The FTC penalty is set to pay on Facebook will not change its practice

• The $ 3 billion to $ 5 billion fine Facebook expects to pay to settle a Federal Trade Commission request sounds great, but for the company it is not really.
• As part of its earnings report Wednesday, Facebook announced that it was putting away $ 3 billion to pay the potential bottom, although it noted that an agreement with the agency has not yet been made.
• Facebook has $ 45 billion in cash and securities at hand and generates $ 5 billion in cash every quarter, even after investing in real estate and equipment, so it can more than afford fines.
• The prayer is not likely to change Facebook's behavior; Instead, the company is likely to see it as just an easy charge for doing business.
• Visit the Business Insider website for more stories.

Facebook seems to be on the verge of making one of its biggest legal issues go away for what it is a little more than chump change.

It sounds like a bad joke, but it's true. And you can almost hear Mark Zuckerberg guffawing from here.

As part of its earnings report Wednesday, the social media giant announced that it expected to pay a fine of between $ 3 billion and $ 5 billion in connection with the Federal Trade Commission's request "in our platform and user data practices". Consequently, the company dropped $ 3 billion, which lowered its reported earnings for the period.

The FTC has not yet provided an update on its Facebook survey, which has been going on for more than a year, and the agency's spokeswoman Juliana Gruenwald declined a request for comment from Business Insider Wednesday. Facebook, meanwhile, acknowledged in a statement that it has not yet reached a settlement with the agency and does not know exactly when it will.

But you can bet that the company would not have announced that it was putting away that amount of money if it didn't believe a settlement was all-but-done and if it didn't have a pretty good idea of ​​the size of the potential The fine should be imposed on the agency. You can also bet on, after Ashkan Soltani, the FTC's former chief engineer, that the settlement will be all-inclusive covering all possible violations of the Facebook secretariat signed with the agency in 2011.

Read this : An Internet pioneer is doubtful Mark Zuckerberg can refocus Facebook on privacy. Here's why.

What is great for the FTC is not great for Facebook

The FTC has investigated Facebook's privacy practices since the Cambridge Analytica scandal broke last year. Since then, many cases have come to light where Facebook seems to have broken users' privacy, or if the data they held on them was compromised. Only last week ago, as Business Insider reported, Facebook confirmed that it reaped the email contacts of 1.5 million users without the users' consent.

In addition to the FTC inquiry, several states have filed civil cases against the company and both the US Department of Justice and the Securities and Currency Commission have launched their own investigations, which have overseas regulators. But the FTC final is probably the largest in terms of the monetary consequences Facebook will face from its seemingly endless stream of privacy and security breaches over the past year.

A $ 3 billion to $ 5 billion fines would be the largest that the FTC has issued far, a fact it will undoubtedly be about. But it's going to be all-but-pointless to Facebook. The company can easily move it off as a cost to do business and continue to do what it has done.

Let's assume $ 5 billion – the high end of the Facebook series offered for the bull – is the figure it and the FTC looked at. That amount represents about one third of the revenue the company generated in the first quarter, traditionally a seasonally slow period for it. It's really equivalent to how much money Facebook generated in the first quarter, even after having the accounts for the money it used to buy long-term assets like computers and real estate. And that's about 11% of the $ 45 billion in total cash and securities that Facebook has on hand.

In other words, the company would easily be able to pay fines in one quarter of the operations, if it didn't just take money out of the bank.

Facebook probably will consider the bow a cost of doing business

Let's put in another way. According to Forbes, Zuckerberg has a net worth of nearly $ 68 billion, almost entirely from its share in Facebook. Even at height, FTC's fines will not amount to 10% of that.

As big as $ 5 billion can be heard, and as large as it may be in terms of what the FTC has done in the past, there is just not so much money on Facebook or Zuckerberg. A nice and big one is not going to hobble the company. It will not force it to undergo major changes. Heck, there's a good chance that a nice one of that size won't even encourage the company to think twice about breaking the user's privacy again.

Think about this: Facebook knew so far back as September 2015 that Cambridge Analytica had illegally received data on Facebook users, as Business Insider reported. Since then, the social network giant has generated about $ 52 billion in cash from its business, even after property and equipment capital gains have subsided. Seen from an ethical-free standpoint, a $ 5 billion fee when making $ 52 billion is a very good deal.

Facebook investors and analysts certainly seemed to see things that way. In trading after the report, the company's shares were increased by 8%. In a brief note on the report, Gene Munster, a financial analyst for a long time, is now managing partner at Loup Ventures, "Facebook storm storm looks forward."

Now, it is quite possible that the FTC, along with fines, will force Facebook to accept certain restrictions on its business. But the company is not worried about them. The FTC fell asleep on the switch for many years to monitor Facebook's compliance with the latest deal the two sides reached last, as the agency made it violate users' privacy.

If the past is any indication, Facebook stands a good chance of not being caught again, at least not for years, if it breaks with the impending settlement. And even if it does, the FTC indicates that the worst thing that can happen is a fine that the company can pay for in three months.

So you better think a place Zuckerberg laughs aloud. Because the point is on the rest of us.