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Wall Street approves Facebook's $ 5 billion FTC fine




The US government will demand a staggering $ 5 billion fine against Facebook to break the user's privacy coming from the Cambridge Analytica scandal.

Facebook investors celebrate.

Wall Street pushed the value of Facebook shares up slightly, to nearly $ 205, after the news of the upcoming Federal Trade Commission penalty discovered this afternoon, via the Wall Street Journal. Another way to put it on: Facebook investors were most optimistic about the company a year ago, when they thought the stock was worth $ 210. But they feel very good about it now too.

The most obvious reason for the disconnection is that Facebook had told investors that it expected to pay fines of up to $ 5 billion, and the company had set aside $ 3 billion to pay for the bucket this spring.

Then the fact is that while $ 5 billion is a very large number and a giant for an FTC fin ̵[ads1]1; the second largest buck it has targeted a Silicon Valley company, was a $ 23 million slap-on wrist for Google in 2012 – It's a very feasible number for Facebook.

The company has ordered a $ 22.1 billion profit last year. This year, even after counting on fines, analysts believe it will earn more than $ 19 billion. And in 2021, RBC analyst Mark Mahaney estimates that Facebook will earn more than $ 35 billion a year.

But the biggest reason for optimism – from Wall Street's perspective – is that the federal government does not seem to move towards any kind of regulation that will change the meaning of how Facebook operates its business, which depends on the detailed information on Its users are sent for targeted advertising.

From the New York Times: "In addition to the bow, Facebook agreed to a more comprehensive oversight of how it handles user data, according to [sources]. But none of the terms of the settlement will limit Facebook's ability to collect and share data with third parties. "

That is, Facebook needs to put more lawyers and other compliance experts to work when the new FTC rules are official, but Facebook can hire many compliance experts and lawyers. Facebook's advertising machine, which pays for them, will run full steam ahead.

It is still possible that we will have greater consequences from the revelations about Cambridge Analytica, the computer company that could store tens of millions of Facebook users without their consent. Facebook will continue to investigate outside America. And in the US, it recurs recurrent criticism from politicians over the political spectrum: Thursday, for example, both President Donald Trump and the Federal Reserve Chair Jerome Powell attacked Facebook's plan to create their own digital currency.

And Friday after the news of the FTC quarrel, Sen. Mark Warner (D-VA) said that a financial penalty was not close enough: "Given Facebook's repeated breaches of privacy, it is clear that basic structural reforms are required. Neither do nor unwilling to put in reasonable protection reports to ensure that the user's privacy and data are protected, it is time for Congress to act. "Facebook itself has said it is looking forward to additional regulation (which again is in a position to handle given their vast resources). And the company has also said it is working to reorient itself to focus on private messages between its users – a move it never tied directly to Cambridge Analytica and other privacy scandals that have dogged it, but we can link the dots ourselves.



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