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The FTC Is Fining Facebook Over Data Privacy Concerns. Users Don't Seem to Care.

The tech giant announced the $3-5 billion fine alongside an 8 percent annual usership increase.
Denely Rafferty of the group Raging Grannies protests outside of Facebook headquarters in June of 2010.

Denely Rafferty of the group Raging Grannies protests outside of Facebook headquarters in June of 2010.

Facebook is preparing to weather a fine of $3-5 billion from the Federal Trade Commission, the company announced in an April 24th financial earnings report, following years of high-profile allegations of privacy violations.

The hefty penalty—a record for the agency—could represent as much as one-third of the $15 billion profit the tech giant reported for the first quarter of 2019. In a conference call with analysts following the earnings report's release, Facebook Chief Financial Officer David Wehner said that the fine had been reported as a range because the "matter is not resolved, so the actual amount of payment remains uncertain," according to CNN.

The one-time charge is part of a larger "ongoing inquiry" by the FTC into accusations that the company had handled its users' data in a way that had violated a 2011 privacy consent decree and ultimately compromised their privacy. The scandal reached a fever pitch in 2018, when a whistleblower at the British political consulting firm Cambridge Analytica helped to surface evidence that Facebook had knowingly allowed data from tens of millions of users to be harvested through a third-party app without those users' consent.

The penalty marks the most severe sanctions levied by the FTC to date, with the previous record belonging to the $22 million fine the agency imposed on Google in 2012 for deliberately obscuring how privacy settings worked in Apple's Safari Web browser. (Earlier this year, Google was also fined roughly $57 billion by the European Union for a "lack of transparency, inadequate information and lack of valid consent" over the way the company handled its user data.)

The fine is also significant for its political implications: It comes during the business-friendly Trump administration, which has thus far been reluctant to impose restrictions on American tech companies.

"This is a slap on the wrist—a fraction of the profits Facebook makes in a year," Senator Elizabeth Warren (D-Massachusetts), a 2020 presidential contender who has previously advocated for using antitrust law to break up Facebook and other big tech companies, tweeted. "Facebook is a repeat offender & fines like this won't stop them from breaking the law & violating our privacy again. It's going to take big, structural change."

Although rumors of a potentially hefty fine had swirled for months, lat week's announcement marked the first public acknowledgment by Facebook that the penalty was in the billion-dollar range. The earnings report also had the unexpected effect of assuring Wall Street investors that the company was in good financial standing, with shares of Facebook shooting up more than 7 percent in after-hours trading after the report was released.

And while the public relations crisis caused by the repeated data breaches have resulted in sagging public trust, for now, at least, users don't seem to be using Facebook and the other social media platforms in its portfolio—including Messenger, Instagram, and WhatsApp—any differently. In its earnings report, the company reported that usership is up 8 percent from the same point last year, currently resting at around 1.56 billion unique users each day.

In the earnings report, Facebook chief executive officer and founder Mark Zuckerberg said that the company had "had a good quarter" and will now turn its focus to "building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the Internet."

Zuckerberg, for his part, has been strategic in his posturing around increased regulation, writing in a March op-ed for the Washington Post about the need for a "more active role for governments and regulators" when it comes to dictating how social media giants should operate.

"By updating the rules for the Internet, we can preserve what's best about it—the freedom for people to express themselves and for entrepreneurs to build new things—while also protecting society from broader harms," he wrote.