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How Do You Stop Facebook When $5 Billion Is Chump Change? If a $5 Billion Fine Is Chump Change, How Do You Punish Facebook?
(about 11 hours later)
It’s time for Facebook to pay up. Sort of.It’s time for Facebook to pay up. Sort of.
On Wednesday, The Washington Post reported that the social network was in negotiations with the Federal Trade Commission over fines relating to the company’s misuse of user data in the Cambridge Analytica scandal. Around the same time, Facebook made it public that it was setting aside between $3 billion and $5 billion for the fine.On Wednesday, The Washington Post reported that the social network was in negotiations with the Federal Trade Commission over fines relating to the company’s misuse of user data in the Cambridge Analytica scandal. Around the same time, Facebook made it public that it was setting aside between $3 billion and $5 billion for the fine.
In Silicon Valley and Washington circles, the news kicked off an informal parlor game of “Guess That Fine,” with some speculating that even the high end of Facebook’s public estimate would be little more than a slap on the wrist.In Silicon Valley and Washington circles, the news kicked off an informal parlor game of “Guess That Fine,” with some speculating that even the high end of Facebook’s public estimate would be little more than a slap on the wrist.
What does a good, meaningful fine actually look like? Would it need to wipe out one quarter’s revenue (roughly $15 billion)? Is a fine meaningless unless it’s recurring (penalties for every quarter or year since Facebook last settled with the F.T.C. for violating user privacy in 2011)?What does a good, meaningful fine actually look like? Would it need to wipe out one quarter’s revenue (roughly $15 billion)? Is a fine meaningless unless it’s recurring (penalties for every quarter or year since Facebook last settled with the F.T.C. for violating user privacy in 2011)?
At the core of these hypothetical arguments is the large question of not only how to regulate Facebook but of how to conceptualize an entity that operates largely without meaningful competitors and collects troves of information on more than two billion human beings. Facebook — alongside Big Tech counterparts of Google and Amazon — is operating at a vast scale. As such, any meaningful attempts to hold the company accountable should be equally disruptive, to borrow a Silicon Valley term of art. That the F.T.C. is negotiating what appears to be a trivial fine, suggests that the organization isn’t just deferential to Facebook, but that it doesn’t truly understand the company’s power.At the core of these hypothetical arguments is the large question of not only how to regulate Facebook but of how to conceptualize an entity that operates largely without meaningful competitors and collects troves of information on more than two billion human beings. Facebook — alongside Big Tech counterparts of Google and Amazon — is operating at a vast scale. As such, any meaningful attempts to hold the company accountable should be equally disruptive, to borrow a Silicon Valley term of art. That the F.T.C. is negotiating what appears to be a trivial fine, suggests that the organization isn’t just deferential to Facebook, but that it doesn’t truly understand the company’s power.
“We don’t have a good regulatory framework [for Facebook] because this kind of scale and impact is unprecedented. And our ideas for remedies, things like fines, are based on an outdated view of how markets work,” the Glitch C.E.O. and longtime developer, Anil Dash, told me.“We don’t have a good regulatory framework [for Facebook] because this kind of scale and impact is unprecedented. And our ideas for remedies, things like fines, are based on an outdated view of how markets work,” the Glitch C.E.O. and longtime developer, Anil Dash, told me.
“The F.T.C. is based on the premise of markets where consumers have choice,” Mr. Dash continued. “As long as their remedies are conceived of within that outdated framework, it will remain structurally impossible for them to hold any major platform accountable in any meaningful way.”“The F.T.C. is based on the premise of markets where consumers have choice,” Mr. Dash continued. “As long as their remedies are conceived of within that outdated framework, it will remain structurally impossible for them to hold any major platform accountable in any meaningful way.”
Don’t believe the critics? Then just ask the market. As BuzzFeed News pointed out on Wednesday, in just one hour of after-hours trading after signaling its impending $3 billion to $5 billion fine, Facebook’s market capitalization increased by $40 billion.Don’t believe the critics? Then just ask the market. As BuzzFeed News pointed out on Wednesday, in just one hour of after-hours trading after signaling its impending $3 billion to $5 billion fine, Facebook’s market capitalization increased by $40 billion.
[As technology advances, will it continue to blur the lines between public and private? Sign up for Charlie Warzel’s limited-run newsletter to explore what’s at stake and what you can do about it.][As technology advances, will it continue to blur the lines between public and private? Sign up for Charlie Warzel’s limited-run newsletter to explore what’s at stake and what you can do about it.]
Which means that most fines likely to be considered by the F.T.C. might amount to what Matt Stoller, a fellow at the Open Markets Institute, described to me as “a parking ticket and a news release.”Which means that most fines likely to be considered by the F.T.C. might amount to what Matt Stoller, a fellow at the Open Markets Institute, described to me as “a parking ticket and a news release.”
Some with insider experience disagree. A former F.T.C. consumer protection official told me Thursday that if the numbers they’d heard around the fine are real, “they might not be transformative to the bottom line” but would be “symbolic of the gravity.” Similarly, they believed the organization could add requirements that “change the way Facebook handles and shares data. I’d be very surprised if Facebook didn’t continue in the same general lines of business, but operating with more restrictions,” they said.Some with insider experience disagree. A former F.T.C. consumer protection official told me Thursday that if the numbers they’d heard around the fine are real, “they might not be transformative to the bottom line” but would be “symbolic of the gravity.” Similarly, they believed the organization could add requirements that “change the way Facebook handles and shares data. I’d be very surprised if Facebook didn’t continue in the same general lines of business, but operating with more restrictions,” they said.
David Carroll, a professor at the New School, who took legal action against Cambridge Analytica in the United Kingdom, agreed that, “no fine would be adequate for a monopoly. Advertisers, users, and investors do not register the fines in their economic activity. [They’re] still buying, using investing. It causes no material harm to Facebook. It’s just bad PR.”David Carroll, a professor at the New School, who took legal action against Cambridge Analytica in the United Kingdom, agreed that, “no fine would be adequate for a monopoly. Advertisers, users, and investors do not register the fines in their economic activity. [They’re] still buying, using investing. It causes no material harm to Facebook. It’s just bad PR.”
What does he have in mind? “Seizure of servers, criminal penalties against corporate directors and Stop Data Processing orders would actually be painful penalties,” he argued. Or, even more intense, “force Facebook to delete its user data and models and start from scratch under rigorous collection restrictions."What does he have in mind? “Seizure of servers, criminal penalties against corporate directors and Stop Data Processing orders would actually be painful penalties,” he argued. Or, even more intense, “force Facebook to delete its user data and models and start from scratch under rigorous collection restrictions."
Of course, Facebook is not likely to see anything resembling Mr. Carroll’s proposals anytime soon; most ideas would likely be dismissed as wildly radical. And certainly without precedent.Of course, Facebook is not likely to see anything resembling Mr. Carroll’s proposals anytime soon; most ideas would likely be dismissed as wildly radical. And certainly without precedent.
And yet the scope of Facebook’s recent privacy scandals in the last two years has little precedent either. A quick, partial rundown:And yet the scope of Facebook’s recent privacy scandals in the last two years has little precedent either. A quick, partial rundown:
A security flaw that potentially exposed the public and private photos of as many as 6.8 million users on its platform to developers (the company told the told European regulators almost two months after discovering the bug and waited almost three months before disclosing publicly).A security flaw that potentially exposed the public and private photos of as many as 6.8 million users on its platform to developers (the company told the told European regulators almost two months after discovering the bug and waited almost three months before disclosing publicly).
A separate “bug” that exposed up to 30 million users’ personal information in late September. Among the information exposed: emails and phone numbers, and profile information including recent search history, gender and location.A separate “bug” that exposed up to 30 million users’ personal information in late September. Among the information exposed: emails and phone numbers, and profile information including recent search history, gender and location.
An admission that the company "unintentionally uploaded" the email contacts of 1.5 million new Facebook users since May 2016.An admission that the company "unintentionally uploaded" the email contacts of 1.5 million new Facebook users since May 2016.
And, of course, the Cambridge Analytica scandal, where data from tens of millions of users was misappropriated and shared to be used for profiling for political campaigningAnd, of course, the Cambridge Analytica scandal, where data from tens of millions of users was misappropriated and shared to be used for profiling for political campaigning
“Everyone is thinking backward about a fine for what they did wrong,” Jason Kint, the chief executive of the trade group Digital Content Next, told me. He argued that the F.T.C.’s framework is out of date and should instead reflect the more progressive industry standard for tech giants of “aligning data usage with consumer expectations.” Under that model, Mr. Kint suggests the F.T.C. consider something similar to the German government’s February decision to restrict Facebook’s data gathering (specifically the ability for Facebook to collect and combine third-party data account advertising profiles).“Everyone is thinking backward about a fine for what they did wrong,” Jason Kint, the chief executive of the trade group Digital Content Next, told me. He argued that the F.T.C.’s framework is out of date and should instead reflect the more progressive industry standard for tech giants of “aligning data usage with consumer expectations.” Under that model, Mr. Kint suggests the F.T.C. consider something similar to the German government’s February decision to restrict Facebook’s data gathering (specifically the ability for Facebook to collect and combine third-party data account advertising profiles).
Should the F.T.C. go with the expected wrist-slap of a fine, it’ll be flatly ignoring a broader sense of mounting frustration over user privacy and the monolithic nature of Big Tech.Should the F.T.C. go with the expected wrist-slap of a fine, it’ll be flatly ignoring a broader sense of mounting frustration over user privacy and the monolithic nature of Big Tech.
“It’s very clear that people are waking up and they want something to be done,” Mr. Stoller said. “What’s happening with Facebook is that, after years of not paying attention, people are turning to the F.T.C. and saying, ‘You’re the cops, we need you to finally police.’ In that way, it’s less a Facebook crisis than it is an F.T.C. crisis.”“It’s very clear that people are waking up and they want something to be done,” Mr. Stoller said. “What’s happening with Facebook is that, after years of not paying attention, people are turning to the F.T.C. and saying, ‘You’re the cops, we need you to finally police.’ In that way, it’s less a Facebook crisis than it is an F.T.C. crisis.”
Of course, the most likely scenario suggests that a $3 billion to $5 billion fine would be far from a crisis for either party, allowing both to save face while solemnly pronouncing that justice has been served. The former F.T.C. official countered that notion, suggesting the F.T.C. “will be thoughtful and reasonable and take steps that are likely to change Facebook’s behavior. ”Of course, the most likely scenario suggests that a $3 billion to $5 billion fine would be far from a crisis for either party, allowing both to save face while solemnly pronouncing that justice has been served. The former F.T.C. official countered that notion, suggesting the F.T.C. “will be thoughtful and reasonable and take steps that are likely to change Facebook’s behavior. ”
But they also acknowledged that a ruling most likely won’t satisfy the harshest critics. “They’re not going to be vengeful. People who are angry and hurt may be disappointed. People who want to see change while still using these services — they may be better served.”But they also acknowledged that a ruling most likely won’t satisfy the harshest critics. “They’re not going to be vengeful. People who are angry and hurt may be disappointed. People who want to see change while still using these services — they may be better served.”
The only potential crisis then seems reserved for us, the users. If the regulators fail to meet the moment they’ll have wasted a rare opportunity for real accountability. Worse yet, quietly prompting Facebook to write a check for an amount it’s already safely ferreted away will be an admission that regulators are out of ideas when it comes to the company’s unprecedented power and reach.The only potential crisis then seems reserved for us, the users. If the regulators fail to meet the moment they’ll have wasted a rare opportunity for real accountability. Worse yet, quietly prompting Facebook to write a check for an amount it’s already safely ferreted away will be an admission that regulators are out of ideas when it comes to the company’s unprecedented power and reach.
Follow @privacyproject on Twitter and The New York Times Opinion Section on Facebook and Instagram.Follow @privacyproject on Twitter and The New York Times Opinion Section on Facebook and Instagram.
Charlie Warzel, a New York Times Opinion writer at large, covers technology, media, politics and online extremism. He welcomes your tips and feedback: charlie.warzel@nytimes.com | @cwarzelCharlie Warzel, a New York Times Opinion writer at large, covers technology, media, politics and online extremism. He welcomes your tips and feedback: charlie.warzel@nytimes.com | @cwarzel