Facebook has been involved in an investigation with the US Federal Trade Commission (FTC) regarding their privacy policies for over a year. It is reported that Facebook expect to pay as much as $5bn in fines to the FTC.
The inquiry assessed the data practices which Cambridge Analytica used to obtain user data via Facebook, and whether this violated the company’s 2011 agreement with the FTC. It has been recorded that Facebook has paid in $3bn legal expenses in connection to the inquiry with the FTC. Despite all this, the first quarter financial reports show that Facebook had a continued growth revenue.
There have been many negative accusations towards Facebook and their use of data. To name a few, there was international outcry after social media companies failed to stop the broadcasting of the terrorist shooting in Christchurch, criticism over anti-vaccine misinformation, and a questionable market research app which paid people to receive all of their data.
Facebook has demonstrated bad practices with user data, which seem to continue. The question is what action Facebook is taking to prevent future cases such as this. The expected fine is much larger than the fine against Google of $22.5m in 2012. This could set a standard for the market and have an impact on the ways advertisers use their platforms, however, this isn’t a significant fine to Facebook. In as little as one hour of after-hours trading (after signalling its impending $3 billion to $5 billion fine), Facebook’s market capitalisation increased by $40 billion.
Facebook won’t be damaged by this fine, it appears they are too big to be moderated in this way, other methods should be considered to incite action from Facebook and other social media companies.