Facebook: Too Big To Fine

Facebook: Too Big To Fine

Facebook: Too Big To Fine

Comments Off on Facebook: Too Big To Fine

Dislike.

2008 kicked off the era of Too Big to Fail.

We’ve officially entered a new paradigm: Too Big to Fine.

This week Facebook disclosed its expecting a $3-$5B fine from the Federal Trade Commission (FTC). This would be the largest fine ever levied on a tech company, specifically related to their privacy practices/big “oops” in allowing a Cambridge Analytica researcher access to 87 million people’s data on Facebook; information then used for the benefit of the Trump campaign. Regardless of the use of the data, the sheer fact of its disclosure is seen as a violation of Facebook’s 2011 privacy settlement with the FTC — hence leading to the anticipated fine.

The mission of the FTC is “Protecting consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity.” One might think $3B is a hefty burden — but not for Facebook.  They managed to set this money aside in Q1, and STILL report $2.4B in profit. The $3B was a footnote in the earnings report — not just figuratively, but literally.

And Facebook isn’t  the only one who has been able to shoulder a massive fine and simply keep moving. As Recode reported, “Bank of America agreed to pay $16.7 billion in a 2014 settlement with the Justice Department related to its activities leading up to the financial crisis. In 2013, JPMorgan agreed to a $13 billion settlement with the Justice Department tied to its sales of securities containing ‘toxic mortgages.” What’s especially ironic is that Bank of America and JPMorgan Chase respectively received, and ultimately repaid, $45 billion and $20 billion in TARP money a few years prior. Banks became the nation’s children — we want to punish them, but still can’t help spoiling them.

Separate from all the corporate wrong-doing — whether Facebook should’ve done better, and whether banks should’ve protected the economy — these fines invite two major structural questions about how business works in the US:

  1. How profitable should companies be?
  2. How can an organization like the FTC actually protect consumers?

Companies in general sit between three groups of stakeholders — customers, employees, and owners. They take a certain amount of money from their customers and pay some money to their employees. Then the balance goes to the owners, whether that be a relatively small group of people in the case of privately-held companies, or a large group of people in the case of publicly held companies.

When the average base pay for a Bank of America teller is $13/hour, yet BoFA can pay $16.7B in government penalties without much of a hiccup, you start to wonder if customers and employees are getting their “fair share” compared to owners. And when Facebook can put aside $3B, and the stock market responds by pushing the price up by 7.6% the same day, it appears that markets care much more about money than about privacy or fairness to stakeholders.

Government fines are one way of saying, “You took too much value from consumers, now give it back.” But what if instead of forcing companies to give back, the FTC’s job was to ensure companies didn’t take too much in the first place — whether our dollars, or our data? If companies had to pay living wages consistently and charged consumers fairly, rather than saving up value for shareholders only, then perhaps fines would actually work as intended — making it costly for companies to mistreat the public. Finally, if companies had far more distributed governance and ownership — as many have pondered for Facebook — they might be less inclined to mistreat the public in the first place.

Government regulation can still only go so far. At the end of the day, we also get to make choices as consumers as to where to take our traffic on the web, or where to park our money at the bank. There are companies out there like Ecosia — where the profits from web searches are used to plant trees, not pay shareholders. There are community banks that focus on helping consumers avoid financial crises, rather than causing them. Building up companies that are more focused on people can help keep value where it should be — rotating in the economy — and ideally, build institutions that are too beloved to fail, and too deeply rooted to harm.

[“source=forbes”]

Lili

Related Posts

CES 2019: Intel Working With Facebook on AI Chip Coming Later This Year

Comments Off on CES 2019: Intel Working With Facebook on AI Chip Coming Later This Year

Facebook offers ‘millions’ to publishers

Comments Off on Facebook offers ‘millions’ to publishers

Poor ecosystem holding back Indian entrepreneurs, says Facebook

Comments Off on Poor ecosystem holding back Indian entrepreneurs, says Facebook

Facebook begins telling users who try to share distorted Nancy Pelosi video that it’s fake

Comments Off on Facebook begins telling users who try to share distorted Nancy Pelosi video that it’s fake

Facebook Messenger to receive delete button and dark mode, this is what it means for you

Comments Off on Facebook Messenger to receive delete button and dark mode, this is what it means for you

Facebook’s Bizarre Response To Privacy Scandals? New Pop-Up Cafés

Comments Off on Facebook’s Bizarre Response To Privacy Scandals? New Pop-Up Cafés

Facebook shares could be on the road to new highs, trader says

Comments Off on Facebook shares could be on the road to new highs, trader says

Is Facebook really that bad? A conversation with Roger McNamee and Antonio Garcia Martinez

Comments Off on Is Facebook really that bad? A conversation with Roger McNamee and Antonio Garcia Martinez

Roger McNamee: ‘It’s bigger than Facebook. This is a problem with the entire industry’

Comments Off on Roger McNamee: ‘It’s bigger than Facebook. This is a problem with the entire industry’

Facebook in talks with US derivatives regulator over digital currency plans: Report

Comments Off on Facebook in talks with US derivatives regulator over digital currency plans: Report

After fixing Facebook, Mark Zuckerberg wants to fix tech in 2019

Comments Off on After fixing Facebook, Mark Zuckerberg wants to fix tech in 2019

Facebook is ‘exploring restrictions’ for live video after Christchurch attack

Comments Off on Facebook is ‘exploring restrictions’ for live video after Christchurch attack

Create Account



Log In Your Account