The Federal Trade Commission’s $5bn fine for Facebook — assuming it is approved by the Department of Justice — is both eye-catching and sets a new record. The 2 per cent rise in Facebook shares after it was reported shows how little impact the market believes it will have on the company’s finances or business model. Facebook and its rivals should nevertheless view the case as a warning shot. Beyond the FTC, the debate has shifted from fines to increasingly severe measures to keep Big Tech in check. As regulators adapt to this reality, future settlements will only become tougher.
The fine follows an investigation which began last March, triggered by the Cambridge Analytica case in which personal information was leaked to a political consultancy through a third party. The FTC found Facebook to be in breach of a previous settlement, reached after the company was discovered to be deceiving customers around their privacy practices.
Using fines to encourage better privacy protection is a questionable strategy. If they become seen as the cost of carrying on with business as usual, the FTC will be undermined.