Re­ports: Face­book faces $5B FTC fine

Antelope Valley Press (Sunday) - - Business - By BAR­BARA ORTUTAY AP Tech­nol­ogy Writer

At $5 bil­lion, the fine the FTC is about to levy on Face­book is by far the largest it’s given to a tech­nol­ogy com­pany, eas­ily eclips­ing the sec­ond largest, $22 mil­lion for Google in 2012.

The long-ex­pected pun­ish­ment, which Face­book is well pre­pared for, is un­likely to make a dent in the so­cial me­dia gi­ant’s deep pock­ets. But it will also likely sad­dle the com­pany with ad­di­tional re­stric­tions and an­other lengthy stretch of strict scru­tiny.

The Wall Street Jour­nal and other news out­lets re­ported Fri­day that the FTC has voted to fine Face­book for pri­vacy vi­o­la­tions and mis­han­dling user data. Most of them cited an un­named per­son fa­mil­iar with the mat­ter.

Face­book and the FTC de­clined to com­ment. The 3-2 vote broke along party lines, with Repub­li­cans in sup­port and Democrats in op­po­si­tion to the set­tle­ment, ac­cord­ing to the re­ports.

The case now moves to the Jus­tice De­part­ment’s civil di­vi­sion for re­view. It’s un­clear how long the process would take, though it is likely to be ap­proved. A Jus­tice De­part­ment spokes­woman de­clined to com­ment on the Face­book mat­ter.

For many com­pa­nies, a $5 bil­lion fine would be crip­pling. But Face­book is not most com­pa­nies. It had nearly $56 bil­lion in rev­enue last year. This year, an­a­lysts ex­pect around $69 bil­lion, ac­cord­ing to Zacks. As a one-time ex­pense, the com­pany will also be able to ex­clude the amount from its ad­justed earn­ings re­sults —the profit fig­ure that in­vestors and fi­nan­cial an­a­lysts pay at­ten­tion to.

“This closes a dark chap­ter and puts it in the rearview mirror with Cam­bridge An­a­lyt­ica,” said Wed­bush an­a­lyst Daniel Ives. “In­vestors still had lin­ger­ing wor­ries that the fine might not be ap­proved. Now, the Street can breathe a lit­tle eas­ier.”

Face­book has ear­marked $3 bil­lion for a po­ten­tial fine and said in April it was an­tic­i­pat­ing hav­ing to pay up to $5 bil­lion.

But while Wall Street — and likely Face­book ex­ec­u­tives — may be breath­ing a lit­tle eas­ier, the fine alone has not ap­peased Face­book crit­ics, in­clud­ing pri­vacy ad­vo­cates and law­mak­ers.

“The re­ported $5 bil­lion penalty is barely a tap on the wrist, not even a slap,” said Se­na­tor Richard Blu­men­thal, a Demo­crat from Con­necti­cut. “Such a fi­nan­cial pun­ish­ment for a pur­pose­ful, bla­tant il­le­gal­ity is chump change for a com­pany that makes tens of bil­lions of dol­lars ev­ery year.”

He and oth­ers ques­tioned whether the FTC will force Face­book to make any mean­ing­ful changes to how it han­dles user data. This might in­clude lim­its on what in­for­ma­tion it col­lects on peo­ple and how it tar­gets ads to them. It’s cur­rently un­clear what mea­sures the set­tle­ment in­cludes beyond the fine.

Pri­vacy ad­vo­cates have been call­ing on the FTC to come down on Face­book for a decade, but over that time the com­pany’s money, power and Wash­ing­ton in­flu­ence has only in­creased.

As­so­ci­ated Press

This photo shows the Face­book logo at the com­pany’s head­quar­ters in Menlo Park, Calif. A Wall Street Jour­nal re­port says that the FTC has voted this week to ap­prove a fine of about $5 bil­lion for Face­book over pri­vacy vi­o­la­tions.

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