Sign up for our free daily newsletter


Get the latest news and some fun stuff
in your inbox every day

Facebook $5bn FIne

The Wall Street Journal reported late on Friday that the Federal Trade Commission (FTC) has agreed to fine Facebook a record-setting $5 billion on Friday for privacy violations. This makes me mad.

The FTC investigation began more than a year ago after reports that the personal data of tens of millions of Facebook users wound up in the hands of Cambridge Analytica, a dodgy data firm that worked on Donald Trump's 2016 campaign. They bought the data from Facebook.

I have previously written here that I think that Facebook is being treated unfairly. In May I noted that they are a private company, offering a free service on the Internet, to which users sign up voluntarily. Ok, they have made a few mistakes, but they said that they'd be more careful in future. Never forget, individual users get to determine their own privacy settings. Facebook makes no secret of the fact that their business model is to share that data with advertisers and other marketers. Most users enjoy seeing commercial offers relevant to their lifestyles.



So Facebook users don't read their privacy agreements, and don't care to change their settings, ever, but the company apologising is not enough. Facebook (in other words its shareholders like you and me) are now going to fork out a huge wad of cash. Why would they do that? To make the whole affair go away, that's why. If approved by the Justice Department's civil division, it will result in the dropping of all litigation by the US government.

This is the largest penalty ever raised by the FTC by an order of magnitude. The previous record was a $22.5 million fine levied against Google in 2012. According to the WSJ other important questions remain unanswered, including whether the FTC has opted to hold Facebook CEO Mark Zuckerberg personally liable for the company's privacy violations, and what sort of external oversight Facebook must submit to going forward.

Facebook said in April that to settle the probe it was expecting to pay up to $5 billion, but had set aside $3 billion in its latest financial report. Facebook shares closed at $204.87 on Friday night (SA time) in New York. Let's see how it trades today. For the record, we feel that it should be held if you have them, and bought if you don't.


Other recommended stocks     Other stories about META