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Facebook was still sharing data as $5 billion settlement becomes official
Much has been said about Facebook’s carelessness in regards to user data, but a recent settlement between the company and the FTC made headlines when the actual dollar amount of $5 billion was announced. Finally, it looked as if Facebook was about to get hit where it hurts the most: the bottom line. And now, the judgment is officially set in stone — with commissioners approving the historical penalty into action.
On the heels of this announcement, however, Facebook revealed that it was officially ending its data-sharing partnership with Microsoft and Sony — a partnership it had kept active until the verdict was officially decided!
When all’s said and done, the government looks to claim a sizable amount of money from the social media giant. But will this massive fine even make a dent in Facebook’s bottom line?
A multi-billion dollar fine
According to a report in The Wall Street Journal, the FTC voted along party lines to approve a settlement against Facebook equaling $5 billion. To date, this is the largest fine in FTC history — with the closest runner-up only reaching a mere $22.5 million. Ironically, that fine was levied against Facebook’s rival, Google, in 2012.
The fine is related to several cases involving Facebook, but most notably the Cambridge Analytica scandal and the company’s numerous data leaks. Facebook claimed in April that it had set aside around $3 billion in anticipation of fines, making the latest number $2 billion higher than Facebook’s initial projections
This proposal was approved and officially announced on July 24th, with commissioners reaching an agreement on the settlement in a 3-2 vote.
Curiously, immediately following the FTC’s announcement, Facebook revealed it was ending a long-running data partnership with two massive names in the tech world: Microsoft and Sony.
Related: 5 things you need to change in your Facebook account right now
These companies had been privy to friend data and profile information courtesy of Facebook and were the last remaining holdouts of a widespread corporate partnership that featured entities like Yahoo, Spotify, Netflix, and Blackberry. Going forward, none of these companies will have access to private user data — provided no new deals are struck.
Given the nature of Facebook’s fine and increased government scrutiny, however, the odds of any new data-sharing partnerships appears unlikely.
Will this affect Facebook in any way?
For those of you eager to see Facebook get its just desserts for its mishandling of user data, the story doesn’t seem to be panning out that way, unfortunately. Facebook recently reported more than $15 billion in sales. This means that the fine only eats up one-third of Facebook’s total earnings in sales.
For perspective, when they were negotiating potential fines earlier in the case, Facebook’s $3 billion projection only represented around 6% of the company’s cash stockpile.
Sadly, this judgment appears to be more of a slap on the wrist than substantive deterrence for Facebook. That said, word-of-mouth for the company hasn’t been all that great recently.
If the company wishes to stay relevant, it needs to at least give the appearance of innovation and care. But with projects like Libra and Mark Zuckerberg’s “privacy initiative,” that might just be the sweet spot it’s aiming for.
Or maybe it really did have a change of heart. You can never really tell with Facebook, can you?
Tags: Facebook, Google, user data
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