Facebook gets off easy after agreeing to pay $5 billion fine
While $5 billion is a lot of money for most outfits, Facebook is such a cash generator that it will hardly be missed. For example, in 2018 the company generated $55.8 billion in revenue and $22.1 billion in profits. For the first quarter of this year, Facebook had $15.1 billion in revenue and $2.4 billion in net profits after subtracting the $3 billion charge. When the first quarter came to a close at the end of March, Facebook had $45.42 billion in cash and equivalents in its accounts. The small size of the fine when compared to the social-media firm’s financials led Rhode Island Democratic Representative David Cicilline to call it “a Christmas present five months early.” He also noted that “This fine is a fraction of Facebook’s annual revenue. It won’t make them think twice about their responsibility to protect user data.”
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When talk of a $5 billion fine against Facebook started circulating earlier this year, Senators Richard Blumenthal, a Democrat, and Josh Hawley, a Republican, wrote a letter to the FTC complaining that the size of the fine was too small. They also wanted top Facebook officials, including co-founder and CEO Mark Zuckerberg, held personally responsible. FTC Commissioner Rohit Chopra has made it clear that the agency believes that executives of companies that violate consent decrees should be held responsible if they took part in the violation. Despite the criticism about the size of the fine, it is the largest civil penalty ever collected by the regulatory agency. In addition, Reuters reported back in May that the settlement will include 20 years of oversight. Still, when word of the fine broke yeterday just before the stock market closed, Facebook shares rose over $2 on the news. The pop indicates that investors feel that Facebook has gotten away with murder.
The settlement still needs to be approved by the Justice Department’s Civil Division, according to a source cited in the report. This approval could be announced as soon as next week.