Critics Warn FTC's Paltry $5 Billion Fine for FaceBook 'Leaves the Public Vulnerable' to Future Abuse by Tech Giant

Facebook was hit with a $5 billion fine and oversight requirements Wednesday, a move that was seen as an insufficient punishment and a worrying indicator of the future of tech regulation by the social media giant’s critics.

The FTC’s ruling (pdf) was along party lines, with the commission’s three Republicans voting in favor and the two Democrats voting against. 

“I fear it leaves the American public vulnerable,” said Democratic commissioner Rebecca Slaughter.

In his dissent, Slaughter’s fellow Democrat Rohit Chopra said he was concerned about the future enforcement efforts of the commission in light of the ruling. 

“When companies can violate the law, pay big penalties, and still turn a profit while keeping their business model intact, enforcement agencies cannot claim victory,” wrote Chopra. 

The company’s “past privacy scandals,” as described by The Washington Post, could have resulted in stricter oversight regulations and higher fines, but, the paper said, “the FTC stopped short of some even tougher punishments it initially had in mind.”

Those punishments, the Post reported, included:

The $5 billion fine, which was approved on July 12, represents roughly three months of the tech giant’s profit earnings. As Sen. Elizabeth Warren (D-Mass.) pointed out, Facebook made that much on the stock market less than an hour after the fine was announced, rendering it almost meaningless. 

“Let’s be honest: this settlement is a victory for Facebook,” Warren said in a July 12 tweet. “Just look to the markets. In the first 15 minutes after the settlement was reported, Facebook’s market value went up by more than $5 billion.”

“Far more serious consequences are needed to curb the tech industry’s behavior and its amoral pursuit of growth at our expense.”
—Gaurav Laroia, Free Press

The details of the settlement reportedly shield Facebook from admitting guilt for its behavior, ensuring the company is protected from future legal liability. The ruling led to a “denunciation” of the FTC from the Open Markets Institute, which, in a statement, called for congressional action against the commission.