A new report details how Mark Zuckerberg’s lawyers beat Washington into submission.
The Federal Trade Commission’s settlement
negotiations with Facebook concluded not
with a bang, however with
a whimper. Sixteen months after opening a privacy investigation
into the tech giant, the FTC cut a deal for Facebook to
pay a $5 billion fine—roughly comparable
to the revenue Facebook generated in a single month.
It was, on the one hand, the biggest fine in FTC history. it absolutely was also so tiny, relative to Facebook’s monster income, that the company’s stock actually went up. Chief executive officer and founder Mark Zuckerberg finished the day $1 billion richer.
In a parallel universe where the FTC has a spine, things might have ended differently. The Washington Post
reports that the independent government agency had originally
planned to fine Facebook “tens of billions of dollars” and impose reforms that would hold Zuckerberg in person accountable—a potentially historic action that
would have had serious consequences for Facebook and made enormous changes
at the corporate. Instead,
the FTC reportedly
caved under pressure from
Facebook’s larger and better capitalized
legal team.
While the FTC had believed Facebook’s privacy violations warranted a fine in the tens of billions,
the tech giant “had a different understanding of its
own errors,” in line with the
Post . Facebook lawyers believed the
corporate ought to pay
a fine in the many millions range “at most.”
Ultimately Facebook oh-so-graciously agreed to “assuage regulators” by paying $5 billion—but won other crucial concessions in return. One such concession may be the FTC losing out on its desire to carry Zuckerberg more responsible for Facebook’s missteps by putting him in person under an FTC order—a move that Facebook’s legal team “steadfastly opposed.” (The final settlement is anticipated to incorporate reforms that subject Facebook to higher federal scrutiny, although actual terms of the deal have yet to be formally declared.) The FTC, it seems, didn’t have the manpower or resources to put up much of a fight. Facebook made it clear that they’d take the matter to court if needed—a legal battle which may have taken years and cost tens of millions of dollars.
Internally, the agency knew that it wasn’t absolute to get a
multi-billion dollar fine
and other new
commitments from a federal judge.
Adding to the difficulty,
the agency, armed with a
relatively tiny $306
million budget in 2018 that supported roughly 1,100 workers,
had to confront the chance that it would be outmatched in
such litigation. Even FTC
Chairman Joseph Simons gave the
impression to warn Congress about the resource challenges once he appeared in
front of Senate lawmakers last November, repeatedly citing some of the agency’s staffing and budget challenges.
“Many of the FTC’s investigations and
cases in this arena
involve complex facts
and technologies and well-financed defendants, usually requiring outside specialists, that may be expensive,” he said in prepared testimony.
A loss also may have vastly damaged the agency, maybe setting a legal standard that curtailed the commission’s authority to
police other tech giants for their privacy and security
practices.