How to read a Facebook privacy settlement
The Federal Trade Commission could vote on a settlement with Facebook over the social giant's alleged privacy failures as soon as this week, according to the NYT.
The latest: The New York Times' Cecilia Kang and the Washington Post's Tony Romm have reported on details of the settlement negotiations, including the internal debate over how far a penalty should go.
Here's our guide for cutting through the spin to understand what this news actually means for Mark Zuckerberg's behemoth.
Key questions to keep in mind:
- How big is the fine, really? It will likely set a record, but remember that Facebook made more than $15 billion in revenue in the first three months of this year. On the other hand, the record FTC fine in a case like this is only $22.5 million. So the $3 to $5 billion fine Facebook predicts would be a major shift.
- Will Facebook be forced to change its foundational business practices? Facebook made that $15 billion last quarter by doing what it’s done for a decade: collecting user data and letting advertisers mine it to target those users. The New York Times reports that the settlement will likely leave that basic way of doing business alone.
- How does the agency scrutinize Facebook going forward? The social network has told the FTC it is willing to put its data practices under additional scrutiny, according to the Washington Post, including privacy reviews of new products.
- Who will make sure Facebook complies? Critics have said that independent audits, which have monitored Facebook's compliance with a previous settlement, aren't enough.
- What about Mark? According to the NYT, one matter dividing FTC commissioners is whether or not to personally penalize Mark Zuckerberg. This matters to the direction of the company, because he isn't going anywhere.
Yes, but: The amount the FTC can seek in a court case against a company is limited by law.
- The agency also has to think about the resources it would use if, instead of settling, it took the costly step of pressing a case against Facebook.
Be smart: Both the FTC’s Republican chairman Joe Simons and the tech industry will have an incentive to paint any settlement as strong.
- The spin is already flowing. After Facebook predicted it would face a multibillion fine, the industry group NetChoice, which represents Facebook, said that the “expected fine demonstrates to consumers and European regulators that the FTC is serious about privacy.”
- Portraying a settlement as tough would allow the industry to counter people who say that the FTC should be given far more power over its business practices.
- Some consumer groups and Facebook's critics will likely complain that the settlement doesn't go far enough.
What's next: Any settlement would be a major development in the ongoing national debate over online consumer privacy — but nowhere near the end of it. Lawmakers on Capitol Hill are currently trying to hammer our legislation that would put Facebook and other tech giants under new privacy rules, but progress has been slow.