Facebook’s $5 billion FTC fine is little more than a slap on the wrist

Mark Zuckerberg must be feeling a bit like President Donald Trump now.

During the 2016 presidential campaign, a confident Trump famously said that he could shoot someone on Fifth Avenue in New York and “wouldn’t lose any voters.”

After the news on Friday that the Federal Trade Commission is close to finalizing a settlement with his company for a mere $5 billion, Zuckerberg has got to be feeling similarly untouchable. If, after all the privacy and security fiascos Facebook admitted to over the past two years — including, but not limited to, the Cambridge Analytica scandal — it gets off with such a small penalty, he’s got to think he probably could get away with murder.

Read this: The FTC has approved a roughly $5 billion settlement with Facebook

Of course, Zuckerberg’s felt he could act with impunity for years. When Harvard students uploaded photos and other personal information to his newly launched Facebook site soon after it launched, he notoriously derided them as “dumb f—s” and offered to share with a friend such details of anyone of interest to the person. He repeatedly pushed privacy boundaries in terms of the data Facebook collected from its users and what it did with that information. When controversies arose about that — as they repeatedly did — the company simply took a step back only to quietly push forward again soon thereafter.

Even a previous FTC investigation proved to be little more than a hiccup. The settlement in that case resulted in no fine. While it was supposed to restrict some of Facebook’s activities and protect users’ privacy, it turned out to do very little of either. Despite numerous complaints from privacy advocates that the company was violating the terms of the settlement, the FTC didn’t take any enforcement actions against the social-networking giant.

This time could have been different

There was reason to think that things would be different this time around. The Cambridge Analytica imbroglio resonated much more widely with the public than the company’s previous privacy missteps. That’s probably because of the scale of the data leak — up to 87 million users were affected — and because of Cambridge Analytica’s ties to Trump’s election campaign.

Facebook was already under scrutiny for the hijacking of its service by Russian-linked figures to spread propaganda that benefited Trump’s campaign during that election. The Cambridge Analytica leak suggested its service had played another hidden role in Trump’s victory, allowing Trump’s campaign to exploit the data of Facebook users — collected without their knowledge — to target election ads.

And it turned out that the Cambridge Analytica was only one of numerous privacy and security scandals Facebook faced. The company later acknowledged that malicious actors had separately collected data on “most” of its 2 billion users, that some 14 million users had been affected by a bug that made their supposedly private status updates publicly viewable, that data on some 30 million users was compromised in a hacking attack, and that photos from some 7 million users that were intended to be kept private might have been shared with as many as 1,500 apps.

What’s more, the company knew about the problems related to Cambridge Analytica as far back as 2015, according to court filings. And, according to a report in The New York Times, the company gave preferential access to its user data to certain companies even after supposedly curtailing access to it to most companies.

On top of all this, the political environment has changed. Not only are Democrats upset with Facebook, but so too are Republicans. Led by Trump, they’ve accused the company and other social-networking corporations of censoring conservative voices. And both sides of the political aisle have been calling for an antitrust investigation into Zuckerberg’s company and new rules to limit its power.

So, if government regulators were going to get serious about reining in Facebook and holding it accountable, you would think now would be the time.

But you’d be wrong.

To Facebook, this is a slap on the wrist

The FTC settlement, at least as it is described in numerous reports, will amount to little more than a slap on the wrist. Facebook will get to put to bed all of the agency’s investigations into its privacy practices. Although it will face some additional oversight over its privacy practices, it won’t have any restrictions on its ability to collect or share data with other companies or organizations, according to The New York Times. And it doesn’t look like Zuckerberg will be held personally responsible for any of his company’s multiple failings or be under any particular scrutiny going forward.

Depending on how that oversight shapes up, the only real cost of the deal for Facebook is likely that it will have to pay that $5 billion fine.

That might sound like a lot — and it is a huge amount to the average person. It also would be the largest fine ever assessed by the FTC, a fact the agency is likely to tout quite a bit when it officially announces the deal.

But to Facebook, $5 billion just isn’t that much money. It represents less than 1% of its $580 billion market capitalization. Heck, it’s only about 7% of Mark Zuckerberg’s net worth.

Put another way, Facebook is such a profitable company that it generates $5 billion in cash — even after accounting for all its day-to-day operating expenses — every 49 days. The company will be able to pay its $5 billion fine and still have money left over to put in the bank at the end of the quarter — that’s how meaningless this fine will be to the company.

Wall Street recognizes this. Facebook’s stock actually rose on the news of the settlement, even though the fine is now expected to be at the top end of the range the company offered investors in April.

The two Democrats on the commission appeared to recognize that the agency was letting Facebook off easy. They reportedly voted against the deal. It will go forward because the three Republicans on the commission approved it.

They can fool themselves into thinking they’ve dealt sternly with Facebook, but everyone else knows better. More importantly, Zuckerberg knows better.

If he and Facebook were able to get away with so much with so little consequence this time around, one can only imagine what they’ll try to get away the next time. “Dumb f—s,” indeed.