Facebook booked a $3-billion charge for a potential FTC fine. But some experts warn that it is too soon to write off Facebook’s regulatory issues.
Facebook CEO Mark Zuckerberg in April 2018 testifies before a House Energy and Commerce hearing on Capitol Hill about data privacy and the use of Facebook data to target American voters in the 2016 election.
Facebook put a number on the potential fine — between $3 billion and $5 billion — and booked a $3-billion accounting charge in its first-quarter results, even though negotiations with the FTC are ongoing. The disclosure served to give clarity to investors, who were aware that a penalty was coming down the track.
Separately, the Irish data commission, which oversees compliance with the European Union’s new data protection regulations, said it had launched a new probe into the company for exposing hundreds of millions of users’ passwords, the commission’s 11th ongoing inquiry into Facebook apps to date. Democratic presidential hopeful Sen. Elizabeth Warren has said she would break up Facebook if elected. On Wednesday evening, she criticized the potential $3-billion to $5-billion penalty as a “slap on the wrist.”
Jim Kohm, the head of the FTC’s enforcement division, hinted at such a move last month, when he told Politico, “In addressing alleged [consent decree] violations, the Commission has the option to seek additional conduct remedies as well as monetary penalties.” The prospect is a daunting one for advertisers, according to Debra Aho Williamson, principal analyst at research group eMarketer. “If advertisers were not able to use that precision targeting to the same extent that they have, it could make Facebook a less attractive advertising platform.”A penalty in the proposed range would mark the largest civil fine ever imposed by the FTC, far surpassing the $22.5 million paid by Google in 2012 for misrepresenting privacy assurances to some users.
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