The possibility of a $5 billion federal privacy fine for Facebook suggests that U.S. regulators may be taking a cue from the large penalties their European counterparts have been handing out to U.S. technology giants.
While investors appear to have shrugged it off for now, the potential fine from the U.S. Federal Trade Commission would be more than a slap on the wrist for Facebook, especially if it comes with strings that limit how the company targets advertising to its massive user base.
In Europe, regulators have routinely slapped Google and other U.S. firms with major fines. Google now owes almost $10 billion in such penalties for alleged anticompetitive behaviour; its parent company Alphabet is appealing. EU watchdogs also hit Apple with a back-taxes bill of more than $15 billion .
Investors shrugged off the charge and sent the company's stock up more than 9% to nearly $200 in after-hours trading. Wall Street in general tends to forgive one-time accounting dents in companies' earnings reports and focus instead on how the overall business is doing. Besides, even if Facebook ends up paying $5 billion this year, it's unlikely to seriously harm a company that's expected to rake in profit of $22 billion this year.
The 2011 FTC agreement bound Facebook to a 20-year privacy commitment and violations could subject Facebook to fines of $41,484 per violation per user per day. The agreement requires that Facebook users give "affirmative express consent" any time that data they haven't made public is shared with a third party.
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