Privacy Group Challenges FTC's Small Facebook Settlement, Also Wants an Admission of Guilt (theverge.com) 51
"A consumer privacy group has filed a challenge to Facebook's $5 billion settlement with the Federal Trade Commission, saying it is not 'adequate, reasonable or appropriate' and lets the social media giant off the hook for years of violations," reports the AP.
The Verge argues that the current consensus is "the FTC gave the company a slap on the wrist, and Facebook's latest earnings report showed the social network earning three times as much in revenue as the FTC fine in just three months." Now, EPIC wants to potentially force the agency to alter the terms of the deal to better address complaints filed by individuals and consumer groups. EPIC takes issue not just with the relatively low size of the fine, which, while the biggest ever for a tech company, is barely a drop in the bucket for the $571 billion company. The group is also upset with how Facebook effectively avoided culpability for its actions, as part of the settlement allowed the company to avoid admitting any guilt over massive privacy and data security scandals, like Cambridge Analytica, that landed it in hot water with the agency.
EPIC also wants a court to decide whether the FTC should have granted Facebook blanket immunity from past legal challenges and if the scope of the settlement can be broadened to include issues like Facebook's widespread use of facial recognition on users without their consent and violations of children's privacy.
EPIC complains that the deal would extinguish more than 26,000 consumer complaints against Facebook that are currently pending at the FTC.
The Verge argues that the current consensus is "the FTC gave the company a slap on the wrist, and Facebook's latest earnings report showed the social network earning three times as much in revenue as the FTC fine in just three months." Now, EPIC wants to potentially force the agency to alter the terms of the deal to better address complaints filed by individuals and consumer groups. EPIC takes issue not just with the relatively low size of the fine, which, while the biggest ever for a tech company, is barely a drop in the bucket for the $571 billion company. The group is also upset with how Facebook effectively avoided culpability for its actions, as part of the settlement allowed the company to avoid admitting any guilt over massive privacy and data security scandals, like Cambridge Analytica, that landed it in hot water with the agency.
EPIC also wants a court to decide whether the FTC should have granted Facebook blanket immunity from past legal challenges and if the scope of the settlement can be broadened to include issues like Facebook's widespread use of facial recognition on users without their consent and violations of children's privacy.
EPIC complains that the deal would extinguish more than 26,000 consumer complaints against Facebook that are currently pending at the FTC.
Three months of profit turned over (Score:5, Insightful)
I wonder if the people complaining think that gross revenue is in any way relevant to the impact on a company, or they are just trying some transparent spin aimed at people who don't know anything about business.
Grocery stores have a profit margin of about 2%, so a fine equal to 10% of revenue would wipe out four years of profit, and likely end up with the company going out of business. They wouldn't have enough margin to pay it and remain in business.
Apple's margin is about 20%. A fine equal to 10% of revenue would leave them with "only" 10% profit - still reasonably healthy.
Facebook's profit for the last six months has been about $5 billion. It would have been about twice that, but the settlements took about half of their profits. That's the number that matters.
One can debate how much the settlement should have been, I won't go into that. Percentage of revenue is not a useful metric, however.
One thing I will point out is this is a settlement, this is what the FTC got without going to court and risk losing the case. Facebook agreed to pay $5 billion. The FTC could have gone to court instead and tried to get more. They might have lost and got nothing.
* 5 years of profit (Score:1)
That should say:
Grocery stores have a profit margin of about 2%, so a fine equal to 10% of revenue would wipe out five years of profit, and likely end up with the company going out of business.
I math good. :)
Re: (Score:1)
That should say:
Grocery stores have a profit margin of about 2%, so a fine equal to 10% of revenue would wipe out five years of profit, and likely end up with the company going out of business.
I math good. :)
That is partly true. of the canned good aisles. For non-store brands.
Totally not true of produce, meat and other areas such as in-store coffee shops, pharmacies, precooked meals, specialty shops like cheese shops and salad bars, which is why some stores have very small grocery aisles in relation to the store size.
Re:Three months of profit turned over (Score:4, Insightful)
Percentage of revenue is not a useful metric, however.
That doesn't follow from the other things you said. Percentage of revenue may not be the whole story, but it's still useful. In this case it indicates that Facebook is a huge company, and that even if their margins were small this would likely not be enough of a penalty to force them to change their behavior. In the worst case they might have to dig through the couch cushions in order to pay this.
As for the risk of the FTC losing the case: good. That's the point of a trial. It's not a positive thing to say that we can, without risk, force this company to pay a penalty without being convicted of anything. If they're guilty, and this is demonstrated in court, then they should face a penalty stiff enough that it really hurts. If they're not guilty then they should pay nothing at all.
Question of law vs question of facts (Score:3)
--
That's the point of a trial. It's not a positive thing to say that we can, without risk, force this company to pay a penalty without being convicted of anything. If they're guilty, and this is demonstrated in court, then they should face a penalty stiff enough that it really hurts. If they're not guilty then they should pay nothing at all.
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I think I understand your point. I also think it is useful to distinguish between questions of fact and questions of fact. I would agree with you if it was a question
I REALLY should use preview (Score:2)
I really should proofread my posts.
Let's try:
also think it is useful to distinguish between questions of fact and questions of law.
Re: (Score:2)
I would agree with you if it was a question of whether or not Facebook did the crime. A trial could establish whether or not they did it. ... It isn't a question of "did Facebook do it"
Well, is isn't a question of "Did Facebook do something?" it's, "Is this thing which Facebook did a crime?" So yes it is a question of whether or not Facebook did the crime, and this settlement comes with no admission of guilt. Meaning that this question is still open. You make the distinction between fact and law, basically: we know that Facebook did something bad, but we do not know that Facebook did something illegal. That's a fine distinction, and it's better to penalize someone who did something bad th
Re: (Score:2)
> if we assume that the penalty given by a judge after a conviction is the right and true penalty for their crime then this system means that they're penalized for less than they should be.
That's a rather huge assumption. Especially given the prosecutor is unsure if what they did is actually a crime at all.
Re: (Score:2)
There is no indictment (Score:2)
> The prosecutor is always sure, otherwise there would be no indictment
There is no indictment in this case. Want to keep playing this game?
Re: (Score:2)
There is no indictment in this case. Want to keep playing this game?
Okay, but you're not doing well: that was in reference to a penalty given by a judge after a conviction. There was an indictment.
Re: (Score:2)
I said the prosecutor in this case isn't necessarily sure that what Facebook did broke any particular laws. You replied "the prosecutor is always sure, otherwise there would be no indictment". Did you forget what you just said?
Re: (Score:2)
Your argument is: we don't have an ideal system, and allowing for settlement is a way to work within that limitation. ... This situation has multiple negatives though: they would not accept a settlement if it were not significantly less than what they stood to lose from a conviction, and if we assume that the penalty given by a judge after a conviction is the right and true penalty for their crime then this system means that they're penalized for less than they should be.
You, referring to the notion that a penalty given by a judge after going through the full legal process is correct:
That's a rather huge assumption. Especially given the prosecutor is unsure if what they did is actually a crime at all.
Me:
The prosecutor is always sure, otherwise there would be no indictment, and after a conviction the judge is also sure.
You:
There is no indictment in this case.
Me:
that was in reference to a penalty given by a judge after a conviction. There was an indictment.
Re: (Score:3)
Their profit per share for 2Q2019 was $1.99 (after setting aside a extra $2B in profit for the settlement). Given shares outstanding, that puts the profit at about $15-16B (not sure I trust the share count I have).
I don't either (Score:2)
> (not sure I trust the share count I have)
I don't trust your numbers either. All three sources I checked show earnings per share at $0.91 and earnings of $2.616B.
Re: (Score:2)
The earnings of 0.91 were AFTER the settlement, which ate "half" of their profit.
Re: (Score:3)
The principal should be that people's personal data deserves special protection and companies that fail to protect it should be dealt with fairly harshly. The goal should be restorative justice and rehabilitation.
To that end, if Facebook didn't protect personal data for years and continues to fail to do so, it should be fined 100% of its profits at least until it gets its house in order, and probably longer to provide restitution for past abuses. The money should be used to help people gain more control ove
Re: (Score:1)
Re: Three months of profit turned over (Score:2)
Solutions:
- Faceboot: smash the monopoly, statutorily ban mass snooping
- Big Brother Google: smash the monopoly, statutorily ban mass snooping
- Equifax: revoke their statutory authorization, and let the old wholesome Common Law wipe them off the face of the Earth.
Re: (Score:2)
One more thing that should be addressed: Should Facebook be put out of business for its repeated and unapologetic violations and have recently proven themselves a violation to the privacy of everyone on the internet [forbes.com].
Re: (Score:2)
There is ABSOLUTELY ZERO CHANCE that ANY government will actually completely shutdown this business and stop it operating in any way.
WILL NEVER HAPPEN.
At best they *might* legislate some severe penalties, some checks-n-balances (mostly it'll be lawmaker check-books and bigger lobbyist balances). Facebook will continue to ignore the laws, the rules, the fines,
Re: (Score:2)
And THAT, folks, is the ONLY metric which measures whether this fine is "adequate", or "a slap on the wrist".
That article is early 2018. This is 2019 (Score:2)
Did you notice either this part of the URL "2018/04/25" or the date like at the top of the article?
Re: (Score:1)
Fining an individual one months worth of salary is actually pretty significant.
Depends. If you're poor and live from paycheck to paycheck, it may be ruinous. For (e.g.) me, one month's salary would be 'meh, I got away with it effectively'. Facebook is definitely in the latter category.
Re: (Score:2)
I think the point would be the admission of guilt and wrongdoing really.
You know whats wrong the usa legal system? yeah. frigging 10 million payment and "i wasn't guilty" at the same time.
Of course the fine is tiny (Score:4, Interesting)