One question that inevitably arises after news of yet another Facebook misdeed is “How on earth did they think they could get away with that?” Why, for example, would Facebook executives agree to a privacy settlement in 2012 with the Federal Trade Commission and then go on about their business as if it was merely advisory, a yellow light they could choose to run at any time? How could they all but ignore the use of its platforms to manipulate the 2016 U.S. presidential election, not to mention turning a blind eye to how WhatsApp is used to stir up long-standing ethnic hatreds elsewhere? Why would they turn around and debut half-baked plans for their own cryptocurrency after so many scandals?
Here’s a thought: Facebook executives — starting with founder and chief executive Mark Zuckerberg — think they can get away with this stuff because they’ve not only gotten away with it before, they continue to do so.
That’s a major takeaway from the FTC’s record-breaking $5 billion settlement with the tech giant for violating that 2012 agreement. The details were revealed at a Wednesday morning news conference — a news conference that took place at the same time ormer special counsel Robert S. Mueller III was testifying before the House Judiciary Committee.
In the agreement, Facebook, in addition to paying that monster-sounding fine, also agreed to follow a host of privacy guidelines. They include running privacy reviews on new products and initiatives before debuting them to the public and setting up an independent privacy review committee as part of its board of directors. In addition, Zuckerberg will need to file and sign off on privacy reports filed quarterly with the FTC, and he can be held personally liable if they are found to be less than accurate.
That may sound tough, but whether it’s actually tough is another matter entirely. The $5 billion penalty, issued for violations of that 2012 consent agreement, is a mere fraction of the company’s revenue, which totaled nearly $17 billion in the second quarter alone. In fact, it could be chalked off as a cost of doing business. As FTC Commissioner Rohit Chopra, who did not vote for the settlement, pointed out in his dissent, the behavior in question allowed Facebook to achieve the platform advertising dominance it now enjoys, and this agreement does nothing to change that. It doesn’t make significant changes to the company’s business model, which depends on mass surveillance of its users for advertising purposes.
In other words, the incentive system that led to all those privacy violations remains the same as it ever was. The privacy guidelines aren’t chopped liver, but they only amount to so much virtual paperwork. As Chopra put it, “The order allows Facebook to decide for itself how much information it can harvest from its users and what it can do with that information, as long as it creates a paper trail.”
There are other concerns as well. While the majority voting in favor of the settlement (all the Republican commissioners) said they wanted to avoid a court battle that would have potentially resulted in defeat, the other dissenter (also a Democrat), Rebecca Kelly Slaughter, pointed out that a court case, regardless of the outcome, would have resulted in a public hearing where “documents and testimony can be compelled.” Translation: The public might find out a few things. Now they won’t. The two dissenting commissioners also objected to the agreement’s broad immunity that appears to let Facebook off scot-free for privacy violations that occurred before the settlement — such as, say, when the company asked users to hand over their phone numbers claiming they would enhance security, yet somehow certain advertisers were able to access those numbers.
As Jeff Hauser, executive director of the Revolving Door Project, told me, “The biggest story from this settlement is that the public has no sense of the breadth of Facebook’s misdeeds for which they have a purchased a `get out of meaningful accountability relatively cheaply’ card.” Late Wednesday, Facebook announced those second-quarter earnings (better than expected) — and the fact the FTC had opened an antitrust investigation into the company. Its share price went up in after-hours trading.
One doesn’t need to be a cynic to suspect this is not the last we will hear of Facebook behaving badly. If there is one thing we’ve learned about Facebook over the past several years, its executives will forever succumb to the temptation to skirt and ignore the rules when it comes to making a buck. The company will almost certainly continue to do that until the day it is made to account in a meaningful way. That day was not Wednesday.