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Two senators say a $5B fine isn’t enough to punish Facebook

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Re: Two senators say a $5B fine isn’t enough to punish Facebook

#71

Post by tptacek »

jachee wrote: post #69
tptacek wrote: post #57

Earlier quoted context omitted.

Sure! Facebook makes more money managing private information than virtually any other company. What's the larger company they'd need to deter?

Every single company that collects, stores and uses any personally identifiable information should be deterred from abusing their privilege of doing so.

Yes, and how does a $5B fine not accomplish that? It's not like any smaller company can look at this and say "well, the total valuation of all firms pursuing these activities is larger than the fine, so it's rational to continue doing that". By all means, fine every company that does this $5B, though.

Re: Two senators say a $5B fine isn’t enough to punish Facebook

#72

Post by tptacek »

TAForObvReasons wrote: post #45
tptacek wrote: post #37

This is kind of alarming to me. A fine should scale with the the greater of the harm done and the amount needed to deter the behavior. But that's not what's happening here; instead, people are proposing that the fine scale with Facebook's total revenue. Even Facebook's most ardent critics probably don't believe they derive a majority (or really even a significant amount) of revenue from the lax API controls companies…

> the amount needed to deter the behavior What's happening here is that $5B is believed to be insufficient, and the market cap reaction to the announcement is proof of that. I'd be willing to believe that the fine deters future behavior if the market cap reacted negatively to the settlement, but celebration probably means it isn't enough

In fact the "market cap reaction" shows us nothing of the sort. A large fine was predicted long ago and has been priced into the stock for many months. The most you can say --- and it's a dubious claim still --- is that the market priced a higher fine in. But you still don't know what Facebook's market cap would have been with no fine, and so don't know how the market values this.

Equally likely, though, is that the market doesn't believe Facebook meaningfully benefited from the actions they've been sanctioned for, and that they'll simply comply going forward, making this fine a one-time event that doesn't need to be factored into Facebook's forward revenues (minus what Facebook could have done productively with the $5B that it lost).

Re: Two senators say a $5B fine isn’t enough to punish Facebook

#73

Post by Avshalom »

tptacek wrote: post #70
Avshalom wrote: post #49

Earlier quoted context omitted.

I mean first fines pretty much have to scale with total revenue to deter behavior second 5 billion won't even lead to an unprofitable quarter at 2018's numbers so there's a loooot of room between 5B and an existential fine, we aren't any where near the slippery part of the slope.

No, fines don't have to scale with total revenue. If most of Facebook's revenue has nothing to do with the incident the FTC is fining it for, all the fine needs to do is make that specific business activity irrationally risky to do in the future.

that specific business activity is 7 years of non-compliance on top of however many years they had no actual user privacy before their 2012 agreement.

That specific business activity is selling information to advertisers, which is their entire business model.

So scale the fine to make 10 years of selling ads irrationally risky? I'm okay with that.

Re: Two senators say a $5B fine isn’t enough to punish Facebook

#74

Post by muckrakerz »

tptacek wrote: post #37

This is kind of alarming to me. A fine should scale with the the greater of the harm done and the amount needed to deter the behavior. But that's not what's happening here; instead, people are proposing that the fine scale with Facebook's total revenue. Even Facebook's most ardent critics probably don't believe they derive a majority (or really even a significant amount) of revenue from the lax API controls companies…

This is absolutely wrong. Fines scale with revenue because they are supposed to deter behavior. If I get fined $1000 the change in my behavior is different from that of a minimum wage earner and a multibillion dollar company.

FB has egregiously harmed consumers and has engaged in behavior that is criminal. In no way should they be left off the hook.

Re: Two senators say a $5B fine isn’t enough to punish Facebook

#75

Post by muckrakerz »

salimmadjd wrote: post #26

my cynical side says there is more to this. I think FB is a major threat to the distribution of news that is mostly owned and controlled by the mainstream media owners. I think this is all part of forcing FB to come to the negotiation table, and negotiate banning more independent information sources to make these fines go away.

FB has largely colluded with major media outlets in determining who would be "real" news. It has given the stamp of approval to most large media corporations.

Which is nonsense, I don't want it screening things. I want my family pictures and my friends thoughts and I don't care where they come from.

Re: Two senators say a $5B fine isn’t enough to punish Facebook

#77

Post by jseliger »

muckrakerz wrote: post #74
tptacek wrote: post #37

This is kind of alarming to me. A fine should scale with the the greater of the harm done and the amount needed to deter the behavior. But that's not what's happening here; instead, people are proposing that the fine scale with Facebook's total revenue. Even Facebook's most ardent critics probably don't believe they derive a majority (or really even a significant amount) of revenue from the lax API controls companies…

This is absolutely wrong. Fines scale with revenue because they are supposed to deter behavior. If I get fined $1000 the change in my behavior is different from that of a minimum wage earner and a multibillion dollar company. FB has egregiously harmed consumers and has engaged in behavior that is criminal. In no way should they be left off the hook.

FB has egregiously harmed consumers

If that were true, you'd see consumers quitting en masse—yet that's not what we see, no? https://jakeseliger.com/2018/11/14/is-there-an-actual-facebo...

Re: Two senators say a $5B fine isn’t enough to punish Facebook

#78

Post by tptacek »

Avshalom wrote: post #73
tptacek wrote: post #70

Earlier quoted context omitted.

No, fines don't have to scale with total revenue. If most of Facebook's revenue has nothing to do with the incident the FTC is fining it for, all the fine needs to do is make that specific business activity irrationally risky to do in the future.

that specific business activity is 7 years of non-compliance on top of however many years they had no actual user privacy before their 2012 agreement. That specific business activity is selling information to advertisers, which is their entire business model. So scale the fine to make 10 years of selling ads irrationally risky? I'm okay with that.

See, there's the problem. The FTC lacks the authority to fine Facebook for "10 years of selling ads", or really, anything outside of behavior they can prove violated Facebook's consent decree. The distinction here is behavior that we disapprove of and behavior the FTC does (or should) have the ability to sanction.

If the FTC can fine Facebook $5B† for a (comparatively) minor violation as a way of expressing the agency's disapproval for all the rest of Facebook's business practices, it can do that to anyone. It can, for instance, fine Apple tens of billions for minor, provable violations as a way of coercing them into cooperating with law enforcement to unlock phones.

Again, I do not like Facebook, broadly agree with 'idlewords testimony before the Senate today that his necktie is more tightly regulated than our industry, and want that to change. I do not think the FTC should be able to make up the rules as it goes, especially not as a way for politicians to showboat.

† or whatever you think the appropriate number is; I'm happy to stipulate that $3-5B is the appropriate range for the fine

Re: Two senators say a $5B fine isn’t enough to punish Facebook

#79

Post by 3xblah »

Here is the letter.

https://www.blumenthal.senate.gov/imo/media/doc/5.6.19_Lette...

The proposal from these two senators seems reasonable:

"The FTC should propose long-term limits on Facebook's collection and use of personal information. It should consider setting rules of the road on what Facebook can do with consumers' private information, such as requiring the deletion of tracking data, restricting the collection of certain types of information, curbing advertising practices, and imposing a firewall on sharing private data between different products, including Facebook's ad platform."

Placing hard limits on data collection and usage seems clearer and more workable than requiring "user consent" as we saw in the last consent decree.

Sen. Blumenthal's office seems to be one of the few that is willing to call BS on the type of shenanigans often discussed here on HN.

https://www.blumenthal.senate.gov/imo/media/doc/01.31.2018%2...

Re: Two senators say a $5B fine isn’t enough to punish Facebook

#80

Post by tptacek »

stevenjohns wrote: post #63
adventured wrote: post #53

Earlier quoted context omitted.

> I mean first fines pretty much have to scale with total revenue to deter behavior That's only an effective approach if your goal is to cripple many of the companies that you fine. Almost no large companies on the planet have the extreme profit margins of Facebook. Alternatively to avoid that kind of damage you have to adjust the percentage scale to each individual company's profit margins (25% revenue fine for Face…

> That's only an effective approach if your goal is to cripple many of the companies that you fine Yes, some companies should be crippled. With criminal sentencing, the first goal is to isolate that person from society as a punishment with reform being a second consideration. With criminals, judges or magistrates would level higher-end sentences as an example and you won't hear many people arguing against a criminal'…

TBTF has nothing to do with this. What's being proposed is basically the exact opposite of TBTF --- that Facebook is too big not to fine unusually.

If you believe there should be a notion of SITCs --- Systemically Important Tech Companies --- lobby to pass that law in such a way that it survives judicial review. But it can't simply be up to the FTC to make that rule up.

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