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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

#81

Post by im3w1l »

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 greater of the harm done and the amount needed to deter the behavior

Shouldn't it be the lower of the two? If deter < fine < harm, then they wont do it. And if harm < fine < deter, then they will do it but everyone comes out ahead (assuming the fine money is distributed properly).

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

#82

Post by tptacek »

FridgeSeal wrote: post #66
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. Don’t screw up egregiously and repeatedly and you won’t get burnt. ¯\_(ツ)\_/¯ Taking the gently-gently approach with fining companies has totally failed: they simply incorporate the cost into their margins and continue on like nothing actually happened; so yes, it is time to start burning companies that don’t do the ri…

Nobody has taken a "gently-gently" approach here. $5B is a record-setting fine, the largest in the FTC's history I believe, and situated nicely in the middle of the fines the big banks got for the 2008 crisis. I reject the premise that people are suggesting we have to be careful not to kill Facebook; that's not what's being said. What's being said is that if you're going to try to cripple Facebook, you have to have a rational basis in law for doing so.

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

#83

Post by chki »

yeahitslikethat wrote: post #62
chki wrote: post #32

Earlier quoted context omitted.

I don't think that's true. The money is not destroyed, it is instead transferred to the government and can be used for various purposes. Of course you could argue that the government could theoretically decide to arbitraly print money so any money that goes to the government is actually not worth anything but since the fed operates independently this is just not true.

The US treasury loans the cash at zero interest to the Fed (which is actually a coalition of corporate banks, not a federal government entity). The Fed then loans that money out with interest and backed by the good faith in the us government. This means the banks which as major holders of stock in Facebook, most of whom want Zuckerberg out as ceo, are also incentivized to pursue a bigger fine.

Sorry to be a bit harsh but those are a lot of strange claims.

The Fed comes very close to a government entity in that its board is nominated by the government and confirmed by the Senate. It is not made up of corporate banks and is definitely not a coalition of corporate banks.

I'm not sure how you get the idea that the US Treasury loans the fine to the Fed? Do you have a source for that?

And if those big banks are major stock holders of Facebook they definitely do not want fines imposed on Facebook. Loosing money is the one thing that businesses need to avoid and fines are a pretty direct way of hurting business while not being useful in any way. Just because those banks might want to see Zuckerberg go (which is not necessarily right) they do definitely not want to loose money to make that happen. Fines are also not very effective in that regard.

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

#84

Post by Avshalom »

tptacek wrote: post #78
Avshalom wrote: post #73

Earlier quoted context omitted.

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 agenc…

The FTC not having the legal authority is a very different argument than your first post which just stated they shouldn't... as a principle.

As to blackmailing Apple:

while Cambridge analytical is a (maybe) minor violation the fact that it happened is again evidence of 7 years of non compliance with a previous settlement and it is a fundamental part of their business model.

I would probably have a different stance if Facebook was being fined umpteen billion for like bribing a doctor for unneeded handicap parking placards.

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

#85

Post by tptacek »

Avshalom wrote: post #84
tptacek wrote: post #78

Earlier quoted context omitted.

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 agenc…

The FTC not having the legal authority is a very different argument than your first post which just stated they shouldn't... as a principle. As to blackmailing Apple: while Cambridge analytical is a (maybe) minor violation the fact that it happened is again evidence of 7 years of non compliance with a previous settlement and it is a fundamental part of their business model. I would probably have a different stance if…

If the people want to elect representatives who pass a law declaring companies like Facebook systemically risky and authorizing their breakup, I'm ambivalent. What I have a real problem with is the federal government seizing on an offense that would ordinarily merit a $10MM fine (or $100MM or $5B) and ratcheting it way up as a way of signaling disapproval for actions not part of the underlying offense, which is essentially what I believe everyone advocating for higher fines is doing.

I think there's some blurriness here because people seem to believe that the violation FTC is pursuing had something to do with Facebook's whole business. That is not my understanding. As I understand it, what set FTC off here was the pattern of violations surrounding the Cambridge Analytica scandal, in which Facebook partners were given more access to user profile data than users expected or would have consented to. That's bad! But it is hard to argue, knowing a little bit about Facebook's business, that those violations were a major component of Facebook's revenue. Thus: Facebook's revenue is not the figure of interest in deriving a fine.

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

#86

Post by Avshalom »

tptacek wrote: post #85
Avshalom wrote: post #84

Earlier quoted context omitted.

The FTC not having the legal authority is a very different argument than your first post which just stated they shouldn't... as a principle. As to blackmailing Apple: while Cambridge analytical is a (maybe) minor violation the fact that it happened is again evidence of 7 years of non compliance with a previous settlement and it is a fundamental part of their business model. I would probably have a different stance if…

If the people want to elect representatives who pass a law declaring companies like Facebook systemically risky and authorizing their breakup, I'm ambivalent. What I have a real problem with is the federal government seizing on an offense that would ordinarily merit a $10MM fine (or $100MM or $5B) and ratcheting it way up as a way of signaling disapproval for actions not part of the underlying offense, which is essen…

Facebook giving advertisers more access to user profile data than users expected is AGAIN the entire fucking point of the 2012 settlement. That Facebook was capable of giving a relatively tiny ass ad company that access is AGAIN evidence that they had been in non compliance with that settlement for 7 years.

And when selling access to user profile data is their entire value-add over any other given ad network AND rando-ass companies (which CA definitely was) can pay for data that Facebook told users was private: there is no untangling it from revenue from companies that didn't take advantage of that abuse of privacy, there is just what companies we know for sure and what companies could have.

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

#87

Post by tptacek »

Avshalom wrote: post #86
tptacek wrote: post #85

Earlier quoted context omitted.

If the people want to elect representatives who pass a law declaring companies like Facebook systemically risky and authorizing their breakup, I'm ambivalent. What I have a real problem with is the federal government seizing on an offense that would ordinarily merit a $10MM fine (or $100MM or $5B) and ratcheting it way up as a way of signaling disapproval for actions not part of the underlying offense, which is essen…

Facebook giving advertisers more access to user profile data than users expected is AGAIN the entire fucking point of the 2012 settlement. That Facebook was capable of giving a relatively tiny ass ad company that access is AGAIN evidence that they had been in non compliance with that settlement for 7 years. And when selling access to user profile data is their entire value-add over any other given ad network AND rand…

That they did it AGAIN is the basis for there being a relatively significant fine in the first place. It does not follow that the purpose of that fine should be to cripple Facebook, not because crippling Facebook is bad, but because there is no reasonable basis in law to do so.

Again, the significance of the fine is relative to the offense, not the entity. We also don’t fine Mark Zuckerberg 10MM for being late (AGAIN) for paying parking tickets.

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

#88

Post by etaioinshrdlu »

rcar wrote: post #46
etaioinshrdlu wrote: post #43

Earlier quoted context omitted.

The knee-jerk is strong with this one. Sometimes glad we don't have direct democracy or mob rule.

I believe that you missed the /s implied at the end.

Yeah, I actually thought it was meant literally...

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

#89

Post by Avshalom »

tptacek wrote: post #87
Avshalom wrote: post #86

Earlier quoted context omitted.

Facebook giving advertisers more access to user profile data than users expected is AGAIN the entire fucking point of the 2012 settlement. That Facebook was capable of giving a relatively tiny ass ad company that access is AGAIN evidence that they had been in non compliance with that settlement for 7 years. And when selling access to user profile data is their entire value-add over any other given ad network AND rand…

That they did it AGAIN is the basis for there being a relatively significant fine in the first place. It does not follow that the purpose of that fine should be to cripple Facebook, not because crippling Facebook is bad, but because there is no reasonable basis in law to do so. Again, the significance of the fine is relative to the offense, not the entity. We also don’t fine Mark Zuckerberg 10MM for being late (AGAIN…

That they could do it again is clear evidence that they never complied.

Separately a 4x, a 20 billion dollar, fine still wouldn't cripple them.

Also I'm actually strongly for fining Zuckerberg personally 10mm for his personal traffic violations because the point of fines is punishment and deterrence and thus should be scaled to the individual.

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

#90

Post by yeahitslikethat »

chki wrote: post #83
yeahitslikethat wrote: post #62

Earlier quoted context omitted.

The US treasury loans the cash at zero interest to the Fed (which is actually a coalition of corporate banks, not a federal government entity). The Fed then loans that money out with interest and backed by the good faith in the us government. This means the banks which as major holders of stock in Facebook, most of whom want Zuckerberg out as ceo, are also incentivized to pursue a bigger fine.

Sorry to be a bit harsh but those are a lot of strange claims. The Fed comes very close to a government entity in that its board is nominated by the government and confirmed by the Senate. It is not made up of corporate banks and is definitely not a coalition of corporate banks. I'm not sure how you get the idea that the US Treasury loans the fine to the Fed? Do you have a source for that? And if those big banks are…

They want that to happen if it means they can accelerate profits plus interest on the loans faster than new fine minus $5 billion.

Fed is a corporation source, there are plenty. It's common knowledge, " the United States Court of Appeals for the Ninth Circuit stated that: "The Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations." "

Loans to the banks: "By the end of 2008, Goldman had snarfed up $34 billion in federal loans – and it was paying an interest rate of as low as just 0.01 percent for the huge cash infusion. "

https://www.rollingstone.com/politics/politics-news/secrets-...

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