After months of investigation following Facebook’s 2018 Cambridge Analytica scandal, the Federal Trade Commission (FTC) decided to slap the company with US$5 billion (£4 billion; RM20.5 billion) fine – the largest ever imposed by the FTC against a tech company. Yet, the punishment was like a mosquito bite to the company.
In fact, the punishment was such a joke that the Facebook shares jumped instead of sinking, after the news exploded. The FB stock celebrated the US$5 billion fine by adding US$3.64 (1.81%) at the end of the trading day, pushing the stock price to US$204.87 a share. The company’s market value is now a whopping US$584.8 billion.
Yes, for most of the people or even companies, US$5 billion seems like a lot of money. The FTC, which began probing Facebook in March 2018 after it was revealed that Cambridge Analytica had improperly accessed the data of 87 million Facebook users, was expected to teach the tech giant a lesson it would not forget. Instead, Facebook is given a slap on the wrist.
Investors are breathing a sigh of relief that the settlement – a record breaking US$5 billion – isn’t as bad as they had thought. If there’s any lesson to be learned from the FTC punishment, it has to be that Mark Zuckerberg can basically get away with anything, including murder – figuratively speaking. The CEO if Facebook now probably feels like President Trump.
During the 2016 presidential campaign, Donald Trump famously said that he could shoot someone on Fifth Avenue in New York and “wouldn’t lose any votes.” Similarly, after the announcement that Facebook will have to pay US$5 billion fine, Zuckerberg probably thinks he’s untouchable and invincible because he could use money to fix all types of problem – including murder.
It’s not hard to understand why Facebook stock price flies immediately after the FTC’s settlement. The company’s advertising revenue for the first quarter of 2019 ended March was US$15 billion. So, the US$5 billion penalty is equivalent to merely one month of the company’s revenue. The fine is just a drop in the ocean compared to the amount of cash Facebook generates.
In the same breath, Zuckerberg can afford to laugh at the pathetic punishment announced by the FTC. The billionaire is worth US$76 billion, according to Forbes. Even if he has to pay the US$5 billion fine from his own pocket, he won’t feel a pinch. Now that he knows the worst FTC could do with Facebook, he might not hold back and might continue breaking the law.
In the wake of the Cambridge Analytica scandal last year, it was also subsequently revealed that the Zuckerberg company was willing to do anything for growth – even if Facebook could get people killed. The greed of the company was exposed when an explosive memo – titled “The Ugly” – was leaked, which originally made its way to the company’s employees on June 18, 2016.
Facebook VP Andrew “Boz” Bosworth, one of Zuckerberg’s most trusted lieutenants, wrote – “We connect people. Period. That’s why all the work we do in growth is justified. All the questionable contact importing practices. All the subtle language that helps people stay searchable by friends. All of the work we do to bring more communication in. The work we will likely have to do in China some day. All of it.”
The mind-boggling memo continues – “So we connect more people. That can be bad if they make it negative. Maybe it costs someone a life by exposing someone to bullies. Maybe someone dies in a terrorist attack coordinated on our tools. The ugly truth is that we believe in connecting people so deeply that anything that allows us to connect more people more often is *de facto* good.”
Interestingly, Zuckerberg used to say that – “The biggest risk is not taking any risk. In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” He also popularly shared his wisdom – “Move fast and break things. Unless you are breaking stuff you are not moving fast enough.”
One of the reasons why the US$5 billion fine was an insult to the intelligence of the people is the fact that Facebook actually knew about the problems related to Cambridge Analytica as far back as 2015, but the company chose to close one eye – according to court filings. After the scandal, Facebook also admitted of separately collected data on most of its 2-billion users.
The penalty of US$5 billion represents less than 1% of Facebook’s US$584 billion market capitalization. And it’s less than 7% of Mark Zuckerberg’s net worth. In other words, if Facebook has US$580 bucks, the company would lose less than a buck. And if Zuckerberg is forced to pay, he would get some loose change after paying 7 bucks from his pocket. What a joke!!!
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July 14th, 2019 by financetwitter
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