What has happened?
The US Federal Trade Commission (FTC) has voted to fine Facebook $5 billion over user privacy violations in the wake of the 2018 Cambridge Analytica scandal. The fine is expected to be approved by the Justice Department making it the largest fine in the history of the FTC, surpassing the previous $22.5 million record fine against Google in 2012. Whilst Facebook are yet to comment on the matter, the weight of the fine is unlikely to be a surprise given that in April 2019, the company announced it had set aside between $3 billion and $5 billion in anticipation of FTC action.
The Media Store Take
At first glance, a $5 billion fine appears to be a significant penalty. However, given Facebook’s last quarter revenue of $15 billion and last year’s profit of $22 billion, one could assume that the tech giant are far from displeased with the outcome. This is perfectly illustrated with the company’s share price hitting the highest price in nearly a year after the fine was announced. Given that the core function of such fines are to provide negative consequences for poor behaviour, the FTC could certainly be criticised for failing to adequately reprimand Facebook . Despite this, few have managed to quantify the impact that these user-privacy breaches have had on consumer and advertiser trust in the brand and platforms it operates. With Roy Morgan’s latest Net Trust Survey listing Facebook as Australia’s “most distrusted media brand” and the industry eagerly awaiting the outcomes of ACCC platforms enquiry, it’s clear that Facebook will need to do more than pay a one off fine to win back the trust of both consumers and advertisers.