Mark Zuckerberg Survived Congress. Now Facebook Has to Survi
During almost ten hours of hearings this week, Facebook CEO Mark Zuckerberg faced questions from nearly 100 members of Congress. And more than a dozen of them brought up the Federal Trade Commission. While questions about that agency may not have made for the sexiest soundbites, its actions may prove to be one of the most important factors in whether Congress actually regulates Big Tech, or just continues to talk about doing so.
The FTC is more of a law enforcement agency than a rule-making one, and one of its primary mandates is protecting consumers from unfair and deceptive practices. Following revelations about Cambridge Analytica, a political marketing firm that improperly obtained personal information from approximately 87 million Facebook user profiles, the FTC announced that it was opening an investigation into Facebook#8217s privacy practices. Tom Pahl, the acting director of the FTC#8217s Bureau of Consumer Protection, said in a statement that the agency is #8220firmly and fully committed to using all of its tools to protect the privacy of consumers.#8221
This is a big deal mdash the company#8217s stock took a hit as reports of the investigation surfaced mdash in part because Facebook has been in the agency#8217s sights before. In 2012, the social media behemoth reached a final settlement with the FTC over charges that the company previously deceived consumers by saying their information would remain private ldquoand then repeatedly allowing it to be shared and made public.rdquo The complaint specifically references the fact that users#8217 data could be obtained by third-party app developers in ways that could have caught those users unaware, which is awfully reminiscent of Facebook#8217s current fiasco.
As part of an agreement known as a consent decree, Facebook promised to institute and maintain a comprehensive privacy program. William Kovacic, who was an FTC commissioner until 2011 and is now a professor at the George Washington University School of Law, says the agency viewed that privacy program as #8220a flagship#8221 designed to show how serious the FTC was about making broad protections a rule of the road for the entire tech sector. ldquoIf therersquos a violation and you donrsquot do something, your flagship policy is in jeopardy,rdquo Kovacic says. ldquoThe stakes here are huge.#8221
So are the potential fines for violating that consent decree, one of the #8220tools#8221 the FTC has at its disposal. Each violation could merit a fine of more than $40,000, per user, per day. Multiply that by the 87 million users affected by the Cambridge Analytica leak, and theoretical fines quickly jump into the trillions mdash a potentially devastating figure even for Facebook, which has a market capitalization of about $480 billion as of this writing. Though Kovacic says it#8217s unlikely the FTC would ever pursue such a ruinous amount, it could be a bargaining chip. The question, he says, is how big of a number would show that the FTC is very serious about its policy and its decree. #8220It#8217s hard to imagine the commission would walk away without a lot of zeroes,#8221 he says.