By CultureBanx Team
Facebook expects the FTC fine to be between $3B - $5B
Cambridge Analytica exploited Facebook’s data of black adults its largest user group
Social media company Facebook (FB +1.53%) has already prepared for what could be the biggest civil fine levied by the U.S. government in history and set aside $3 billion dollars. All of this stems from the Cambridge Analytica fallout, the data analytics firm which exploited Facebook’s data of black adults its largest user group and some 87 million Americans. Is a fine in the low billions of dollars just a slap on the wrist for a company that had $41.1 billion in cash and marketable securities at the end of 2018?
Why This Matters: As the primary custodians of users social media data, the U.S. Federal Trade Commission has been investigating whether Facebook’s data sharing violated a 2011 agreement to safeguard user privacy. When the company reported its Q1 earnings last month they cited the settlement accrual for a potential fine and accounted for a $3 billion loss but noted it could rise as high as $5 billion, even though negotiations with the FTC are ongoing.
As the Washington Post noted a “penalty in the proposed range would mark the largest civil fine ever imposed by the FTC, far surpassing the $22.5 million paid by Google (GOOG +1.96%) in 2012 for misrepresenting privacy assurances to some users.” Facebook brought in $15.1 billion in revenues in Q1 2019, leaving many investors unbothered by the $3 billion write off, after initially being worried about the outcome of the long federal probe.
When it comes to data breaches they are often more problematic for people of color living on fixed or low incomes, or from other marginalized communities. The black community is very valuable to Facebook, with 70% of adults users in this demographic being on the platform, according to Pew Research.
Situational Awareness: It could be too soon to write off Facebook’s regulatory issues since they are facing numerous investigations in Europe, Australia, Canada and the UK. We can also look at Facebook’s lack of diversity as being part of the problem and how they ended up in this mess to begin with. The social media giant’s workforce and leadership is only 3% black and this continued lack of diversity at Facebook hinders it from identifying ways their product might harm certain customers.
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