Why it matters: Facebook, a company that made $55 billion in revenue last year, is set to receive a hefty fine from the FTC as early as this Wednesday, when it will report its earnings for Q2 2019. The company is apparently too big to fail, which is why the underfunded agency has settled for less than what it should have -- highlighting its inability to properly punish tech giants.
Earlier this month, news broke that Facebook had reached an agreement with the FTC to pay $5 billion for its history of privacy and data breaches. It's the biggest fine the agency has fired at a tech company (by far), but everyone from critics to lawmakers have been questioning its effect on the company's bottom line and its ability to deter others. Even more so after Facebook's value shot up as a result of the news, negating the effect of the punitive action and even making it richer as a result.
Now, a new report from The Washington Post reveals a disturbing tale of an agency that was in an excellent position to set a precedent and deter other companies from being as careless as Facebook, but then it didn't. The FTC is said to finalize the settlement for the 16-month investigation in the next few days, with Facebook planning to form a specialized team focused on privacy oversight.
Apparently, the agency had initially hoped to slam Facebook with a much bigger fine, in the tens of billions of dollars -- more comparable with its annual turnover in 2018. It also would've liked to hold Zuckerberg accountable for his mistakes, especially as his company's shareholders want him replaced but are seemingly unable to do so.
WP says Facebook's team of lawyers vehemently opposed the FTC's proposal to place Zuckerberg under orders, going to great lengths to protect him from being singled out by the agency, who wanted to call him out for his public statements on privacy and how Facebook would deliver that to its users.
The company's legal team was prepared to go to court to protect the CEO, and the Commission feared it lacked the funding to take on the social media giant, so it settled for less as a compromise. In the meantime, Facebook remains a social monopoly of sorts and is fighting for a chance to launch Libra, its very own digital currency.