The US government will levy a staggering $ 5 billion fine on Facebook to violate user privacy arising from the Cambridge Analytica scandal.
Facebook investors celebrate.
Wall Street pushed the value of Facebook shares up to nearly $ 205, after news of the upcoming Federal Trade Commission penalty arose this afternoon via the Wall Street Journal. Another way of expressing it: Facebook investors were most optimistic for the company a year ago when they believed the shares were worth $ 210. But they feel very good about it now too.
The most obvious reason for the interruption is that Facebook had told investors to pay a fine of up to $ 5 billion, and the company had set aside $ 3 billion to pay the fine in the spring.
Then there is the fact that while $ 5 billion is a very large number and a giant for an FTC fin ̵
The company posted a profit of $ 22.1 billion last year. This year, analysts also believe it will make more than $ 19 billion, even after fining it. And by 2021, RBC analyst Mark Mahaney estimates that Facebook should earn more than $ 35 billion a year.
But the biggest reason for optimism – from the Wall Street perspective – is that the federal government does not seem to move towards any kind of regulation that would meaningfully change how Facebook operates its business, due to the provision of detailed information about their users in targeted advertising.
From the New York Times: "In addition to the fine, Facebook agreed on a more comprehensive overview of how it handles user data, according to [sources]. But none of the terms of the settlement will limit Facebook's ability to collect and share data with third party. "
That is, Facebook needs to put more lawyers and other conforming experts to work when the new FTC rules are official, but Facebook can hire lots of compliance experts and lawyers. Facebook's advertising machine, which pays for them, will run full steam ahead.
It is still possible that we will see greater implications of the revelations about Cambridge Analytica, the computer company that could have my data on dozens of millions of Facebook users without their consent. Facebook will continue to face review outside America. And in the US, the recurring criticism from politicians receives over the political spectrum: Thursday, for example, both President Donald Trump and the Federal Reserve Chair Jerome Powell attacked Facebook's plan to create their own digital currency.
And Friday after the news of the FTC's fine offense, later Mark Warner (D-VA) said that an economic penalty was not close enough: "Given Facebook's repeated breaches of privacy, it is obvious that fundamental Structural reforms are required. With the FTC either unable or unwilling to impose reasonable safeguards to ensure that the user's privacy and data are protected, it is time for Congress to act. "Facebook itself has said it welcomes additional regulation (which again is the one in one position to handle in view of their enormous resources). And the company has also said it is working to reorientate itself to focus on private messaging between its users – a move that it never links directly to Cambridge Analytica and other privacy scandals that have dogged it, but we can connect the dots ourselves.