The easiest way would be for the SEC to get involved. They can bar people from being officers of public companies. Of course, it would be a major abuse of power and certainly unconstitutional.
>While the Republicans could push through a relatively lenient offer along partisan lines, doing so could come with heavy political costs for the agency, since it would expose them to attacks that the Republican majority is soft on misbehaving technology companies.
One thing that has changed recently in politics is that a significant portion of Republican base now considers Silicon Valley tech companies as foes. I would guess that there would actually be a lot of grassroots support for a massive fine on Facebook.
In the past, tech companies could assume that the Republican affinity for big business would shield them. Now that has gone.
>a significant portion of Republican base now considers Silicon Valley tech companies as foes
Which is hilarious, as Facebook at least is happy to take Russian money to aid Republicans. Silicon Valley is party-less, stateless. They serve only money, nothing else.
I think that’s a stretch. Mark Zuckerberg, Jeff Bezos, Jack Dorsey (Twitter), Mark Benioff (Salesforce), Tim Cook and Reed Hastings (Netflix) have all come out as rabidly pro-Democrat and have in many cases admitted to adjusting their platforms to shift public sentiment in favor of liberal politicians and liberal political causes.
Silicon Valley is a haven of meritocratic fake libertarianism. Most of the people on your list that are supposedly "rabidly pro-Democrat" have given as much, more more, to Republican pro business candidates as Democrats. I guess to you anyone who isn't sucking at the teet of Fox and Breitbart is "rabidly pro-Democrat"?
You need some pretty serious citations before I'm going to believe anything out of that last line. It sounds like an easily re-packaged and regurgitated Fox sound bite more than reality.
If you look at conservative opinion formers, like Tucker Carlson, they're talking about breaking up major firms and so on. I think the ideology that was pro-oligarchy died on both the left and right in 2008, and only the most diehard centrists are believers in it
Really? That really surprises me given the free market arguments that he and others bring. Do you happen to have a specific example of him arguing this?
> “So that’s the crux of it right there,” said Tucker. “You are hearing Google, or you have for the past ten years, Google, Facebook and a number of other companies defended on pro-market grounds,” Tucker said before making the point that a “monopoly changes the calculation completely.”
The idea is that the large tech companies are overwhelmingly staffed and lead by people who qualify as the political left by American standards. As Breitbart said, "Politics is downstream from culture." - so if you have the most important communications platforms the world has ever seen all privately owned and operated by "the left", that sounds like a bad thing if you're on "the right", because they can shape discourse however they want - either overtly by banning people for bad politics or covertly by shadowbanning and otherwise muting popular voices with undesirable opinions. Imagine if Google/Facebook/Twitter were owned by the Koch brothers and staffed by members of the Federalist Society and Heritage Foundation - people on the left would be doing the same thing Tucker Carlson is doing.
they only believe in free market as far as it benefits their corporate sponsors and private interests. As soon as it helps people that are not them (or look like them) they change their tune instantly.
Some of it also has to do with the demographics of their audience. Fox news viewers skew older[1] (65, 66 for primetime) and likely are more skeptical of technology.
There's also some "working the refs" at play here, where there's conspiracy theories swirling that conservative content gets suppressed and prominent conservative voices are "shadow-banned." There's even a grassroots effort to get popular social media sites declared the "public commons" to prevent technology companies from removing content, but that's A) likely a pipedream B) Assuming it could hold up in court, would ultimately be a massive boon to the left as it would strike a decisive legal blow against the notion of "corporate personhood" and agency of private industry. A free-marketer's footgun, if you will.
Historically, that's certainly true. But I'm not sure if modern conservatism has fully acknowledged their own ideological conflicts with free markets. It's all anecdotal, but talking to conservatives about these issues they often will say technology companies are cheating, employing anti-competitive practices, or even breaking the law and that such restrictions aren't changing market dynamics but simply punishing a few bad actors.
These two are former state AGs and IMHO their kind should be barred from being part of any important deliberative body, they are prosecutors with strictly punitive mindset in a legislative body that is also supposed to encourage entrepreneurship and look after national interests, and at any rate everyone should be wary of grandstanding and populist pronouncements by elected officials.
> their kind should be barred from being part of any important deliberative body
It is hard for me to not agree with that (at least emotionally) but I would then argue further to also limit the number of attorneys that are legislatures since as a very general rule they are trained to think a certain way. Of course this idea (your idea and my idea) is not practical and will never happen. But the truth is like with any profession if you are in it long enough you tend to think in a certain way.
I remember Obama (a trained Harvard Lawyer) thinking he could just sit down the two parties in the middle east conflict and just have them talk things out. Like it was going to be some kind of binding arbitration where both sides were reasonable and not impacted by past biases (or other influences). A totally ridiculous idea. (Not saying by the way that had anything to do with the fact that he was trained as an attorney but more that to your point a person's past can determine greatly how they think things should be handled).
Prosecutors are reinforced by winning even in the face of evidence of innocence to the contrary just like sports teams win that is the name of the game not being nice to your opponents.
I've always wondered in cases like these what they actually DO with the money after they fine huge companies like this... As in, how would they remedy the damage? Would they use it to go after companies that made money off of people's personal data or make them develop better privacy features or what else?
> I've always wondered in cases like these what they actually DO with the money after they fine huge companies like this... As in, how would they remedy the damage? Would they use it to go after companies that made money off of people's personal data or make them develop better privacy features or what else?
The answer is but a Google away: except for the CFPB, the money goes to the same place your tax checks go: into "the U.S. Treasury for general use."
I don't think that's true. The money is not destroyed, it is instead transferred to the government and can be used for various purposes.
Of course you could argue that the government could theoretically decide to arbitraly print money so any money that goes to the government is actually not worth anything but since the fed operates independently this is just not true.
The US treasury loans the cash at zero interest to the Fed (which is actually a coalition of corporate banks, not a federal government entity).
The Fed then loans that money out with interest and backed by the good faith in the us government.
This means the banks which as major holders of stock in Facebook, most of whom want Zuckerberg out as ceo, are also incentivized to pursue a bigger fine.
Sorry to be a bit harsh but those are a lot of strange claims.
The Fed comes very close to a government entity in that its board is nominated by the government and confirmed by the Senate. It is not made up of corporate banks and is definitely not a coalition of corporate banks.
I'm not sure how you get the idea that the US Treasury loans the fine to the Fed? Do you have a source for that?
And if those big banks are major stock holders of Facebook they definitely do not want fines imposed on Facebook. Loosing money is the one thing that businesses need to avoid and fines are a pretty direct way of hurting business while not being useful in any way. Just because those banks might want to see Zuckerberg go (which is not necessarily right) they do definitely not want to loose money to make that happen. Fines are also not very effective in that regard.
They want that to happen if it means they can accelerate profits plus interest on the loans faster than new fine minus $5 billion.
Fed is a corporation source, there are plenty. It's common knowledge, " the United States Court of Appeals for the Ninth Circuit stated that: "The Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations." "
Loans to the banks: "By the end of 2008, Goldman had snarfed up $34 billion in federal loans – and it was paying an interest rate of as low as just 0.01 percent for the huge cash infusion. "
I think FB is a major threat to the distribution of news that is mostly owned and controlled by the mainstream media owners.
I think this is all part of forcing FB to come to the negotiation table, and negotiate banning more independent information sources to make these fines go away.
I think that of all the news companies, Fox is probably the one that would care most, since they have the largest proportion of the audience that's only there for the daily outrage.
I would leave the thinking to journalists who dedicate their careers to uncovering the truth. Stating you believe in a conspiracy without having any evidence undermines your entire point.
FB has largely colluded with major media outlets in determining who would be "real" news. It has given the stamp of approval to most large media corporations.
Which is nonsense, I don't want it screening things. I want my family pictures and my friends thoughts and I don't care where they come from.
Banning the 737 Max from flying in the U.S. forever would be a good start, I'm thinking. It could be a decent lesson for airplane makers (and self-driving car makers) at least.
1. Execute the company (dissolve the charter)
2. throw the board collectively in jail for a time for inaction of illegal actions leading to death
3. charge all who conspired to subvert laws as a co-conspirators to premeditated murder
4. Liquidate the company and pay back shareholders not in C levels, the Board, family thereof, or people charged with aforementioned crimes
Wouldn't be the first time programmers were the only ones to do time for a company's crimes.
But when I'm asked to implement robosigning and push back now I'm the bad guy. I won't do it, but another dev did against my and the other developer's advice. He'll be fine I'm sure. No one will notice.
And it's not hard at all to see different pieces done, which individually do not make a crime. However these 10 pieces (read: Agile cards) do make illegal actions possible.
The management approved this, and the devs worked on it. The devs certainly didn't execute said code. Now, if they were discussing "this feature allows fraud but we're going to do it anyway" over jira or email, roast'em.
The government is building a case against itself for the time when they are going to fk up with all the data they have been collecting about the citizens.
$5B for FB for the leaked emails and likes? How about $50B for the leaked tax records.
This is kind of alarming to me. A fine should scale with the the greater of the harm done and the amount needed to deter the behavior. But that's not what's happening here; instead, people are proposing that the fine scale with Facebook's total revenue. Even Facebook's most ardent critics probably don't believe they derive a majority (or really even a significant amount) of revenue from the lax API controls companies like Cambridge Analytica relied on. The fine should be sufficient to ensure that nobody at Facebook thinks that being lazy about access to user profiles in their APIs is a good business decision. It should not, in effect, be a litigation of whether Facebook is on the whole a good idea.
I don't think Facebook (as constituted) is a good idea! But that doesn't mean I think the FTC should be able to fine it existentially, unless an existential fine is really what it takes to defer the specific thing they did that was unlawful. There's no evidence that $5B --- a record high fine equivalent to the entire cost of several well-known startups Facebook could have otherwise acquired rather than lighting that money on fire --- is insufficient to the task.
Agreed, it's hard to believe that if $5B isn't enough some larger amount will be, unless it's enough to completely wipe out Facebook. This has become a litigation of whether or not Facebook is a good idea, and these Senators are out for blood. Because I think they perceive that their constituency just wants to see Facebook get it, and I think their perception is correct. While I certainly don't think this is fair, or the way these regulations should be enforced, I do think that Facebook has brought this upon themselves, they've peddled their wares as the solution to so many of societies ills and people eventually woke up and realized not only were they not solving these problems, they were making them worse. Furthermore Facebook seems to have gotten stuck in a rhetorical loop wherein their response to every scandal is more of the same rhetoric about how they're building this hopefully new world, people are just sick of it, and want to see Facebook punished. I don't think these Senators are going to get what they want in this case, what they will get though is that Facebook is going to pay $5B and people are going to look back on it and think, astonishingly, that Facebook "got off easy."
What's happening here is that $5B is believed to be insufficient, and the market cap reaction to the announcement is proof of that. I'd be willing to believe that the fine deters future behavior if the market cap reacted negatively to the settlement, but celebration probably means it isn't enough
In fact the "market cap reaction" shows us nothing of the sort. A large fine was predicted long ago and has been priced into the stock for many months. The most you can say --- and it's a dubious claim still --- is that the market priced a higher fine in. But you still don't know what Facebook's market cap would have been with no fine, and so don't know how the market values this.
Equally likely, though, is that the market doesn't believe Facebook meaningfully benefited from the actions they've been sanctioned for, and that they'll simply comply going forward, making this fine a one-time event that doesn't need to be factored into Facebook's forward revenues (minus what Facebook could have done productively with the $5B that it lost).
I mean first fines pretty much have to scale with total revenue to deter behavior
second 5 billion won't even lead to an unprofitable quarter at 2018's numbers so there's a loooot of room between 5B and an existential fine, we aren't any where near the slippery part of the slope.
> I mean first fines pretty much have to scale with total revenue to deter behavior
That's only an effective approach if your goal is to cripple many of the companies that you fine. Almost no large companies on the planet have the extreme profit margins of Facebook. Alternatively to avoid that kind of damage you have to adjust the percentage scale to each individual company's profit margins (25% revenue fine for Facebook, N% for a retailer with microscopic 3% profit margins), which instantly makes the revenue approach absurd.
Slap 3M, Walmart, Caterpillar or Costco with the equivalent of a ~25% quarterly revenue fine, and you'll do severe damage to the company. A 25% quarterly fine on Walmart's revenue would nearly bankrupt them. As opposed to Facebook which has profit margins 15-20x greater than eg Costco and can more or less absorb the fine directly out of its quarterly profit.
I don't see the argument behind using fines as a means to intentionally severely damage companies, which is what huge revenue-based fines accomplish.
Fair enough I used 'total revenue' instead of total profit to make it clear which part of the paragraph is was arguing with. However it's not profit margin but overall profit: Walmart might have thin margins but they still made ~20B in profit: they too could absorb a $5B fine. Costco could eat a billion.
But purposely damaging a company is exactly what a fine is for. It's punishment and deterrent.
> That's only an effective approach if your goal is to cripple many of the companies that you fine
Yes, some companies should be crippled. With criminal sentencing, the first goal is to isolate that person from society as a punishment with reform being a second consideration. With criminals, judges or magistrates would level higher-end sentences as an example and you won't hear many people arguing against a criminal's 15 year sentence by saying it would cripple their economic output.
Society owes nothing to corporations and this "too big to fail" mentality creates a system where corporations are above ethics.
Seeing Facebook fined into to a point where they are seriously crippled as a company will make a lot of other companies change their tune, internationally, for the better.
TBTF has nothing to do with this. What's being proposed is basically the exact opposite of TBTF --- that Facebook is too big not to fine unusually.
If you believe there should be a notion of SITCs --- Systemically Important Tech Companies --- lobby to pass that law in such a way that it survives judicial review. But it can't simply be up to the FTC to make that rule up.
> That's only an effective approach if your goal is to cripple many of the companies that you fine.
Don’t screw up egregiously and repeatedly and you won’t get burnt. ¯\_(?)\_/¯
Taking the gently-gently approach with fining companies has totally failed: they simply incorporate the cost into their margins and continue on like nothing actually happened; so yes, it is time to start burning companies that don’t do the right thing.
Maybe some will fail as a result, that’s ok: simply existing is not carte balnche permission to continue existing. At least the new gap in the market will probably make room for a new company that will play by the rules.
Nobody has taken a "gently-gently" approach here. $5B is a record-setting fine, the largest in the FTC's history I believe, and situated nicely in the middle of the fines the big banks got for the 2008 crisis. I reject the premise that people are suggesting we have to be careful not to kill Facebook; that's not what's being said. What's being said is that if you're going to try to cripple Facebook, you have to have a rational basis in law for doing so.
We use percent of person's total life revenue (jail time) for non-violent crimes (theft, fraud, etc.) all the time. It's not clear why corporations should get a pass.
No, fines don't have to scale with total revenue. If most of Facebook's revenue has nothing to do with the incident the FTC is fining it for, all the fine needs to do is make that specific business activity irrationally risky to do in the future.
See, there's the problem. The FTC lacks the authority to fine Facebook for "10 years of selling ads", or really, anything outside of behavior they can prove violated Facebook's consent decree. The distinction here is behavior that we disapprove of and behavior the FTC does (or should) have the ability to sanction.
If the FTC can fine Facebook $5B† for a (comparatively) minor violation as a way of expressing the agency's disapproval for all the rest of Facebook's business practices, it can do that to anyone. It can, for instance, fine Apple tens of billions for minor, provable violations as a way of coercing them into cooperating with law enforcement to unlock phones.
Again, I do not like Facebook, broadly agree with 'idlewords testimony before the Senate today that his necktie is more tightly regulated than our industry, and want that to change. I do not think the FTC should be able to make up the rules as it goes, especially not as a way for politicians to showboat.
† or whatever you think the appropriate number is; I'm happy to stipulate that $3-5B is the appropriate range for the fine
The FTC not having the legal authority is a very different argument than your first post which just stated they shouldn't... as a principle.
As to blackmailing Apple:
while Cambridge analytical is a (maybe) minor violation the fact that it happened is again evidence of 7 years of non compliance with a previous settlement and it is a fundamental part of their business model.
I would probably have a different stance if Facebook was being fined umpteen billion for like bribing a doctor for unneeded handicap parking placards.
If the people want to elect representatives who pass a law declaring companies like Facebook systemically risky and authorizing their breakup, I'm ambivalent. What I have a real problem with is the federal government seizing on an offense that would ordinarily merit a $10MM fine (or $100MM or $5B) and ratcheting it way up as a way of signaling disapproval for actions not part of the underlying offense, which is essentially what I believe everyone advocating for higher fines is doing.
I think there's some blurriness here because people seem to believe that the violation FTC is pursuing had something to do with Facebook's whole business. That is not my understanding. As I understand it, what set FTC off here was the pattern of violations surrounding the Cambridge Analytica scandal, in which Facebook partners were given more access to user profile data than users expected or would have consented to. That's bad! But it is hard to argue, knowing a little bit about Facebook's business, that those violations were a major component of Facebook's revenue. Thus: Facebook's revenue is not the figure of interest in deriving a fine.
Facebook giving advertisers more access to user profile data than users expected is AGAIN the entire fucking point of the 2012 settlement. That Facebook was capable of giving a relatively tiny ass ad company that access is AGAIN evidence that they had been in non compliance with that settlement for 7 years.
And when selling access to user profile data is their entire value-add over any other given ad network AND rando-ass companies (which CA definitely was) can pay for data that Facebook told users was private: there is no untangling it from revenue from companies that didn't take advantage of that abuse of privacy, there is just what companies we know for sure and what companies could have.
That they did it AGAIN is the basis for there being a relatively significant fine in the first place. It does not follow that the purpose of that fine should be to cripple Facebook, not because crippling Facebook is bad, but because there is no reasonable basis in law to do so.
Again, the significance of the fine is relative to the offense, not the entity. We also don’t fine Mark Zuckerberg 10MM for being late (AGAIN) for paying parking tickets.
That they could do it again is clear evidence that they never complied.
Separately a 4x, a 20 billion dollar, fine still wouldn't cripple them.
Also I'm actually strongly for fining Zuckerberg personally 10mm for his personal traffic violations because the point of fines is punishment and deterrence and thus should be scaled to the individual.
Nobody is debating whether they complied. They didn't. They got a fine. The fine is good. What we're debating is how big the fine should be, and my argument is, the notion that the fine should scale with Facebook's overall revenue, unmoored from the specific offense, is both irrational and dangerous.
How else do fine a company for a decade of knowingly bad behavior except looking at what they afford and setting it accordingly. This wasn't a whoopsie, it was a deliberate choice made consistently for years with the knowledge and budgeting that they might get fined for it.
Also this behavior is inextricable from their overall revenue.
Also also are we back to should as opposed to the FTC's legal authority? I think it should be enough to change the entire culture of Facebook because selling user data is their business model and so anything short of changing the entire culture of Facebook will just result in selling more and more user data as soon as no one is looking. I think it should be enough to prevent Facebook from not just repeating current behavior but to prevent them from coming up with functionally identical but legally distinct behavior. I think it should be enough that Facebook management starts playing whack-a-mole with unethical behavior before the government has to play it after a decade of damage.
They absolutely do have to scale with revenue. Maybe a small fine, enough to cover API revenues, will deter them from that the very specific behaviour around API data they got fined for however it won't make them think twice about taking a chance on the next unrelated opportunity to be nefarious. A large fine will.
I'm also not sure that "scaling with the offense" makes sense -- If company A and B can do the same thing, receive equal fines, but company B can continue to exist as if nothing happened, did the fine mean anything? Would your argument in this case be that the fine should be high enough to be damaging enough to both companies, approximately equal to the social value of discouraging that behavior?
Curious especially because you said if the laws changed, you'd be ambivalent. I think there's a structural problem here, I'm not sure any amount of fining particularly will solve the real problem.
FWIW my personal opinion is the the goal should be to deter from unethical and/or (borderline) illegal activity in the future, not only that specific behaviour. Anything else turns into a game of whack-a-mole which is long term damaging to the economy and competitive environment.
This just allows corporations to compartmentalize their risks. They can put all their illegal activities in a side division, and if they don't pan out no worries since we only get fined on the revenue of the failed project.
Every single company that collects, stores and uses any personally identifiable information should be deterred from abusing their privilege of doing so.
Yes, and how does a $5B fine not accomplish that? It's not like any smaller company can look at this and say "well, the total valuation of all firms pursuing these activities is larger than the fine, so it's rational to continue doing that". By all means, fine every company that does this $5B, though.
Why won't a $5B fine deter Facebook? That's a huge amount of money, even to Facebook. More importantly: it is almost surely a giant multiple of the revenue Facebook obtained from the specific behavior that violated the consent decree.
Maybe. On the other hand, historically there have been too many 'slap on the wrist' punishments that don't even reach the total profit that was by the illegal activity....and that definitely sends the wrong message.
This is absolutely wrong. Fines scale with revenue because they are supposed to deter behavior. If I get fined $1000 the change in my behavior is different from that of a minimum wage earner and a multibillion dollar company.
FB has egregiously harmed consumers and has engaged in behavior that is criminal. In no way should they be left off the hook.
> the greater of the harm done and the amount needed to deter the behavior
Shouldn't it be the lower of the two? If deter < fine < harm, then they wont do it. And if harm < fine < deter, then they will do it but everyone comes out ahead (assuming the fine money is distributed properly).
How else do you give a sufficient deterrent if the fine doesn’t hurt and make you reconsider future actions?
A couple hundred dollar fine is not a deterrent to me speeding in my car, but multiple thousands of dollars would be.
You can absolutely make the case that 5bil is not much to Facebook, especially if it solidifies their safety going forward without any real behavioral changes / enforcement.
The problem being solved here is not "punish Facebook" but "make the tech oligopoly take the FTC seriously." The fine has to bite to achieve that goal.
I don't disagree even a little bit. My position is that this fine is of a scale that has teeth at virtually every company in America. I remain frustrated, however, that people generally believe that an existential fine is called for, since the underlying conduct was not itself existential to Facebook.
If we passed a law outlawing targeted advertisement driven by behavior tracking, and Facebook ignored that law, a $20B fine would be reasonable to me. And I'd be OK with that law!
> If we passed a law outlawing targeted advertisement driven by behavior tracking, and Facebook ignored that law, a $20B fine would be reasonable to me. And I'd be OK with that law!
When we first heard that Facebook was putting $5bn aside for this, wasn't it clearly a deliberate tactic to steer the inevitable fine, to suggest a range?
$5bn isn't pocket money, but it's hardly a serious expense for Facebook. They've [clearly] already accounted for it. It's not punitive.
Add a couple of zeros. Facebook is repeatedly at the bleeding edge of privacy invasion, acting too late to obvious evils, letting advertisers [essentially] identify people by offering such exact filters, illegally siphoning off data... Any action needs to hit Facebook hard enough that their engineers feel it and start to consider things in what they should be doing, not what they're technically able to do to churn out more cash.
The proposal from these two senators seems reasonable:
"The FTC should propose long-term limits on Facebook's collection and use of personal information. It should consider setting rules of the road on what Facebook can do with consumers' private information, such as requiring the deletion of tracking data, restricting the collection of certain types of information, curbing advertising practices, and imposing a firewall on sharing private data between different products, including Facebook's ad platform."
Placing hard limits on data collection and usage seems clearer and more workable than requiring "user consent" as we saw in the last consent decree.
Sen. Blumenthal's office seems to be one of the few that is willing to call BS on the type of shenanigans often discussed here on HN.
Why not require all their profit for the next 10 years be put into an escrow account, such that any violations in those 10 years would result in a forfeiture of those funds? Seems to be a reasonable deterrent and it drives the action in the public’s best interest.
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