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With a $5 billion fine, the pain may just be beginning for Facebook

Lionel Bonaventure/AFP/Getty Images/File

LONDON — After Facebook was hit Friday with a fine of around $5 billion for privacy violations, critics immediately said it escaped largely unscathed: The settlement neither bruised its bottom line nor severely restricted its ability to collect people’s data.

Yet even if the Silicon Valley company dodged that bullet, its pain was just beginning.

Regulators and lawmakers in Washington, Europe, and in countries including Canada have begun multiple investigations and are proposing new restrictions on Facebook that will probably embroil it in policy debates and legal wrangling for years to come.

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And in some of these places, the authorities are increasingly coordinating to form a more united front against the company.

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In the United States, the potential for a federal antitrust investigation looms, several state attorneys general have initiated investigations, and members of Congress are considering a privacy law and other restrictions. Not to mention that President Trump has turned up the heat on Facebook and other tech behemoths, including on Friday, when he said the platforms were “dishonest” and “crooked” and that “something is going to be done.”

On Tuesday, the House Judiciary subcommittee on antitrust plans to hold a hearing featuring executives from Facebook, Apple, Amazon, and Google about the power of the companies. That same day, the Senate Banking Committee is scheduled to hear from David Marcus, a top Facebook executive, on its new Libra cryptocurrency project, which lawmakers have criticized.

In Europe, Facebook faces sanctions for breaking strict privacy laws, and the European Commission is in the early stages of an antitrust investigation. In Britain, where a parliamentary report this year labeled Facebook “digital gangsters,” officials are writing new competition and social media laws, and regulators have started a broad antitrust inquiry targeted at Facebook and Google. France is considering new penalties against the social network if hate speech and other harmful content is not removed within 24 hours.

And Australia, Japan, India, New Zealand, and Singapore are either considering or have passed new rules for big Internet platforms. Since 2016, at least 43 countries have passed or introduced regulations targeting social media and the spread of misinformation, according to Oxford University researchers.

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“The debate has shifted,” said Tommaso Valletti, a professor at Imperial College Business School and chief economist for the European Commission’s antitrust division. “The right question is not whether to intervene, but what kind of intervention do we need.”

For Facebook, these global fights could sting more than the FTC’s $5 billion fine. While that amount would be a record penalty by the federal government against a technology company, it represents just a fraction of Facebook’s $56 billion in annual revenue. And while the FTC also moved to increase oversight of how Facebook handles user data, none of the conditions in the settlement would impose strict limits on the company’s ability to collect and share data.

Yet governments and regulators can still potentially force the company to change how it conducts business — a damaging outcome that Microsoft and other large companies have faced in the past. Already, Facebook has put huge amounts of time and resources into pushing back against tougher privacy, antitrust, and hate speech rules, even as it has publicly expressed openness to more regulation.

Facebook said Saturday that “by updating the rules for the internet, we can preserve what’s best about it.” The company added, “We want to work with governments and policymakers to design the sort of smart regulation that fosters competition, encourages innovation and protects consumers.”

Facebook is the centerpiece of a broader reckoning facing the tech industry, with governments beginning to collaborate. The European Commission has shared information with the FTC and the Justice Department about its investigations into Google. And this spring, Ireland’s top privacy regulator, who has been investigating Facebook and Google, met with officials in Washington.

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In May, an annual meeting of antitrust regulators turned into a four-day strategy session focused on the tech industry. Joseph Simons, head of the FTC, and Makan Delrahim, the assistant attorney general overseeing antitrust at the Justice Department, were among those who attended the event in Colombia.

“It’s good news that the US agencies are diving into this discussion,” said Andreas Mundt, Germany’s top antitrust enforcer, who in February issued one of the first antitrust rulings against Facebook. “It’s clear these are companies that are active worldwide and thus a worldwide approach is not a bad idea.”

Mundt and other regulators say that actions against Facebook and its industry peers must go beyond fines. Many authorities want to force structural changes in how the businesses operate — like their collection of data and sale of digital advertising.

Facebook’s next sanctions are expected to come from Europe, where the authorities have traditionally been more assertive against the tech industry than US regulators have been.

Ireland’s data-protection office has 11 investigations underway of Facebook for violations of the European privacy law, the General Data Protection Regulation, or GDPR. (Ireland has jurisdiction over Facebook under the privacy law because the company’s European headquarters is in Dublin.) At least two verdicts against the company are likely in coming months.

“Facebook has powers that were previously poorly understood,” said Helen Dixon, head of the Irish data commission. She declined to comment on specific Facebook cases.

France is debating a sweeping new law that would require Facebook and other large internet platforms to prevent the spread of hate speech and other harmful content or risk fines. Germany has enacted a similar law. In Britain, a similar measure is under consideration, as well as tougher competition rules.

Some academics and free-speech advocates have raised concerns that in a rush to limit Facebook’s power, governments are drafting policies with unintended consequences. Human rights groups were alarmed by proposals in Singapore and India to give the government new powers to censor content on social media.

“They are all very reactionary,” said Samantha Bradshaw, a doctoral student at the Oxford Internet Institute. “I haven’t seen any proposals that really get to these systemic-level challenges about the algorithms, the data collection and the privacy.”

What specific policies Facebook will accept remains unclear. In many places, it has fought back against the regulatory and legal onslaught.

Dixon said Facebook has tried to stall her investigations by raising questions and challenges. The social network is “asking constantly for extensions,” she said. “There have been quite a few testy exchanges. Once you have a law with a very big stick” that can be used “against a very big company, they are going to seek to protect their interests at every turn.”

In Germany, Facebook is appealing an antitrust ruling that would prevent it from sharing data with its other apps, such as Instagram and WhatsApp, as well as websites that use the “like” and “share” buttons. It is simultaneously fighting elements of the French and British proposals regarding hate speech, saying they place too much responsibility on the company to judge what is acceptable online content.

Facebook and other tech giants also oppose a European Union proposal to toughen privacy rules for communications platforms like WhatsApp and Messenger.

In Australia, lobbyists were dispatched to battle antitrust proposals intended to limit Facebook and Google’s market power. And Canadian authorities are taking Facebook to court after the company refused to change its data-collection practices.

“They have softened their message toward the public, but ultimately they are trying to avoid as much binding regulation on them as possible,” said Margarida Silva, a researcher with Corporate Europe Observatory, a group that tracks lobbying in Europe.