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I'm glad the attorney general is getting involved. We need to start charging Facebook execs for these flagrant privacy violations. They're being fined 3 billion

I'm glad the attorney general is getting involved. We need to start charging Facebook execs for these flagrant privacy violations. They're being fined 3 billion dollars for legal expenses relating to an FTC inquiry… and their stock price went up by 8% [1]. The market just does not care; it's time regulators and law enforcement started to. [1] https://www.barrons.com/articles/facebook-stock-is-up-because-its-earnings-report-was-mostly-positive-51556138491 https://www.barrons.com/articles/facebook-stock-is-up-becaus...

jonahb 8y ago
The market cares. It had already priced in a fine, possibly one larger than 3B. The reduction in uncertainty -- knowing the magnitude of the fine -- also positively affects the stock price. If the fine were cancelled tomorrow, you can be sure that, all else equal, Facebook's market cap would jump by 3B. The fines need to be bigger.
- baroffoos 8y ago
  They need to increase the fine substantially for each repeated violation. After a few violations its going to be hard to justify a $50B fine to investors.
  - kerng 8y ago
    Totally agree, at the third time there is really no excuse anymore to not bump this up to maybe even threaten the existence of an organization or it changes its behavior. For FB this is the nth time. I don't even know what n is anymore.
    - acct1771 8y ago
      Neither do any of the regulators...
  - rhizome 8y ago
    No, they need to adjust the first-time penalties for deterrence. $50B at a minimum, because it has to hurt their stock price when they do these things. Or hey, how about a year of revenue.
  - omeid2 8y ago
    The fines also needs to be fair, not fixed cost. I think the EU has got the percentage-of-revenue approach right. A million dollar fine for a small company can be death-sentence while for a big player it is lose change, that is not fair.
    - cobbzilla 8y ago
      I agree that percent of revenue is a much better metric to base these kinds of fines off of, but not without reservations -- a small company with high sales revenue but razor thin margin could get killed by a % revenue fine; this seems unfair to the little guy. On the other hand, if the fine is % income or anything but % gross receipts, then of course the system will be gamed endlessly by accountants and lawyers to show the smallest possible net number. The end result might be worse than a fixed fine. So % of revenue it is.
      - WrtCdEvrydy 8y ago
        > So % of revenue it is. GDPR, 4% of Global revenue and your Directors can be barred from operating in the EU.
- chongli 8y ago
  Yes. The fine needs to take into account how much Facebook would stand to lose if the case went to trial and they were found guilty, setting a precedent for future actions against them. That seems like it could result in near-unlimited liability for Facebook. The fine for avoiding an admission of wrongdoing should be set equal to the expected value of all that liability, based on an estimate of the probability of winning the case.
  - throwaway5167 8y ago
    There's no way the government has the same resources as Facebook to make that case. The FTC loses when it goes to Court. Facebook would have more lawyers on the case than the FTC has paralegals total.
    - chopin 8y ago
      And that guarantees victory? Interesting judicial system you have, over there.
      - luckylion 8y ago
        Where is that fundamentally different in other countries for very large (especially domestic) players? Will Germany actually take a swing at Volkswagen? Will Germany try to go after those that defrauded the government with cum-ex-trades? Everybody vs banks regarding the Libor scandal? Sure, they paid some fines, but the fines were far below the damage done, and it appears to still have been a good investment for the banks, that is: all in all they made money, fines included. Crime does pay at that level. That's not something US specific, I believe.
        chopin 8y ago
        I was referring to the fact that you can outpay your opponent. Yes, large corporations can get away with much more in other countries as well, but rarely by outpaying their opponents.
- Simple_Guy 8y ago
  The fines should be 100 billion. Make them itch a little.
SheinhardtWigCo 8y ago
Not just execs, I hope. The engineers who wrote the code and managers who told them to do it should also face justice.
- droithomme 8y ago
  I agree, but with conditions. PEs have ethical responsibilities. If the engineers are licensed, yup, they absolutely have a moral and legal responsibility to refuse to sign off on illegal work. In most states though, software engineers are not professionally licensed, certified, or ethically trained. Often they are referred to using demeaning terms such as "coders", which are equated as "bricklayers" by thought leaders such as Steve McConnell and others. Thus it would not necessarily be reasonable to hold them to a responsibility refuse to follow illegal orders they were given as mindless "bricklayers" and "coders" etc, which is the most common paradigm of software engineers. Unintelligent implementors who are simply typing things up on command with a surfeit of semicolons can not be held to any sort of professional responsibility. But PEs absolutely can and must.
- baroffoos 8y ago
  That would require all developers to become lawyers so they can make sure everything they are being asked to do is legal.
  - spaceheretostay 8y ago
    We don't all need to be lawyers to understand the basics of our laws. Knowledge of the existence of the law is assumed for all citizens. Ignorance of the law has never been a valid excuse when the law is broken. (Yes, the US does have some new problems with private laws being passed, where the public is not allowed to know the law itself - and this opens up huge scary things. But that is not what is being discussed here and I don't believe is relevant.)
  - wavefunction 8y ago
    What's wrong with introspection about what you're doing on an ethical level? There's no legal standard involved so you don't have to be a lawyer, just a bit more thoughtful.
kevin_thibedeau 8y ago
What laws have they broken? Without laws to break there isn't much justification for punishment.
- spaceheretostay 8y ago
  Facebook have broken a huge list of laws. But recently from my reading I think the current issue is a breach of contract. They signed a legal contract with the FTC and then broke it, hence the fine. There doesn't seem to be any debate that Facebook broke the law - just debate about what the punishments should be.
- kerng 8y ago
  Theft of personal information seems the most obvious one that they could be charged with. Unauthorized access of email accounts and exfiltration of information is something hackers have gone to jail for.
  - joering2 8y ago
    Single instance can put you 20 behind bars. Zuck would be computed 250,000 years for all the mass email access hack even if it cleverly asked users to actually gave passwords in at their own free will. But to semiquote: you kill one men thats a murder, you kill million men thats statistics.
- doodliego 8y ago
  The Computer Fraud and Abuse Act (CFAA) prohibits accessing a computer without authorization, or in excess of authorization.
orijing 8y ago
Is it a coincidence that the stock price would move on the day when FB releases earnings?
Causality1 8y ago
Personally I think monetary fines are a fundamentally flawed form of punishment. Send. Decisionmakers. To. Prison. I don't care if it's for just a single day but march them into a courthouse in an orange jumpsuit and handcuffs.
- spinningslate 8y ago
  This. Whether jail or some other sanction, hold decision makers personally accountable. Fines have their place, but - at least for a firm of FB's size - they just get priced into accounts. The FB/Zuckerberg combination is almost unique in terms of (1) market cap, (2) the controlling ownership he holds, and (3) behaviour of the firm. Facebook is reputedly pedalling furiously behind the scenes to prevent Zuckerberg himself being charged. Whilst saying almost nothing about the fines. That says everything about where they see the real danger.
- marcosdumay 8y ago
  Did they commit any crime? I do agree that fines are overused, but I don't think there's reason for sending anybody to prison on this case.
  - Causality1 8y ago
    Why is Facebook anticipating a five billion dollar fine if they didn't break any laws?
    - marcosdumay 8y ago
      Breaking laws is not the same as comiting crimes.
hjk05 8y ago
No matter how the market reacts 3 billions is still 3 billion. People need to stop trying to look for justice in the market trends, investors are not pricing facebook based on how much cash they have in the vault right this instance, and if a verdict comes in below expectations the price is bound to rise. Could you imagine the absurdity of them passing down a verdict of “and they shall be fined a billion per month until their stock price falls by at least 10%!”
- colpabar 8y ago
  I think the point is that we need to punish companies like Facebook in ways that might actually incentivize them to behave differently. If they get slapped with a fine that they can easily pay and then see their stock price go up, what's the point?
- save_ferris 8y ago
  The purpose of the fine is to discourage FB from engaging in illegal and unethical behavior. The problem here is that FB sees a $3B fine as the cost of doing business, since they surely made much, much more than $3B engaging in these invasive, user-hostile tactics. If they know that regulators will only come after them for an arbitrarily low percentage of revenue generated from these activities, why would they stop doing them? If a punishment no longer deters bad behavior, then it's no longer a punishment.

jonahb 8y ago

The market cares. It had already priced in a fine, possibly one larger than 3B. The reduction in uncertainty -- knowing the magnitude of the fine -- also positively affects the stock price. If the fine were cancelled tomorrow, you can be sure that, all else equal, Facebook's market cap would jump by 3B. The fines need to be bigger.

baroffoos 8y ago
They need to increase the fine substantially for each repeated violation. After a few violations its going to be hard to justify a $50B fine to investors.
- kerng 8y ago
  Totally agree, at the third time there is really no excuse anymore to not bump this up to maybe even threaten the existence of an organization or it changes its behavior. For FB this is the nth time. I don't even know what n is anymore.
  - acct1771 8y ago
    Neither do any of the regulators...
- rhizome 8y ago
  No, they need to adjust the first-time penalties for deterrence. $50B at a minimum, because it has to hurt their stock price when they do these things. Or hey, how about a year of revenue.
- omeid2 8y ago
  The fines also needs to be fair, not fixed cost. I think the EU has got the percentage-of-revenue approach right. A million dollar fine for a small company can be death-sentence while for a big player it is lose change, that is not fair.
  - cobbzilla 8y ago
    I agree that percent of revenue is a much better metric to base these kinds of fines off of, but not without reservations -- a small company with high sales revenue but razor thin margin could get killed by a % revenue fine; this seems unfair to the little guy. On the other hand, if the fine is % income or anything but % gross receipts, then of course the system will be gamed endlessly by accountants and lawyers to show the smallest possible net number. The end result might be worse than a fixed fine. So % of revenue it is.
    - WrtCdEvrydy 8y ago
      > So % of revenue it is. GDPR, 4% of Global revenue and your Directors can be barred from operating in the EU.
chongli 8y ago
Yes. The fine needs to take into account how much Facebook would stand to lose if the case went to trial and they were found guilty, setting a precedent for future actions against them. That seems like it could result in near-unlimited liability for Facebook. The fine for avoiding an admission of wrongdoing should be set equal to the expected value of all that liability, based on an estimate of the probability of winning the case.
- throwaway5167 8y ago
  There's no way the government has the same resources as Facebook to make that case. The FTC loses when it goes to Court. Facebook would have more lawyers on the case than the FTC has paralegals total.
  - chopin 8y ago
    And that guarantees victory? Interesting judicial system you have, over there.
    - luckylion 8y ago
      Where is that fundamentally different in other countries for very large (especially domestic) players? Will Germany actually take a swing at Volkswagen? Will Germany try to go after those that defrauded the government with cum-ex-trades? Everybody vs banks regarding the Libor scandal? Sure, they paid some fines, but the fines were far below the damage done, and it appears to still have been a good investment for the banks, that is: all in all they made money, fines included. Crime does pay at that level. That's not something US specific, I believe.
      - chopin 8y ago
        I was referring to the fact that you can outpay your opponent. Yes, large corporations can get away with much more in other countries as well, but rarely by outpaying their opponents.
Simple_Guy 8y ago
The fines should be 100 billion. Make them itch a little.

SheinhardtWigCo 8y ago

Not just execs, I hope. The engineers who wrote the code and managers who told them to do it should also face justice.

droithomme 8y ago
I agree, but with conditions. PEs have ethical responsibilities. If the engineers are licensed, yup, they absolutely have a moral and legal responsibility to refuse to sign off on illegal work. In most states though, software engineers are not professionally licensed, certified, or ethically trained. Often they are referred to using demeaning terms such as "coders", which are equated as "bricklayers" by thought leaders such as Steve McConnell and others. Thus it would not necessarily be reasonable to hold them to a responsibility refuse to follow illegal orders they were given as mindless "bricklayers" and "coders" etc, which is the most common paradigm of software engineers. Unintelligent implementors who are simply typing things up on command with a surfeit of semicolons can not be held to any sort of professional responsibility. But PEs absolutely can and must.
baroffoos 8y ago
That would require all developers to become lawyers so they can make sure everything they are being asked to do is legal.
- spaceheretostay 8y ago
  We don't all need to be lawyers to understand the basics of our laws. Knowledge of the existence of the law is assumed for all citizens. Ignorance of the law has never been a valid excuse when the law is broken. (Yes, the US does have some new problems with private laws being passed, where the public is not allowed to know the law itself - and this opens up huge scary things. But that is not what is being discussed here and I don't believe is relevant.)
- wavefunction 8y ago
  What's wrong with introspection about what you're doing on an ethical level? There's no legal standard involved so you don't have to be a lawyer, just a bit more thoughtful.

kevin_thibedeau 8y ago

What laws have they broken? Without laws to break there isn't much justification for punishment.

spaceheretostay 8y ago
Facebook have broken a huge list of laws. But recently from my reading I think the current issue is a breach of contract. They signed a legal contract with the FTC and then broke it, hence the fine. There doesn't seem to be any debate that Facebook broke the law - just debate about what the punishments should be.
kerng 8y ago
Theft of personal information seems the most obvious one that they could be charged with. Unauthorized access of email accounts and exfiltration of information is something hackers have gone to jail for.
- joering2 8y ago
  Single instance can put you 20 behind bars. Zuck would be computed 250,000 years for all the mass email access hack even if it cleverly asked users to actually gave passwords in at their own free will. But to semiquote: you kill one men thats a murder, you kill million men thats statistics.
doodliego 8y ago
The Computer Fraud and Abuse Act (CFAA) prohibits accessing a computer without authorization, or in excess of authorization.

orijing 8y ago

Is it a coincidence that the stock price would move on the day when FB releases earnings?

Causality1 8y ago

Personally I think monetary fines are a fundamentally flawed form of punishment. Send. Decisionmakers. To. Prison. I don't care if it's for just a single day but march them into a courthouse in an orange jumpsuit and handcuffs.

spinningslate 8y ago
This. Whether jail or some other sanction, hold decision makers personally accountable. Fines have their place, but - at least for a firm of FB's size - they just get priced into accounts. The FB/Zuckerberg combination is almost unique in terms of (1) market cap, (2) the controlling ownership he holds, and (3) behaviour of the firm. Facebook is reputedly pedalling furiously behind the scenes to prevent Zuckerberg himself being charged. Whilst saying almost nothing about the fines. That says everything about where they see the real danger.
marcosdumay 8y ago
Did they commit any crime? I do agree that fines are overused, but I don't think there's reason for sending anybody to prison on this case.
- Causality1 8y ago
  Why is Facebook anticipating a five billion dollar fine if they didn't break any laws?
  - marcosdumay 8y ago
    Breaking laws is not the same as comiting crimes.

hjk05 8y ago

No matter how the market reacts 3 billions is still 3 billion. People need to stop trying to look for justice in the market trends, investors are not pricing facebook based on how much cash they have in the vault right this instance, and if a verdict comes in below expectations the price is bound to rise. Could you imagine the absurdity of them passing down a verdict of “and they shall be fined a billion per month until their stock price falls by at least 10%!”

colpabar 8y ago
I think the point is that we need to punish companies like Facebook in ways that might actually incentivize them to behave differently. If they get slapped with a fine that they can easily pay and then see their stock price go up, what's the point?
save_ferris 8y ago
The purpose of the fine is to discourage FB from engaging in illegal and unethical behavior. The problem here is that FB sees a $3B fine as the cost of doing business, since they surely made much, much more than $3B engaging in these invasive, user-hostile tactics. If they know that regulators will only come after them for an arbitrarily low percentage of revenue generated from these activities, why would they stop doing them? If a punishment no longer deters bad behavior, then it's no longer a punishment.