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If there isn't escalation in price for violations past this in the future, this may just be the new price to play ball.
by linuxdude314 7y ago
If there isn't escalation in price for violations past this in the future, this may just be the new price to play ball.
- tjoff 7y agoWhy would there not be any escalation?
- MichaelApproved 7y agoThe fear is that FB makes more donations to political campaigns which would ease the pressure on future violations. The campaign finance laws in the US are a joke and it would be easy for them to bribe politicians with campaign assistance.
- vikramkr 7y agoThis is not a sustainable amount to be fined. I think they made a net income around 20 billion last year, this a quarter of that. A couple more of these fines and that's a really dangerous situation - companies at Facebook's stage are valued on multiples of earnings with growth, not revenues, and 75 to 50 percent reduction in earnings wiped a lot of shareholder value off the table, meaning the shareholders (basically just zuck) would need to think twice before committing these violations again.
- throwaway2048 7y agoExcept it didn't whipe a lot of shareholder value off the table, the stock rose by 5% after fines were announced. Zuck himself made a cool billion off the bump.
- vikramkr 7y agoNews like this is already priced in and the market reaction is an irrational mix of random expectations. Some would have thought it would be more, some will think that this the end of Facebook's regulatory troubles, some will think that people overreacted over the last few days and are buying now that the uncertainty of the fine is gone and we know how the settlement stands. If this was a surprise 5 billion, then the stock would have dropped by way more than the 25% you might expect because of panic. You also have the growth story. A good way to put it is that the stock price would not have changed by more than a few percent today anyway, but in a world with no fine the starting price would have been higher. And in a world where we see more and more 5 billion dollar fines, they'll be less and less shrugged off as one offs even without increasing penalties.
- jakear 7y agoThat fines were coming was known, and reflected in the stock already. The announcement reduced uncertainty, causing value to rise.
- firebird84 7y agoA larger fine was priced in because investors were uncertain of earlier estimates of the fine being accurate. When the settlement news was announced, the stock bumped because it was better than expectations.
- Dirlewanger 7y agoThese kinds of fines are rarely lump-sums. The FTC will probably have Facebook on a nice 10 year plan for them to pay it.
- OliverJones 7y agoAccording to Kara Swisher and Scott Galloway, this fine is far too small to make a difference to Facebook's behavior. A fine of a size that exceeded their free cash ($40 billion) would have given FB a huge incentive to clean up their act. A fine of this size is nothing but a toll to pay.
- vineyardmike 7y agoDon't forget that future violations hold Zuck et al. personally liable for violations. Potentially criminally liable. > Any false certification will subject them to individual civil and criminal penalties.
- FireBeyond 7y agoOooh, not quite. IANAL, but I've worked with enough to know exactly what this means. Facebook is required to _report_ how they handle privacy data. They can choose what that handling looks like. They just have to accurately describe that. The false certification is related to materially false statements in the _reporting_. How they handle privacy data is still up to them (albeit potentially subject to future sanction if problematic), but this definitely does _not_ state that Zuck will be subject to criminal liability for future privacy problems.