According to the Financial Times Facebook may be fined up to 5bn by the US Federal Trade Commission resulting from an ongoing investigation related to privacy violation. The FT reports such fine could be a record and ‘the largest civil penalty ever imposed by regulators’.
Although a fine of $5bn may appear high, it also may be totally ineffective and small compared to the magnitude of Facebook’s finances. In 2018 (fiscal year) Facebook reported Revenuefor $55.8bn, net income $22.1bn, cash $41.1bn, total asset $97.3bn.
The potential fine, is equivalent to about 22.6% of its net income and 12.1% of its cash. If we consider:
- the exceptional circumstances of the current investigation
- the impact that the investigation may have on privacy and data management
- how unusual such type of investigations are the revenues generated through the breach of regulations
we may say that
- even the largest fine ($5bn) may be ineffective
- there would be no adequate incentive for FB not to act against regulations anymore
- Facebook`s (and large corporates) size and influence may raise to an even more concerning level
Regulations seem to be ineffective for Facebook and large corporations that have significant influence on regulators that monitor them, Senator Elizabeth Warren explained in 2014. Furthermore, she ‘reiterated President Theodore Roosevelt’s warningsregarding powerful corporate entities that threatened the “very foundations of Democracy”’.
Also Adam Smith was critical to some aspects of corporate activity. In his famous book the Wealth of Nations, the “bible” of capitalism, he described corporations as working to evade the laws of the market, trying to interfere with prices and controlling trade etc.
Big corporations and big government go hand-in-hand. Washington Examiner writer Timothy Carney states that“as the federal government has progressively become larger over the decades, every significant introduction of government regulation, taxation, and spending has been to the benefit of some big business.”
Defence Studies Department