Facebook dodged a bullet from the FTC, it faces many more

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 proposing new restrictions against Facebook that will probably embroil it in policy debates and legal wrangling for years to come. And in some of these places, the authorities are increasingly coordinating to form a more united front against the company.

In the United States, the potential for a federal antitrust investigation looms, several state attorneys general have initiated investigations of the company, and members of Congress are considering a federal privacy law and other restrictions. Not to mention that President Donald 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.”

That momentum will be on display this coming week on Capitol Hill. 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 firms. That same day, the Senate Banking Committee is scheduled to hear from David Marcus, a top Facebook executive, on the company’s new Libra cryptocurrency project, which lawmakers have criticised and questioned.

In Europe, Facebook faces sanctions for breaking the region’s strict privacy laws, and the European Commission is in the early stages of an antitrust investigation against the company. 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 also 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 against 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.

“The debate has shifted,” said Tommaso Valletti, a professor at Imperial College Business School and the 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 decision and its $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 with third parties.

Yet governments and regulators can still potentially force the social media company to change how it conducts business through new laws and restrictions — 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 toward more regulation.

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

In May, an annual meeting of antitrust regulators from around the world 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 helped organise the meeting and 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 believe that actions against Facebook and its industry peers must go beyond fines. Many authorities want to force structural changes to how the businesses operate — like their collection of data and sale of digital advertising.

After the FTC decision, 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 against Facebook for violations of 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 the coming months.

“Facebook has powers that were previously poorly understood,” Helen Dixon, head of the Irish data commission, said in an interview. She declined to comment on specific Facebook cases but said, “It’s up to us as regulators to enforce where we see accountability hasn’t been demonstrated.”

What specific policies Facebook will accept remains unclear. In many places, the company 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.”

© 2019 New York Times News Service