Facebook receives a get out of jail free card after the latest hearings
At the face (book) of it, it looks like an old western lynching, but this time in front of a civilized US Senate, as the world watched.
Mark Zuckerberg and his 27,000 Facebook employees were ‘hanging’ in the balance.
Was he nervous? Probably, but what’s for sure was his preparedness.
“Facebook co-founder Mark Zuckerberg needed to thread the needle, this week, by answering lawmakers’ questions without hanging himself,” online privacy advocate Michael Fertik told CNBC on Tuesday.
Stock prices are rising.
Mark said there are no dropouts from his subscribed users list on Facebook.
All is looking good, for now.
Are investors on edge?
It all started when Christopher Wylie, former employee at Cambridge Analytica, blew the whistle as reported by The Guardian on March 16, quoting him as saying that he, himself, created the tool to mine potentially millions of peoples’ data but in reality, only got so far as 80 million users, with only 300,000 people giving their consent to this.
The result of this report prompted people to start hashtagging #DeleteFacebook on twitter, and at the time Facebook said they were not affected in the slightest by this campaign.
Later that week Facebook stocks began to drop rapidly. According to NASDAQ, Facebook shares went from $185 on March 16th to $152 on the 26th, which was a 21% decrease.
This translated into $96 bn in market cap losses, but since then the value of the company regained $35 bn.
Last week we reported on the Federal Trade Commission’s (FTC) $2 trillion fine it could penalize the social networking giant, and that it could potentially put Facebook out of business.
But guess what: Investors aren’t the least scared!
Facebook has denied any violation of its agreement with the FTC which said it’s investigating the matter.
But Fertik, founder and executive chairman Reputation.com, pointed out that Facebook could in theory face more than that in fines if the FTC were to conclude the Cambridge Analytica data scandal violated the consent decree the social network signed with the agency seven years ago.
However, few industry watchers, including Fertik, believe any potential fines would reach anywhere near that level.
The company said, “most” of its users probably had their data collected by “malicious actors” who abused Facebook’s search and account recovery tools.
But the mere threat of a massive fine for Facebook, whose profits last year were $15.9 billion, gives the FTC rare power to demand that the company make changes in how it handles user privacy, according to The Washington Post.
Fertik took it a step further, appealing to Zuckerberg to “get past the myth that a click to consent” on a 1,000-word document means consumers understand what they agree to.
Senate, John Kennedy reiterated on this in the hearing, by saying “Your user agreement sucks.” And that “The purpose of that user agreement is to cover Facebook’s rear end.”
Fertik added that the cost of these reforms — regarding new staff to guard against intrusions or revenue foregone in the name of protecting users — could easily cost the company more money than any fine.
But, whatever the FTC demands, if anything, former officials say “Facebook is going to have a hard time refusing.”
Are apologies enough?
A scandal that opened the eyes of billions to data privacy forced Mark to apologize at least three times in yesterday’s hearing, but are promises and apologies enough?
Probably not when 80 million users got their data ‘mined’ by Cambridge Analytica.
80 million people whose information is still incredibly relevant today and no word on whether the data has been deleted yet.
So, yes Zuckerberg did apologize, his company stocks rose 4.5% in the last 8 hours, and still enjoys a market cap of $477 bn, but who knows what the future holds