On Slate, April Glaser writes about the prospect of a record-setting fine likely to be imposed on Facebook by the FTC. It raises the usual issue raised memorably by Edward, First Baron Thurlow: Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?
If the idea is to punish bad—and promote good—behavior, what size fine should Facebook receive? It’s first worth clarifying that Facebook really did mess up. The company had a 2011 agreement with the FTC not to share its users’ data without consent, but it wasn’t until 2014 that Facebook actually changed its data-sharing policy, which allowed developers to access not only the data of users who downloaded or agreed to use their apps, but also their friends’ data. From the looks of it, Facebook likely did not obey its consent decree—and because of its loose policies, one of those third-party developers was able to slip a massive amount of user data to Cambridge Analytica.
Certainly, Facebook should face consequences for its actions. But it’s hard to imagine an amount of money the feds would consider that would even give the company reason to flinch—there’s just no history of the FTC leveling such high fines. Theoretically, the U.S. could issue a European Union–size slap on the wrist, a la the $5 billion regulators levied at Google in 2018 for anticompetitive practices in the Android smartphone market. That would certainly scare any company. But there’s really no precedent that suggests a fine that big would be applied in the U.S. anytime soon.
Professor Jennifer Taub, one of our favorite experts, points out that it is the shareholders who end up paying the fine. And VEA Vice Chair Nell Minow says that the government should insist on more than money when a company violates a consent order it had agreed to.
“What the government needs to do is insist that there be very significant changes in corporate governance structure,” says Minow. “That’s the only thing that will make a difference here. They need independent directors.”