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Comment by minimaxir | Hacker News Reader

> Every insider I've spoken to said any FTC fine on Facebook under $10 billion would be seen as a massive win, showing firm won't face serious consequences for privacy violations. Wall St. seems to agree in response to news of $3-$5b settlement [$FB up 4% after hours]

https://twitter.com/lhfang/status/1121148735818358784

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In other words, market rewards Facebook for being fined only $5 billion by increasing their market cap $20 billion. Unreal.

as it so turns out, you can't rely on capitalism to even have any morality, much less enforce one

Eh, a capitalist system is going to reflect the moral framework of the participants. The participant here is the stock market, and its moral framework is based on economic growth and profit for shareholders. In that regard this was a good outcome and, as a result, is rewarded.

Which means it has no morality no matter how you try to twist it.

Sure, no intrinsic morality...more of a passthrough.

I try to think of it more as utterly sociopathic (in more or less the strict medical definition of the term), and things seem to really make a lot of sense under that framework.

This is a very strange way to put it. More likely, the fine was priced in with some level of uncertainty, the with the fine having been decided, the market corrected relative to its estimates.

Facebook announced earnings today; other new information besides the fine contributed to the after-hours jump.

> by increasing their market cap $20 billion

Is this actually meaningful to any company that isn't IPOing or releasing new shares? I am not pro-facebook by any means but it's not clear this means much aside from how much their investors like them, again of questionable value as the majority of votes are privately held by Zuckerberg.

Increase the value of shares and options and owned by the very people who made the mistake? Yes, increasing an individual's net worth doesn't exactly discourage future mistakes.

Unless Zuckerberg is immediately about to sell I don’t see how this incentivizes any behavior at the company. It’s a trailing indicator of performance, not a leading one, and seems to reflect public opinion more than anything.

We should never read too much into such numbers, but, technically, expectations of a $25bn fine could explain exactly what you describe.

Agreed. This small of a fine comes off as a cost of doing business for a company as large as Facebook.

This is why we need GDPR in the US. Make the fine like 5% of global annual profit (not sales). Something that will hurt and make them actually think it's not worth it and actively avoid it rather than just the cost of doing business and a snicker as they walk away.

5% of FB revenue (55B) is $2.75B which is less than the proposed FTC fine of 5B.

Making it be 5% of profit and not revenue would make it hurt even less.

Laws don't seem to matter in this day and age as they can be gamed by money and/or legal tricks. Only way to fix the issue is to get rid of corrupt and unethical government and business leaders. Implementing something like GDPR would only be adding to the arsenal of bad actors.

This isn't the future I wanted.

I'm like 99% sure this has always been the "ideal" business model. Only take a chance if you can afford it. Something, something cost-benefit analysis.

There was a stink about a car manufacturer and seat belts (I think) a few years back. They decided the cost of a few settlements for dead people was less than the cost of fixing the problem.

This is now, has been, and (unless we eat the rich) always will be the way it is.

Facebook will not acknowledge any wrongdoing as part of the settlement....Which is what I expect the script to read.

If the settlement happens, I imagine this would provide some weight behind any class action lawsuit.

> will not acknowledge any wrongdoing as part of the settlement

This bugs the heck out of me (in general, not specific to this case). What is point of letting them claim innocence? How does this benefit the consumer?

I can see occasional exceptions where it's clearly a case of misunderstandings so you don't want to bring down the full hammer...but I honestly can't remember more than one such case where someone DID acknowledge wrongdoing.

If Facebook admits wrongdoing they will lose every lawsuit brought against them going forward, which means they will contest the charges instead of settling. The FTC doesn’t want that, because an actual court case means they might lose, which would be bad for the careers of everyone involved. They’d rather just take the guaranteed W by offering FB a palatable settlement.

This is a perfectly rationale terrible explanation - it absolutely makes sense, but there's a real problem if we allow decision making like this to be accepted at large. Some cases might be lost, but companies that violate our privacy should actually pay for it.

Taking a bribe shouldn't be the best outcome for all involved.

That's not a W, though. It's playing to a tie, then forfeiting the rest of the game. Naturally, I would love for this to go to trial. Even if the FTC lost, at least we'd know what the consumer privacy landscape in the US actually looks like.

The title of this post/story, should be "Facebook Expects to be Fined Not More Than $5B by FTC," because a $5B fine would be extremely not-painful; there would be zero deterrent effect from a fine of this size.

>What is point of letting them claim innocence?

It changes the evidentiary basis of future claims on related grounds. The admission opens them up to other legal risks outside of the current dispute.

Maybe European regulators want to slap them for the same fact pattern (same facts, different jurisdiction). Maybe a class action is put together (same facts, different plaintiffs). Maybe they have an HR suit for unlawful termination from one of their security guys claiming he was fired for disclosing a vulnerability (related facts).

Etc.

> It changes the evidentiary basis of future claims on related grounds

Well that's interesting...citation? I thought not admitting any wrongdoing meant that you didn't admit it, meaning that there'd be no lower bar for anything, related grounds or not.

Those insiders may just be lowering expectations, preparing their audience to consider rather bad news as a “massive win”.

After all, the insiders most familiar with the matter are those deciding how much to set aside for its eventual resolution. There are rules for how to account for the inherent uncertainty, and massively underestimating the loss would just set them up for new trouble, i. e. a shareholder lawsuit.

A $10 billion fine for the Cambridge Analytica "scandal" would be so far beyond reasonable as to merit criminal charges against Joseph Simons. $3 billion is already insanely ridiculously high.

This is the correct opinion.

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