Facebook would prosper in a less robust market.
Hackers and scammers are running amok while social media platforms are harvesting our precious personal information for profit.
Sen. Ron Wyden (D–Ore.) warns that "Facebook can't be trusted to protect users' data on its own." Yet Wyden's bid to hold their feet to the fire––"It's time for Congress to step in"––barely lights a match. Facebook executives long ago called for government oversight, and CEO Mark Zuckerberg has doubled down on this hand in a Washington Post op-ed.
A reform bill by the Oregon senator would pump up the Federal Trade Commission (FTC), authorizing new staff and a big jump in potential fines for violations of law––up to 4 percent of annual revenues. The "tiny" penalties now in place, says Wyden, "are not a credible deterrent." Perhaps the FTC boost would improve customer knowledge. But it is close to an email phishing scam to argue that these measures will supply the strong consumer protection we need.
While Congress has been holding hearings, poking tech execs, and dancing the legislative Fandango, the marketplace has imposed actual sanctions. Between the time Facebook's Cambridge Analytica scandal was revealed, March of last year, and March of this year, shareholders lost more than $61.6 billion adjusted for overall market (NASDAQ) fluctuations. In contrast, Sen. Wyden's 4 percent fine––even if applied to global sales, and instantly––would whack just $2.2 billion from the Facebook moguls.
The equity tumble focused their minds. In 2018, CNN proclaimed: "Facebook is facing an existential crisis." Bumbling though Zuckerberg and COO Sheryl Sandberg may have been, they adjusted privacy settings, banned many third-party apps, and required more information from advertisers. They bought extra cybersecurity.
It is not clear where the optimal privacy protections lie, but these three things are clear.
First, Facebook is highly motivated to avoid another "existential crisis" wherein scores of billion dollar fines are imposed by markets.