Facebook Faces More Than A Fine From Regulators
RACHEL MARTIN, HOST:
The scrutiny of Facebook has now increased. The Federal Trade Commission is now investigating the social media company for potential antitrust violations. This comes after the FTC announced a settlement in a separate privacy investigation and a record $5 billion fine, as well as new oversight of Facebook's privacy practices.
FTC Commissioner Noah Phillips is in our studios this morning. Thanks so much for coming in.
NOAH PHILLIPS: Thanks for having me, Rachel.
MARTIN: So I want to start with the newest development here, the antitrust investigation that is now underway and, really, the central question, which I will put to you. Is Facebook a monopoly?
PHILLIPS: Rachel, I'm afraid because there's an ongoing investigation, which we can now confirm, there's little I can say about that.
MARTIN: Can you confirm that that is the question that is at the heart of the investigation?
PHILLIPS: Other than the existence of the investigation, I'm afraid I can't confirm anything.
MARTIN: Can you speak generally about whether or not Facebook - if there is any other competition to Facebook? Do you recognize that Facebook is a singular player in the social media space?
PHILLIPS: Here's what I can say. The social media companies - in particular, a few of them - are ubiquitous in our economy. They're something that all of us notice. And we're taking a close look at the FTC - and we have been for the last year since all of us came in - through a series of public hearings that we've been having and through a technology task force focused specifically on competition issues in the technology sector.
MARTIN: Can you say what prompted this investigation?
PHILLIPS: Again, I can't speak to the specifics of the investigation.
MARTIN: Let's talk about the privacy settlement that the FTC announced yesterday. Can you speak to what made the FTC act in that regard?
PHILLIPS: Absolutely. Facebook made a series of commitments in 2012 about leveling with consumers about what it was doing with their data, the control it would have over their data. And it obligated itself to have a reasonable privacy program, to protect the privacy of its users. Facebook broke those promises, and that's why we're here today.
So what we've done is two very important things. The first is that historic $5 billion fine that you mentioned. But the other thing that we've done, which is equally important, if not more important, is to restructure how the company approaches privacy, including oversight from the board and from the outside - a whole new corporate restructuring of Facebook built around privacy, as well as substantive privacy protections.
MARTIN: Do you use Facebook?
MARTIN: You don't - because you have concerns over how the company deals with its consumer data?
PHILLIPS: No. I stopped using Facebook many, many years ago.
MARTIN: Can you talk about the personal nature of the accountability? - because Mark Zuckerberg himself is on the line with this development, is he not?
PHILLIPS: Yes, he is - Mark Zuckerberg and others. Mark Zuckerberg and other designated officers at the company who deal with privacy are going to have to certify that the company is complying with its privacy program and also with the terms of the order that we've promulgated. That certification is on pain of both civil and criminal penalty.
MARTIN: The $5 billion is a record amount. But, you know, yesterday Facebook reported $48.6 billion in cash and cash equivalents. What is to stop it from just building this into their budget, to just assuming that they're going to have to pay fines and that it's worth it in order to circumvent these new rules?
PHILLIPS: Sure. It's important to remember that 5 billion represents approximately a quarter of Facebook's annual revenue from 2018. That's the kind of money a big company doesn't like to part with. But this isn't just about the money. The penalty does matter. They're not going to want to pay that kind of money again. It's also about trying to prevent the bad things from happening in the first place. And that's why what we've done is set up a whole new system of privacy governance at Facebook.
And the real point here is that we've strengthened the hand within the company of those who care about privacy. When the question is making money versus privacy, now those who care are empowered, and they have a much stronger voice.
MARTIN: What kind of precedent are you setting here, though? I mean, there will be other companies - of course, Facebook is unique in so many ways. But there will be other people who look at this and say, this is a dangerous precedent.
PHILLIPS: That may be. We felt that this was the kind of remedy that was warranted by the facts of the case. It's not clear to me that every company is going to need this kind of governance structure. But one thing I think Congress ought to take a very careful look at is, what are the things that they are upset about, that they worry about? And should we take what's been done in this settlement and map it onto the whole economy?
MARTIN: FTC Commissioner Noah Phillips, we appreciate you coming in. Thank you so much for your time.
PHILLIPS: Again, thanks for having me. Transcript provided by NPR, Copyright NPR.