The FTC fined Facebook five billion dollars in July 2019, the largest fine in the agency's history, settling an investigation into privacy violations that had begun in the wake of the Cambridge Analytica disclosures.
Five billion dollars is a genuinely large number. It was larger than any fine the FTC had previously issued by an enormous margin. The previous record was a twenty-two million dollar fine, also against Google, in 2012. By that comparison, the Facebook fine represented a significant escalation in regulatory willingness to impose real costs.
The stock market received the news with something close to relief. Facebook's share price rose on the day of the announcement. The uncertainty about the outcome of the investigation had been resolved, and the resolved number, while large in absolute terms, was not large relative to Facebook's financial position. The company had reportedly set aside three billion dollars in anticipation of the fine. Five billion was above that reserve but still manageable. It represented roughly three months of Facebook's revenue at the time.
The settlement came with additional requirements beyond the fine. A new privacy committee would be established at the board level. Mark Zuckerberg would be required to personally certify privacy compliance. There were structural changes to how privacy decisions would be reviewed internally.
Whether those structural requirements would prove meaningful depended entirely on implementation and follow-through. The incentive structure at Facebook had produced the privacy practices that had led to the investigation in the first place. Adding oversight mechanisms to that structure was better than doing nothing, but it was not obvious that it addressed the underlying logic.
What the five billion dollar fine demonstrated clearly was the tension in how to think about penalties for technology platforms. A fine large enough to be felt would need to be measured not against previous regulatory precedent but against the actual economics of the behaviour being penalised. Five billion dollars was a historic fine. It was also a number that the market absorbed without distress. Those two facts together said something about the scale of the problem the FTC was attempting to address.