WEBVTT - Will Facebook Face Record Fines Over Privacy Violations?

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple podcast, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcasts. You'd never guess

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<v Speaker 1>from Facebook's repeated privacy scandals that the company has been

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<v Speaker 1>under consent agreement with the Federal Trade Commission over a

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<v Speaker 1>privacy breach since twenty eleven. But now users, lawmakers, and

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<v Speaker 1>data security advocates are demanding a forceful government response, and

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<v Speaker 1>that job mainly falls to the chairman of the FTC.

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<v Speaker 1>Joining me is an expert in privacy law, Joel Riidenberger,

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<v Speaker 1>Professor at Fordham Law School. Joel, is Facebook the worst

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<v Speaker 1>offender of privacy in the world of social media or

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<v Speaker 1>are we just hearing more about its violations. That's a

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<v Speaker 1>great question. It's not really clear. I think Facebook probably

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<v Speaker 1>has the largest number of users, so any large scale

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<v Speaker 1>violation that Facebook does will affect more people than most

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<v Speaker 1>other organizations. I think some of the big companies like

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<v Speaker 1>Google and Amazon are also facing issues, but we certainly

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<v Speaker 1>hear more about Facebook because of their behavior. Sources are

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<v Speaker 1>telling Bloomberg that the FTC is expected to hit Facebook

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<v Speaker 1>with the record fine in the current investigation involving Cambridge Analytica.

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<v Speaker 1>What can you tell us about that investigation? Well, Facebook

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<v Speaker 1>settled with the FTC a number of years ago. There

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<v Speaker 1>was two thousand eleven for essentially collecting and sharing information

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<v Speaker 1>from its users without proper consent, and it certainly seems

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<v Speaker 1>for what's been made publicly available, that's exactly what happened

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<v Speaker 1>in Cambridge Analytica, along with a whole series of other

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<v Speaker 1>scandals this year. That's not the only one. Cambridge Analytica

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<v Speaker 1>affected about eighty seven million users. For the ft SEE

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<v Speaker 1>to really show that it matters as a privacy enforcement agency,

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<v Speaker 1>they're going to have to issue a quite substantial fine.

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<v Speaker 1>And Facebook has revenue of what approximately fifty billion dollars

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<v Speaker 1>in the last year, So if it's anything like the

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<v Speaker 1>fines that the FTC has issued thus far for privacy violations,

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<v Speaker 1>it's chunk changed for Facebook. I mean, this is going

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<v Speaker 1>to have to be a fine in the nine figures

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<v Speaker 1>for it to actually be taken seriously. Do find even

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<v Speaker 1>work with a company like Facebook. They haven't worked in

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<v Speaker 1>the past so some people are calling for it to

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<v Speaker 1>have a privacy law. Others are calling for breakup of Facebook.

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<v Speaker 1>What do you think is needed, Well, there's no question

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<v Speaker 1>that we need a stronger privacy laws in the United

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<v Speaker 1>States to deal with these kinds of problems. The fine,

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<v Speaker 1>if the fine is sufficient enough, it might be successful

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<v Speaker 1>in changing a company like Facebook. But something else. You know,

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<v Speaker 1>we just don't have the capacity right now, and the

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<v Speaker 1>FTC doesn't to deal with all of the different scandals

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<v Speaker 1>that Facebook was involved in this year. I mean, you

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<v Speaker 1>have Cambridge ANALYTICAUP, you have Facebook. Uh. It was exposed

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<v Speaker 1>that they were tracking non Facebook users across the web,

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<v Speaker 1>they were tracking logged out users across the web. They

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<v Speaker 1>were capturing call history of clients. They bought What's Apped,

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<v Speaker 1>and the co founder this past year quit essentially in

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<v Speaker 1>discuss because of their data misuse. Facebook tries to capture

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<v Speaker 1>telephone numbers, claiming they needed it for dual factor security

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<v Speaker 1>to make your account more secure, and then it turns

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<v Speaker 1>out they turned around and use those phone numbers for

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<v Speaker 1>all sorts of other purposes that weren't disclosed. That's a

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<v Speaker 1>huge problem. They've been involved in manipulating the elections in

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<v Speaker 1>the United States and they knew about it and denied it.

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<v Speaker 1>We saw the the press reports that Cheryl Sandberg knew

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<v Speaker 1>of the Russian election activities, and she publicly denied it,

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<v Speaker 1>and she privately tried to stop the investigation. You know,

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<v Speaker 1>all of these sorts of things are occurring, I think

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<v Speaker 1>in large part because the tech giants have built a

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<v Speaker 1>economic model on monetizing individuals data essentially without their effective consent,

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<v Speaker 1>and that's a problem. We need to be able to

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<v Speaker 1>address that effectively in this country. So what about the

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<v Speaker 1>privacy experts who are calling for breaking up Facebook? Is

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<v Speaker 1>that even a possibility that the FTC may try that.

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<v Speaker 1>I guess it's a possibility, but the legal authority to

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<v Speaker 1>do that would be antitrust, and I don't think Facebook

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<v Speaker 1>would necessarily be the first target for an antitrust breakup order.

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<v Speaker 1>It might be part of a consent decree, but I'm

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<v Speaker 1>not sure what you would break off from Facebook. Because

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<v Speaker 1>the problem with Facebook is the core of data misuse

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<v Speaker 1>comes from its core business, comes from the main social

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<v Speaker 1>media activity, and that's where we're seeing the essentially non

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<v Speaker 1>consensual use of the data. You know, they purport to

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<v Speaker 1>have customers consent because somewhere buried in terms of service,

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<v Speaker 1>there is something there. There are some settings that can

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<v Speaker 1>be adjusted, but the reality is that the privacy policies

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<v Speaker 1>are so ambiguous. There's absolutely no way a well informed

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<v Speaker 1>consumer can really understand how their data is being used

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<v Speaker 1>and have a tool to say no. That just isn't

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<v Speaker 1>there in the marketplace. Right now, let's just talk for

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<v Speaker 1>a moment about FTC chairman Joe Simons, who talked tough

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<v Speaker 1>when he took over the agency. He's been criticized for

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<v Speaker 1>not being tough enough. What's your take on how he's

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<v Speaker 1>been Well, we haven't seen any action coming from the

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<v Speaker 1>FTC yet. I think the jury is still out as

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<v Speaker 1>to what he's going to do if he gives Facebook.

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<v Speaker 1>I mean, I look at the fine that the British

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<v Speaker 1>Information Commissioner there their privacy regulator, issued against Google this week.

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<v Speaker 1>It was about fifty seven million dollars. That's chump change

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<v Speaker 1>for Google. That's nothing. What would be a big enough

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<v Speaker 1>fine for any of these companies? I think for a

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<v Speaker 1>company like Facebook or another one where their revenue is

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<v Speaker 1>in the forty fifty billion dollar range, you need to

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<v Speaker 1>find over a hundred million dollars for it to actually

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<v Speaker 1>make a difference. Well, we shall see if that happens,

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<v Speaker 1>because I think twenty two and a half million dollars

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<v Speaker 1>against Google was the previous record for the FTC. Great

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<v Speaker 1>to have you on again, Joel. That's Joel Ridenberg. He's

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<v Speaker 1>an expert in privacy law and a professor at Wardom

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<v Speaker 1>Law School. Thanks for listening to the Bloomberg Law Podcast.

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<v Speaker 1>You can subscribe and listen to the show on Apple Podcasts, SoundCloud,

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<v Speaker 1>and on Bloomberg dot com slash podcast. I'm June Brosso.

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<v Speaker 1>This is Bloomberg