Aug 10, 2012
FTC issued two statements that pertained to privacy policies with two different outcome for Facebook and Google. Facebook was slapped on the wrist by FTC in the Facebook settlement that was published on 8/10/2012, and on the other side of the spectrum, Google’s settlement on 8/9/2012 involved paying a $22.5 Million fine. Facebook is really lucky as their offense is as severe as Google’s, and all they need to do is to “take several steps to make sure it lives up to its promises in the future”, or face the possibility of a fine of $16,000 per violation.
$22.5 Million dollar is the largest fine imposed on any company. Compared to the Janet Jackson SuperBowl wardrobe malfunction which the FCC is still trying to collect on the $500,000 fine, the FTC fine is 45x more that what was imposed on CBS.
The story behind the lawsuit:
Facebook: The lawsuit alleged that Facebook deployed deceptive privacy setting and misrepresented the policy to users of Facebook. Facebook users are able to customize their privacy setting to have pictures, post, profile, etc shared on Facebook to “Only Friends” or “Friends of Friends” or “Customized”, but the setting only apply to other Facebook users. Facebook will still share that information to certain third parties, making that setting ineffective.
From the lawsuit, it was reported that in Facebook generated $777.2 million dollars in advertising revenue in 2009 and the shared information will be available to those advertisers and other third parties.
In the first offense that FTC filled against Facebook, it was technically a warning; if a fine was imposed today, Facebook will be looking at forking out $2,544,475,840,000 as there are 159MM Facebook in US as reported by socialbakers.com.
Google: The lawsuit alleged that Google misrepresented to users of Apple Inc.’s Safari Internet browser that it would not place tracking “cookies” or serve targeted ads to those users, violating an earlier privacy settlement between the company and the FTC. This is the second time that Google is addressing privacy issues with the FTC in the last 12 months as Google settled with the FTC with the Google Buzz fiasco. Part of the settlement in March 2011 involved “future privacy misrepresentations, requires it to implement a comprehensive privacy program, and calls for regular, independent privacy audits for the next 20 years.”
W3 reported that Safari users make up about 4% of the total internet users, while US Census in 2010 reported that approximately 52.6 million individuals have access to the internet at home and outside of their house. Taking those number into account, the number of Safari users in 2010 is about 2.1 million users (52.6 million users X 4%). There are sources that speculates that Apple / Mac users make up 10% of the market share as opposed to 4% reported by W3.
Either case, if FTC would to fine Google $16,000 per infraction, Google will be looking at a $33.6 Billion dollar fine as opposed to the $22.5 Million. Although the fine is huge, Google fair pretty well with the $22.5 Million fine, as they could have been slapped with a $33.6 Billion fine; and it is just a drop in the bucket as Google reported $37.9 Billion in revenue for FY 2011.