In the white paper, Facebook outlines their plans for a decentralised blockchain low volatility cryptocurrency and smart contract platform, stating their aim is to provide a new opportunity for responsible financial services innovation.
Another word for innovation is disruption. It’s one thing to read the shiny white paper, with benefit after benefit, but if you take apart the sentences, you might, via transmutation, discover their intended reasons for entering into the cryptocurrency space.
And one of those reasons is trust. Facebook found itself in the middle of a data scandal in March 2018, involving a British company, Cambridge Analytica, where millions of users had their data harvested via an app without their permission, resulting in Facebook being hauled up in front of Congress and a British Parliamentary committee.
Despite being labeled as “digital gangsters” by British lawmakers, Facebook was fined the maximum possible amount of £500,000 for failing to protect users information. The thing is, at the time of the scandal, Facebook made that much in advertising revenue every five and a half minutes.
In the US, Facebook is facing much harsher penalties. The Federal Trade Commission’s private inquiry has cost Facebook $3 billion so far, as evidenced by the charge made public on Facebook’s first quarter 2019 earnings report, with estimates the amount could go to $5 billion, and that’s about equal to Facebook’s quarterly net profit, according to recent financial statements.
Facebook is facing multiple investigations from other agencies around the world. In the US, the Securities and Exchange Commission, the FBI, and the Northern District of California are also investigating Facebook, targeting executives within the company, asking about what they knew about the Cambridge Analytica data breach, and more importantly when they knew it.
The US Justice Department and the Eastern District of New York have, according to CNBC, been conducting a criminal investigation of Facebook, and the Department of Housing and Urban Development is seeking damages for anyone harmed by Facebook’s advertising practices relating to housing. The European Union’s data protection watchdog has launched multiple investigations into Facebook’s privacy practices. Ireland is also investigating the usage of data from Facebook-owned What’s App and Instagram. Authorities in Belgium are also scrutinising how Facebook tracks users via cookies, pixels, and social plug-in apps, and Germany’s Federal Cartel Office is investigating Facebook’s overstepping of the GDPR rules that came into force in May 2018.
Multiple investigations into the company and its executives, the labeling of Facebook as a “digital gangster” by British lawmakers, and the prospect of record-breaking fines have made little impact on the share price, and user engagement figures.
Despite the negative headlines accusing Facebook of harvesting their user’s data, the public doesn’t seem to care, but the authorities most certainly do.
Reading the headlines and skimming through the articles, it would be easy to come to the conclusion that Facebook had directly stolen the data, but that is not the case.
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