The Facebook Settlement: Is This Justice?

This piece first appeared on the Independent Institute blog.

The Federal Trade Commission has agreed to a $5 billion settlement with Facebook as a penalty for the social media giant’s unauthorized sharing of user data with consulting form Cambridge Analytica in 2017. Presumably, the settlement is warranted because of the harm done to users when Facebook shared their data. Is this justice?

If Facebook users were harmed by the unauthorized data sharing, why does the federal government get the money? Why doesn’t it go to the users whose data was shared?

Think about it. If no harm was done because of Facebook’s sharing of user data, the restrictions on the data sharing would be a needless cost imposed on business, with no offsetting consumer benefit. If users were harmed when Facebook engaged in unauthorized data sharing, the settlement should compensate users for the harm done to them. Why would the federal government have any legitimate claim to the settlement?

If the federal government was really looking out for our well-being, then when companies violate the law and harm us, the government would see that those companies compensate us for the harm they have done. There is no justice in a settlement that sends all the money to the U.S. Treasury and does nothing to compensate those who are harmed.

Dr. Randall Holcombe is the DeVoe Moore Professor in the Department of Economics.

The feature image is from the Independent Institute blog.

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