Facebook is actually richer thanks to news of the FTC’s $5 billion fine
Its share price jumped by nearly 2% after reports of the record-breaking fine emerged on Friday.
The news: Facebook is set to be fined $5 billion by the US competition watchdog. It’s the largest such fine ever, yet when the news broke, Facebook’s share price rose by nearly 2%. That added about $10 billion to its market value, more than double the cost of the fine.
Why? It’s because the settlement doesn’t change anything about the way Facebook collects and shares data, and thus won’t affect its very profitable business model, which relies on advertising.
Other terms: The FTC’s settlement isn’t just financial. Facebook has agreed to document data decisions for new products, keep a closer eye on the way third-party apps tap users’ information, and other terms.