How Congress Should Spend the FTC’s $5 Billion Facebook Fine

Use the windfall to help fix local journalism

Last month, the FTC announced a $5 billion fine against Facebook resulting from multiple privacy violations, including the Cambridge Analytica Scandal. Despite the company being subject to the biggest fine in the FTC’s history, Facebook investors were unfazed. Many observers argued the fine is too small- The Verge editor Nilay Patel noted that “the largest FTC fine in the history of the country represents basically a month of Facebook’s revenue, and the company did such a good job of telegraphing it to investors that the stock price went up.” Or, to put it baldly: “Here’s another way to say it: the biggest FTC fine in United States history increased Mark Zuckerberg’s net worth.”

For the tens of millions of Americans impacted by Facebook’s repeated privacy failures and the dangerous implications for our democracy, such an apparent lack of consequences might hardly seem like justice. Rightly, the deal is being challenged by advocates who say it did not go far enough to hold the company to account. Putting aside whether the fine may actually convince Zuckerberg to change his company’s venal behavior, it could represent a historic opportunity, if Congress is willing to consider putting the money to good use. Congress could use the money to try to revitalize local journalism.

Here’s the idea. By law, the civil penalties that the FTC collects go straight into the Treasury’s general fund. But that’s just a default based on current federal law-and Congress could always override that with a new federal law specifically directing how this money gets spent. It could, in particular, decide to put the money towards a fund or set of funds earmarked for initiatives intended to help rebuild the local journalism infrastructure that has atrophied across the country in recent years as the newspaper industry has contracted.

$5 billion is a sum double the endowment of the Knight Foundation- one of the most generous philanthropies investing in journalism. This money could go a long way towards advancing existing efforts to fix journalism, and indeed spawn many new experiments. It could be leveraged to look for more sources of money to capitalize the search for facts and the important role that journalism plays in holding power to account, such as private capital or additional state and local funding.

This isn’t necessarily a new idea. The FTC itself wrote a substantial report on the problems facing the journalism industry in 2010, noting that “there are reasons for concern that experimentation may not produce a robust and sustainable business model for commercial journalism.” A decade hence, that appears to be true. The report offered dozens of ideas for how to shore up the impending market failure, including a proposal to establish a national fund for local news. The report suggested the fund could be raised from FCC fees on cell phone users or Internet service providers, or from taxes on advertising. There is something karmic about the idea of using a fine on Facebook- which has incubated a Cambrian explosion of disinformation, polluting the global information ecosystem and giving rise to a variety of anti-democratic forces — to help fix local journalism, one of the most important ingredients in a healthy democracy.

And yet some will argue that it is dangerous to give the federal government power over local journalism and news media. They have a point. We could be creative about how the funds are governed and dispersed. The money could be disseminated regionally, and governed by nonpartisan boards. It could be tied to innovation metrics and goals that local news organizations must meet to draw down the funds. Or, it could be used to fuse local news organizations to existing institutions, such as universities or nonprofits.

Perhaps this fine could set a precedent, and future fines on social media platforms could also be put towards efforts to improve the information ecosystem. Beyond a verdant local media ecosystem, imagine new digital literacy programs designed to avoid dystopian outcomes as technology progresses. Imagine a well funded research community committed to understanding the psychological and physical health implications of emerging media on society.

It is only right to extract a bit of flesh from these enormous technology companies to help clean up our information ecosystem. The social platforms already extract enormous amounts of free labor from journalists, civic organizations and citizens who must put in the time and effort to address the pollution they enable- from conspiracy theories to attacks on vulnerable populations to election interference. Congress could take an enormous step toward strengthening democracy by putting Mark Zuckerberg’s money to good use.

Justin Hendrix

Justin Hendrix is Executive Director of NYC Media Lab, connecting media and tech companies with NYC universities to drive digital media innovation and entrepreneurship. Previously he was Vice President, Business Development & Innovation for The Economist. He holds a BA from the College of William & Mary and an MSc in Technology Commercialization from the McCombs School of Business, University of Texas at Austin. Follow him on Twitter @justinhendrix. Opinions expressed here are entirely his own.

Originally published at https://protegopress.com on August 6, 2019.