 Hello and welcome to NewsClick. Today, we will be discussing the $5 billion fine imposed on Facebook by the U.S. Federal Trade Commission. To talk more about this, we have with us Prabir Prakash. Hello, Prabir. Prabir, so the $5 billion amount is actually a settlement between the FTC and Facebook. For violations of a 2011 settlement, they had reached regarding users' privacy. And while the full details are not out yet, it's largely understood that it's a response to the Cambridge Analytica scandal. So do you see this almost record fine? To be a meaningful step in actually regulating what Facebook is doing? You know, it might appear to be a very hefty fine. $5 billion is not chicken feet. So that is there. But it's interesting how the markets have reacted since every day now, every time anything happens today. We look at the markets for what is supposed to be good or bad. Well, if it was hefty fine, it should have depressed the stock of Facebook shares. Instead of that, it has actually gone up. So the Facebook is supposed to have had a revenue, profits, not revenue, profits of $22 billion in the last quarter. Now, that would simply indicate that they have, they're really earning a very high income from the kind of business that they do. And this $5 billion, therefore, is a wrap on the knuckles for 10 years of violating, essentially, the user, shall we say, privacy. Now, we have commented on this earlier extensively that whether it's Google or it's Facebook, the essential model of these companies come from the fact that they have access to private data, our private data. They can dice us up as consumers in any way you want. And if we see what the leak of the documents which took place in the one British Parliamentary and sees some documents from a traveling person who had these documents of Facebook with him, it is very clear that the way Facebook operates, it essentially extorts money from its, not money from its partners, but extorts data from its partners. And if they don't give that data access to the data for any app on Facebook, then they are generally treated differently, shall we say. And after the Cambridge Analytica scandal, the issue is not that Cambridge Analytica had access to this data, but Facebook's anger was how is it they could use the data which should have been exclusively used by us for marketing. So, it's futile to talk about violating users' privacy if the entire business model of Facebook is built on violation of user privacy, which is what it is. So, either you look at the market power that Facebook has, or you decide that certain principles you put in place, what constitutes data and how it can be used, neither of which is the direction which either the US government wants to travel, and the FTC at the moment is really much weaker as a regulatory agency. The monopolies that Facebook and Google have built up in the last 10, 15 years are the most powerful monopolies the world has ever seen, and has also been built up over not 50, 60, 70 years as happened with earlier monopolies, but the shortest possible time. So, I think the challenge that all governments and US government, because it's a home country for Facebook and Google, but it's also true that Alibaba and WeChat and all are also there, Baidu are also there in China. So, the question is how do the home governments regulate what are essentially global monopolies, and what does the rest of the world do? There are some presidential candidates in the US who have been talking about breaking up these companies. Yes, that's one possible answer. What are the other regulatory answers or what other answers we can take? Ideally, you don't know at this stage. And right now, the strategy generally seems to be imposing fines because recently the Italian government also imposed a one million fine, and Ireland is conducting at least 10 enquiries right now. But there seems to be a general lack of clarity on what else can be done in addition to just imposing fines, which like you said is actually peanuts as far as Facebook is concerned. You see, this has been also the European Union's attempt to force Google to do certain set of things, and what are called anti-competitive practices. Impose on them fines for violations of anti-competitive practices. They have also put hefty fines on Google. You know, the problem that is there in this fine model is if violating this anti-competitive practices, say for five years, gets you 20 billion dollars of profits say over a period of five years, then paying one billion seems to be an entry price. So it becomes instead of buying a license say on telecom, you buy a fine. So in order to violate the privacy, and this is the buying the license to misuse private data is essentially what Facebook and Google are doing in terms of accepting fines in lieu of what this particular order calls the egregious violation of privacy. So I think we are in that model that violating privacy for Google and Facebook and a host of others is the basic business model. And since violating of the privacy has a price, they are willing to pay the prices fine, because otherwise there is no shall we say regulatory barrier to getting access to users private data. Now if you remember what was to be said the airwaves, you had to buy the airwaves license. So you are buying private data through fines seems to be the business model of Google and Facebook. So privacy protection, we must be very clear, privacy protection in a model which is based on user surveillance is actually meaningless. And therefore, to think that we can protect it in any one other way except by either law, which enforces certain things or by regulatory creating regulatory barriers and breaking up monopolies one of them is at the moment only two things to do. Otherwise, I am afraid that we are, we have a really shall we say a fine filled future, but it will not harm Google and Facebook's growth. This is a price they are willing to pay for in lieu of shall we say untrammel access to your and my data or our viewers data. And this is of course not even considering the Facebook currency Libra that is coming out which is also faced hearings and similar criticism. And we also have a situation the global south where most countries actually have not enacted including India for that matter have not enacted very strong provisions to stop these companies and Facebook is actually involved in promoting the internet with free basic schemes in many of these countries. So again, that's a lot. There's another question there as to what these kind of countries will also be able in a position to do. So just passing two separate things out of it. One is the privacy angle that you've talked about and the fact that Google and Facebook are equally guilty about it, but Facebook has the other aspect which is that it pretends to be the internet and says everything should happen in my ecosystem. So in that sense while Google also has similar policy in terms of giving you more and more tools in lieu of which you part with data, Facebook in that sense also tries to create ecosystems which you don't leave then and that becomes effectively your internet world. So that's the net neutrality versus free basics debate which of course India Facebook failed to get it through but in a lot of other places they have successfully got it and the zero rating issue is still an issue in different parts of the world and zero rating when it comes to even European Union it's not that clear they have got a clear policy against zero rating while India we do. So I think those are some of the issues that we have to take into account when you talk about how to regulate this company but when you come to currency and this is an area where Google obviously has not gone this particular way. All the other digital platforms we know create what are called wallets. Wallets are not outside the currency zones you put in currency money over there and that stays in the wallet it could also be essentially adding to the reserve of these companies because the wallet if you don't take out the money that stays with the company you don't get any interest but they could park it in a bank and get interest or invest in other things get interest. So if you create a wallet you are actually creating free cash for yourselves and you are not a banker so you don't have any obligations what a bank has if you put in money in a bank but at the same time you can use the money in all kinds of ways. This the wallet is what we have seen till now digital platforms do Facebook has gone one step ahead he said not only am I providing you a wallet I'm actually providing you a currency and I'm also going to provide you a currency which will be recognized by other people as well they've got a set of friends with who are also backing the Leibler currency and they have said for verification as a first step we will verify but behind our verification is a bit coin equivalent stuff that we will do which is that we will also have a verification which will be algorithmically done. Now how this algorithmic verification will be done blockchain what variant of blockchain etc we don't know but it's also clear that blockchain kind of methods as you know the number of transactions globally you can do with blockchain is about seven or eight based on current computing power and internet speeds but this obviously is not sufficient for normal transfers a normal accounting purposes so while credit card companies can do up to 7000 per second this supposed to be 1000 per second kind of speeds so the first layer of verification is going to act like a credit card company that some companies verify whether this is money or not the blockchain method is supposed to be the second tier we don't know what the hell it is so is it a cryptocurrency as it is claiming liberalized cryptocurrency or we don't know what it really means is that is it outside the currencies of governments because companies have not guaranteed money governments have states have is it with are we seeing private money creation instead of wallets are we really seeing private money creation and do they lie outside all currency regulations therefore bypassing all the capital controls other currency controls that are there so large amount of money can it flow out of the country through this route these are all open questions I don't think it's going to be that easy the regulatory barriers are not going to given up by other countries so we might find the liberalized declare illegal so all those possibilities exist but I do think that facebook now is moving into an issue area where it says not only do I use your private data but I'll create an ecosystem within which you always are going to live and you don't need to have anything else to go out of it so can it actually envelope amazon can it actually envelope all other shall we say companies which deal with merchandising basically buying and selling can they develop that system as well within it and become a ecosystem from which you get from internet to goods all and services all of it we'll do and on top of that also we give you a currency within which if you stay in the ecosystem you don't have to change this currency I think that's the threat of Libra and it's really a much bigger regulatory threat where it that it comes to private data because money is what every company every human being in the world and governments use therefore its control going to this kind of ends is a is a shall we say a very daunting prospect given the fact that the way Facebook has dealt with our privacy I think dealing with Facebook whose model is an extortionist and predatory model I think is very dangerous for all of us thank you that's all we have time for today keep watching us click