Facebook might owe you money. You should find out. June 26, 2023 is the deadline.
Facebook was recently ordered to pay $725 million to USA’s Facebook users active between 2007 and 2022 for privacy violations1. This most likely applies to at least 200 million2 people, but will not be divided equally, and doesn’t account for attorneys and courts taking up to 25% of the settlement as fees, nor the up to $15,000 to be awarded to each of 8 named plaintiffs (probably because they helped get the lawsuit going).
This is an indicator that the USA federal government values its citizens privacy between $2.41 and $3.62. Whether or not this represents 15 years of privacy violations or is closer to a lifetime value, it is woefully below an accurate value. Ironically, you don’t even have to go that far to see that at least one judge in Illinois understands this. In 2021, 1.6 million users were awarded a minimum of $345 each (with a total of $650 million, alarmingly close to the federal judgement).1
How much money did Facebook make off of these privacy violations?
Let’s start with the most generous estimate possible: Over those 15 years, Facebook reported $168.3 billion net income3. As of 2023, they have 2.96 billion users4. If these numbers went together, that’s $56.85 per user. Ignoring that Facebook makes at least 2x more per North American user than any other user5, and estimating that only 10% of their profit comes from these privacy violations, this settlement is 64% of what it should be.
But we can do better than that. In 2017 Q1, Facebook made $17.10 per user in revenue. This is the lowest value I could find over the range, and it went much higher – so it seems fair to use as an estimate. Assuming this is average for the entire period and using 200 million users in the USA, Facebook brought in $1,026 per user. They only kept 29.7% of their revenue in profit, so that turns into $305.30 per user. This time, let’s pretend privacy violation only gives them 5% of their profits. In that case, this settlement is 23.7% of the profit they made.
(Because of how close this calculated value is to the Illinois settlement, I’d argue it’s at least much closer to an accurate value. The Illinois settlement seems unusually correct in the amount of harm done compared to most large settlements.)
This is complicated, and most of the data isn’t easy to find. Even so, you can see the disconnect between corporate fines and corporate profits. Most companies don’t care about the law, because they know they can make more money than they will be fined for violations.
Will Facebook actually pay $725 million?
It may sound like a silly question, but out of 200 million people entitled to a cut of this settlement, how many of us will actually sign up and receive our pay? Not many. The FTC released a study6 a few years back that shows only around 9% of those entitled to large settlements claim their share.
When people don’t sign up, the excess award is sometimes divided amongst those who did sign up – boosting their payment. Other times a designated charity receives the difference (which can be good or bad). The third option? The defendant gets to keep it.7 While the rate of claims is not directly proportional to how much a company has to pay, Facebook could get away with paying $65 million or less depending on how the court ordered this settlement.
(If they get away with that, they are paying at most 2.1% of what they should be paying.)
- Have you used Facebook in the past 16 years? You may qualify for payment.
- Number of Facebook users in the United States from 2018 to 2027. Obviously this is based on estimates beyond a certain point, but it’s close enough to use for calculations.
- Annual revenue and net income generated by Meta Platforms from 2007 to 2022.
- Essential Facebook statistics and trends for 2023.
- Facebook’s Average Revenue per User by Geography (Q1 2017 – Q1 2022).
- FTC’s comprehensive study finds median consumer class action claims rate is 9%.
- What Happens to Unclaimed Class Action Settlement Money?
(And if you’re still here, I find it amusing that Facebook’s net margin is a little below the tech sector average.)