In July 2019, the U.S. Federal Trade Commission (FTC), the country’s consumer protection agency, voted to fine Facebook roughly $5 billion for mishandling its users’ personal data. It was by far the biggest penalty the U.S. government had levied against a technology company.
Yet praise for the settlement was muted. Then–democratic FTC commissioner Rohit Chopra, who voted against it, and other critics said it wasn’t large enough to deter Facebook from repeating its past mistakes, given the company was worth more than $580 billion at the time.
The agreement highlights the role of power in negotiation, specifically in the form of financial resources—and suggests how you might draw on other sources of leverage to boost your power in negotiation.
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Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.
Repeat Offender?
Back in 2012, as it settled FTC charges that it had deceived consumers by sharing their private information, Facebook promised to take steps to better protect such sensitive data.
Six years later, in March 2018, the FTC began investigating whether Facebook had violated that settlement. The social media giant reportedly had allowed Cambridge Analytica, a British consulting firm that worked for Donald Trump’s 2016 presidential campaign, to harvest its users’ personal information without their consent and apply it to creating political messages that would influence voters.
Both congressional Democrats and Republicans urged the FTC to come down hard on the company. The FTC had been much less aggressive than European governments in penalizing technology companies for privacy violations and other transgressions. But the FTC’s annual budget of about $306 million, along with the lack of a U.S. consumer privacy law, severely limited its privacy and antitrust enforcement efforts.
Keeping It out of Court
By the end of 2018, FTC investigators concluded that Facebook had breached the 2012 consent decree by misleading millions about how the site used their personal information. The FTC computed that Facebook’s fine should be in the tens of billions of dollars, according to the Washington Post.
Citing a different formula, Facebook aimed for a fine well below $1 billion. The company reportedly believed it would prevail if it challenged a high FTC penalty in court—yet it had a strong motivation to settle, notes the Post. Facebook CEO and board chair Mark Zuckerberg and other executives wanted to avoid taking the witness stand and facing public scrutiny, which could prompt Congress to propose new privacy laws.
The FTC was also motivated to settle. The agency’s legal budget was no match for Facebook’s, and losing such a high-profile lawsuit could lessen its ability to hold other tech companies accountable. Even if the government prevailed in court, a judge was likely to hand down a much lower fine.
Concession Time
Ultimately, Facebook agreed to pay $5 billion—significantly more than it said it believed was required—to win a series of concessions from the FTC.
The two Democrats on the commission had wanted to place Zuckerberg under an FTC order, which would open him up to fines and penalties in the future. Ultimately, the parties agreed that Zuckerberg would be required to certify that Facebook complied with new privacy rules and that he could be held accountable for making false statements. The settlement did not require Facebook to admit to wrongdoing, but Facebook agreed to accept stronger federal oversight of its management of user data, the New York Times reports.
The FTC’s two Democratic commissioners refused to endorse the deal because of the agency’s concessions. Although many congressional Democrats viewed the settlement as a mere slap on the wrist, some tech-industry experts said it would motivate leaders of other companies to beef up their privacy practices.
Bolster Your Power in Negotiation
In conflict resolution and negotiation, it’s easy to be intimidated by a counterpart who seems to have unlimited resources. The following advice can help you find untapped sources of power in negotiation:
- Examine your counterpart’s BATNA. You may think you have a bad BATNA, or best alternative to a negotiated agreement, but have you thought about what your counterpart will do if you can’t reach a deal? The other side may be just as motivated as you are to stay at the table. Both Facebook and the FTC, for example, had strong reasons to settle and stay out of court. When you know your counterpart also has a weak BATNA, you may decide you can press harder for a better deal.
- Look for wise tradeoffs. Facebook conceded on price in return for concessions from the FTC on other issues. Similarly, the FTC made concessions while pushing for a high penalty (though lower than many deemed fair). A mutual gains approach to negotiation can allow both sides to get more of what they value most.
- Welcome dissent, but strive for consensus. Negotiating teams that debate issues, priorities, and goals are more effective than those that keep disagreements and conflict under wraps. But to increase your power in negotiation, try to reach consensus on your goals before negotiating so that you can present a united front; otherwise, your counterpart may be able to play a game of “divide and conquer” that leaves dissenters—and their good ideas—out in the cold.
What other strategies have you used to increase your power in negotiation?
Claim your FREE copy: Business Negotiation Strategies: How to Negotiate Better Business Deals
Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.
