When Boeing first introduced the 737 MAX 8, the new plane was supposed to help usher in a new generation of commercial aircraft. Then two MAX 8’s crashed within five months of each other, killing a total of 346 people.

Since then, the controversy around Boeing has kept growing and growing as numerous investigations revealed a number of highly questionable and even negligent business and regulatory practices that ultimately led to the crashes.

Even now, more than a year after the first crash, Boeing is still in the news and under the microscope as it struggles to keep up appearances.

• Facebook agreed to pay $550 million to settle a class-action lawsuit in Illinois that claimed its “Tag Suggestions” feature illegally harvested facial data from millions of users in Illinois without their permission.
• Facebook disclosed the settlement while also announcing it made $21 billion last quarter.
• Some championed the settlement as a victory for consumer privacy rights.
• Others argued that no matter how much Facebook pays in lawsuits and settlements, the company has continued to grow and has not fundamentally changed its business practices.

Facebook Announces Settlement

Facebook announced Wednesday that it had agreed to pay $550 million to settle a class-action lawsuit involving facial recognition technology.

The lawsuit was filed in Illinois in 2015 and claimed that Facebook’s “Tag Suggestions” feature violated the state’s 2008 Biometric Information Privacy Act (BIPA).

The “Tag Suggestion” tool uses facial recognition software to scan users’ faces and then suggest the names of other users who might be in the picture. 

The lawsuit alleged that Facebook used it to illegally harvest facial data from millions of users in Illinois without their permission or without telling them how the data was kept.

Illinois is one of three states that has its own biometric privacy laws, and BIPA is arguably the strongest of all three. 

Under BIPA, companies that collect biometric data, which includes data from finger, face, and iris scans, must get prior consent from consumers and detail how the data will be used and how long the company will keep it. BIPA also allows private citizens to sue.

The lawsuit accused Facebook of failing to comply with those restrictions. 

Facebook, for its part, argued that the people who it collected data from without consent could not prove that they experienced any concrete harm, like financial losses. However, the company still ultimately decided to settle.

Once the federal judge overseeing the case approves the settlement, people eligible to claim money are expected to receive a couple hundred dollars.

Other Settlements & Controversies

Many privacy experts and advocates applauded the settlement and said it was a victory for consumer privacy rights.

But others argued that the settlement does not really change anything, because it is not a big deal for Facebook. While $550 million might seem like a lot, for Facebook, its basically pocket change.

Even the way Facebook announced the settlement seemed to emphasize that point. The tech giant disclosed the settlement while announcing its financial results for 2019, reporting that revenue rose 25% to $21 billion in the last quarter alone.

Not only did that indicate how minor the Illinois settlement was for the company financially, it also showcased their incredible ability to weather scandals and controversy.

Over the last few years, Facebook has received a lot of backlash, largely over privacy concerns and the spread of misinformation on the platform.

Most recently Facebook has been under fire for its decision to essentially let politicians lie in political ads.

In July, the Federal Trade Commission (FTC) fined Facebook $5 billion over privacy violations— the largest fine the FTC has ever imposed on a tech company by far.

Facebook’s Continued Growth

But even in the face of massive financial costs and prominent controversies, Facebook still continues to grow.

In an article published by Axios, writer Sara Fischer described Facebook’s ability for continued growth despite those obstacles.

“Facebook closed out the second decade of the millennium stronger than ever,” she wrote. “Facebook’s continued ability to post double-digit revenue growth every year speaks to how well it has been able to innovate and adapt, even in the face of regulatory headwinds and increased competition.”

Fischer gave the example of North America and Europe where Facebook has gotten more money per user each year despite the fact that its user growth in those regions has stayed relatively stagnant.

She also mentioned the Illinois case, FTC fine, and other growing concerns over privacy and advertizing Facebook has warned its investors about.

“So far these fines have proven moot in getting the tech giant to fundamentally change its business, which continues to grow substantially,” she said.

While Facebook did agree to be more transparent about how it uses facial recognition technology as part of the FTC settlement, many are skeptical that the Illinois case will bring about any substantive change.

However, in an investor call following the release of Facebook’s earnings report Wednesday, CEO and founder Mark Zuckerberg said that he wanted to be more transparent about the company’s values.

“One critique of our approach for much of the last decade is that because we wanted to be liked, we didn’t want to communicate our views as clearly, because we worried about offending people,” he said.

“Our goal for the next decade isn’t to be liked, but understood. In order to be trusted, people need to know what we stand for.”

See what others are saying: (Axios) (The Verge) (The New York Times)

• Casino operator Penn National Gaming agreed to buy a minority stake in Barstool Sports for $163 million, a deal that now values the popular sports and pop culture blog at $450 million.
• Since sports gambling was legalized in 2018, media and gambling companies have been rushing to enter the market. 
• By combining their forces, media companies get access to revenue streams outside of advertising, while gambling companies get access to new consumers and a broader reach.
• While some believe this model will spread, others note that Barstool has a unique following and ability to monetize its audience that sets it apart from others.

Penn National Buys Barstool Stake

Casino operator Penn National Gaming announced Wednesday that it bought a $163 Million stake in sports pop culture blog Barstool Sports, valuing the media company at $450 million.

In a press release, Penn National said that they had acquired a 36% stake in Barstool, adding that in three years the casino operator will “increase its ownership to approximately 50% with an incremental investment of approximately $62 million.”

Penn National will now be the “exclusive gaming partner” of Barstool for “up to 40 years,” according to the press release. 

Penn National will also have “the sole right to utilize the Barstool Sports brand for all of the Company’s online and retail sports betting and iCasino products.” 

Barstool founder Dave Portnoy separately announced the deal in a video on Twitter, where he talked about how he started Barstool as a “gambling rag” 17 years ago, and how the company has a deep history connected to gambling.

“We just needed a company with a shared vision,” he said. “That vision is Penn National Gaming. They have one of the biggest infrastructures in the country for gambling. They have sports tracks, they have casinos, they’re all over the country.”

“They have the infrastructure, we have this rabid audience, this fan base craving it,” Portnoy added. 

“Together, we’re going to create an omnipresent approach to gambling, on-premise, off-premise: Barstool casinos, bars, pizza places, you name it, we’re going to build it. All fueled by the Barstool media engine.” 

Win-Win for Media and Gambling Companies

The deal is a significant step for Barstool and Penn National, but it is also representative of a broader change in the gambling industry. 

In 2018, the Supreme Court ruled that sports gambling was legal in the U.S., giving individual states the power to decide if they wanted to legalize. 

According to the Wall Street Journal, 20 states and DC have legalized sports gambling. While some of those states only allow it to take place in casinos, others do permit online betting.

Since the decision, there has been a rush by both the gambling industry and media companies to capitalize on that new market, specifically when it comes to online gambling.

Those efforts have proven to be incredibly lucrative. According to the American Gaming Association, gamblers have placed $15.8 billion in sports bets and generated $1.1 billion in revenue for sportsbooks since the Supreme Court ruling.

Online betting has been the most profitable in states where it is allowed like New Jersey, where nearly 84% of the $4.58 billion the state brought in from sports wagers last year came from online bets, according to the Journal. 

The thing that is so unique about this market is that media and gambling companies do not have to be competitors. When companies like Penn National and Barstool combine their resources, both benefit.

Working jointly is good for companies like Barstool because digital-media companies primarily depend on advertising revenue. But combing forces with a gambling industry giant allows them to diversify their revenue streams.

It is also beneficial for big gambling operations like Penn National because media companies give them access to their large, young audience.

For example, Barstool sports has 66 million monthly unique visitors. By pairing with a popular company like Barstool, Penn National— which is very lucrative but not very well known— can grow its profile nationally while simultaneously cutting down on costs.

This saves gambling companies money because attracting new customers through normal means like advertising Facebook and Google can be expensive.

According to filings from the sports betting company DraftKings, the company paid an average of $406 for each new customer acquired in New Jersey in the first half of 2019. 

Future of Sports Gambling

While some predict that this model will be used for other media and gambling company pair-ups in the future, others are not so sure.

In an article for Forbes, writer Daniel Marcus argued that from the get-go, Barstool, “has been willing to leverage its’ rabid and loyal fan base into other revenue opportunities outside of the traditional advertising model.”

Marcus notes that Portnoy has always mobilized Barstool’s fans in a unique way, like through selling merchandise and convincing fans to actually buy that merchandise in a way other companies have not.

He also said that while other media companies have leaned into premium subscription models, Barstool has always supported growth without doing so.

“For those assuming this deal will trigger some sort of domino effect that will benefit the other sports media entities that are currently in play, I wouldn’t count on it, as few of them have proven they are able to effectively monetize their audiences beyond advertising,” he wrote.

While Portnoy has been effective at reaching his fans, he has also been a controversial figure. In August, he came under fire after he threatened to fire Barstool employees who talked to union activists in a series of tweets.

He was later forced to remove the tweets in a settlement with the National Labor Relations Board.  

See what others are saying: (The Wall Street Journal) (Forbes) (Business Insider)