Facebook Sets Aside $3 billion For FTC Privacy Fine

Facebook has posted robust quarterly results, but its profits have halved after the social network set aside billions for looming regulatory penalities.

The number of the monthly and daily users of the main Facebook app rose 8 percent compared to last year, and advertising revenues rose a healthy 26 percent, despite the controversies at the firm which last year Facebook admitted that had caused some “pausing” of advertising spending.

The company is at the centre of a number of ongoing problems. Earlier this month it admitted that it had “unintentionally uploaded” email contacts of 1.5 million new users since May 2016, without their knowledge or consent.

Profit hit

The firm is also in hot water over the Cambridge Analytica scandal from 2018. But there have been other scandals as well.

The firm for example had to react quickly recently when it was discovered that public databases contained data on 540 million of its users were being held on an Amazon cloud server.

And then last month Facebook admitted that “hundreds of millions” of passwords were stored on its internal server in plaintext, unprotected by any form of encryption whatsoever.

Yet despite this Facebook continues to thrive, but that said, there has been some pain.

For the quarter ending 31 March, net profit at Facebook fell 51 percent to $2.4bn from $4.9bn a year earlier.

The profit fall comes after Facebook set aside $3 billion to pay a possible FTC fine, but it warned the penalty could as high as $5bn.

“In the first quarter of 2019, we reasonably estimated a probable loss and recorded an accrual of $3.0 billion in connection with the inquiry of the FTC into our platform and user data practices,” said the firm. “We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion. The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”

Facebook meanwhile posted quarterly revenues of $15bn, up 26 percent from $11.9bn in the same year-ago quarter.

Operational highlights

During the past quarter, there were a number of other points of interest at Facebook.

For example, daily active users (DAUs) were at 1.56 billion on average for March 2019, an increase of 8 percent year-over-year.

Monthly active users (MAUs) were 2.38 billion as of 31 March, an increase of 8 percent year-over-year.

Mobile advertising revenue represented approximately 93 percent of advertising revenue for the first quarter of 2019, up from approximately 91 percent of advertising revenue in the first quarter of
2018.

Headcount was 37,773 as of 31 March, an increase of 36 percent year-over-year

Privacy future?

“We had a good quarter and our business and community continued to grow,” said Mark Zuckerberg, founder and CEO.

“We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet,” he said.

In March Zuckerberg outlined a “vision” for the future of social media that he said would hinge on privacy.

Then earlier this month Facebook called for more regulation of internet firms in general.

Zuckerberg had called for an international framework that would “establish a way to hold companies such as Facebook accountable by imposing sanctions when we make mistakes”.

Quiz: Think you know all about Facebook?