Facebook braces for $3B to $5B fine over privacy lapses

Facebook braces for $3B to $5B fine over privacy lapses

Facebook has told investors it's probably on the hook for up to $5 billion in fines - a record-high penalty for a tech company in the U.S. - as a Federal Trade Commission probe continues into its violations of users' privacy.

Total Q1 revenue rose 26 percent from past year to United States dollars 15.1 billion - this beat analysts' average estimate of USD 15 billion. That's down 51 percent from $4.99 billion, or $1.69 per share, a year earlier, largely as a result of the $3 billion charge. This equals earnings per share of $0.85.

The $3-billion charge is a contingency against a possible fine by the Federal Trade Commission.

The FTC has been investigating revelations that Facebook inappropriately shared information belonging to 87 million of its users with the now-defunct British political consulting firm Cambridge Analytica.

Former FTC chief technology officer Ashkan Soltani suggests that major FTC mandates that curbed Facebook's ability to share data with partners - or forced them to be more transparent about how much data they collect and how - would be far more meaningful to the company.

Facebook has said it will set aside $3bn (£2.3bn) to cover the potential costs of an investigation by U.S. authorities into its privacy practices.

Facebook finished the first quarter of 2019 with $US45 billion in cash on its balance sheet. It would also be the largest privacy-related fine in FTC history. However, the Company still managed to earn $2.429 billion in profit, which is quite lower than the profit generated in the last quarter, or even a year ago.

CEO Mark Zuckerberg on Wednesday said Facebook, Messenger and WhatsApp's Stories features now have 500 million daily active users, joining Instagram, which hit that mark in January.

Shares jumped as much as 8.7 per cent, the most since January, to US$198.48 Thursday morning in NY.

Facebook has reported revenue growth of more than $3 billion (€2.69bn) on Q1 2018.

Facebook has been in negotiations with the Federal Trade Commission, following concerns the company violated a 2011 consent decree.

The company cautioned during a conference call with analysts that it faces "ad targeting headwinds" in the second half of this year. In a March post published on Zuckerberg's own Facebook page, the CEO said he wanted to make Facebook a more personal experience and focus in on smaller conversations between tighter groups of users, rather than the town square-style ecosystem Facebook has become.

That plan - to stitch together the various messaging platforms in Facebook's "family of apps" - was announced in March as a pivot to a "privacy-focused communications platform". It added the inquiry is looking to determine whether Facebook has complied with "obligations" of the rules.

Daily users grew 8 precent to 1.56 billion.

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