Facebook sets aside billions due to privacy investigation
The Cambridge Analytica data scandal could have costly consequences for Facebook—the social network is bracing itself for a fine in the billions. Meanwhile, its advertising business continues to thrive.
Facebook expects the latest data protection scandals to cost the online network up to five billion dollars. In connection with corresponding investigations by the US Federal Trade Commission (FTC), Facebook already set aside three billion dollars in the last quarter for possible fines. In total, the burden could reach five billion dollars, the company explained on Wednesday.
The FTC's investigations can end with a fine or a settlement, for example. The investigation was primarily triggered by the Cambridge Analytica scandal.
Facebook can easily digest such an amount - the online network has cash reserves of over 45 billion dollars. Investors were relaxed following the announcement of the provision: the share price rose by more than seven percent in after-hours trading.
At the same time, the provision pushed profits down to 2.43 billion dollars in the last quarter, compared to just under 5 billion dollars a year earlier. Revenue rose by 26 percent year-on-year to just over 15 billion dollars. As before, 93 percent of advertising revenue is generated on mobile devices such as smartphones.
The number of monthly active Facebook users grew by around 60 million to 2.38 billion within three months. Every day, 1.56 billion users accessed the online network - compared to 1.52 billion in the previous quarter.
Across all Facebook offerings - the Group also includes the chat services WhatsApp and Messenger as well as the photo platform Instagram - 2.7 billion users were active, 2.1 billion of them daily.
The growth came primarily from Asia. In Europe, the number of users active at least once a month increased by 3 million to 384 million. Last year, the number of European users fell temporarily, presumably due to the changeover to the General Data Protection Regulation (GDPR), which required new consent for data processing to be obtained.
The number of employees has grown from just under 35,600 to almost 37,800 since the beginning of the year. Among other things, Facebook is constantly expanding the teams that delete unauthorized or criminal content. In the past quarter, the online network was criticized, among other things, because the live video of the devastating attack on two mosques in Christchurch, New Zealand, was streamed via the Facebook platform.
In the Cambridge Analytica case, the developer of a survey app passed on some information from millions of Facebook users to the data analysis company years ago. Facebook emphasized that the developer had violated the rules. However, the online network still came under fire because the data transfer was possible in the first place - and because Facebook had known about it since the end of 2016, but was satisfied with the assurance that the data had been deleted.
The FTC launched its investigation around a year ago after the case became public. Among other things, the authority is investigating whether Facebook may have violated an agreement with the FTC from 2011 by allowing the transfer of data. At that time, the online network had agreed in a settlement following data protection violations, among other things, not to pass on any user information without their consent. (SDA)
