Facebook is poised to receive a record fine of up to $ 5 billion (about VND 116,000 billion) because of a shocking leak of user data last year.
On April 24, Facebook said the company predicted that the US Federal Communications Commission (FCC) investigation of Facebook users’ private information leak could result in a fine of 3-5. billion dollars. The company has saved $ 3 billion in legal costs related to the investigation. That is the reason that Facebook’s 1-2019 profit only reached 2.43 billion dollars, down 51% compared to the same period last year.
David Wehner, Facebook’s chief financial officer, said: “The case has not been resolved yet, so the actual number of fines is still uncertain. However, we estimate the loss due to the fine of about US $ 3-5 billion.
In February, the Wall Street Journal also reported that FCC officials are considering a penalty for Facebook of up to $ 5 billion.
This will be the first financial penalty that Facebook has suffered in the US since the scandal involving data analysis company Cambridge Analytica illegally collects and uses private information of tens of millions of users. Facebook was released in March last year. Facebook is accused of knowing this security breach but does not do anything to protect users. Cambridge Analytica declared bankruptcy in May 2016 after being harshly criticized by the public and unable to regain trust from customers.
Mark Zuckerberg, Facebook CEO, at the hearing on the use and protection of user data before the US Senate’s Trade Commission and Justice Committee in April 2016. Photo: Reuters
Since then, Facebook has also been closely monitored because it provides more user data for companies than previously acknowledged by the company.
These unauthorized user data offerings could violate an agreement between Facebook and the FCC in 2011, in which Facebook agreed to set up a “comprehensive privacy protection program” and pledged to share only. Sharing user data with third parties if there is explicit consent from users.
The FCC’s previous penalties were aimed at technology companies that had nothing to do with their huge revenues. In 2012, the FCC fined Google $ 22.5 million for violating an agreement to protect users’ private information. In that year, Google first surpassed $ 50 billion in revenue.
However, former FCC officials forecast this time the FCC could feel greater pressure and be forced to declare an “impressive” penalty against Facebook in the context of personal information leak scandals. Facebook users attract great public attention.
A multi-billion dollar fine will be the largest ever penalty a regulatory agency in the United States has dealt with a major US technology company. It will also record the FCC’s historic privacy-related penalty.
Facebook’s confirmation of the huge fines does not seem to worry investors. Facebook shares increased by 8% in off-hours trading on April 24. Since the beginning of this year, Facebook’s stock has increased by 35%.
It seems that investors bet that the $ 5 billion fine is the last worst news for Facebook or they may think that the penalty is quite mild compared to their imaginations.
Earlier this year, Rep. David Cicilline, Chairman of the US House of Representatives’ Judicial, Commercial and Antitrust Law Committee, warned: “A small billions of dollars in fine will not make Facebook explains full responsibility.