Business

Facebook reserves a fine of up to $ 5 billion for the Cambridge Analytica scandal

In its first quarterly financial report published on April 24, Facebook prepared for a possibility of a $ 3-5 billion fine by the US Federal Trade Commission (FTC) for issues related to privacy. of the user.

According to Business Insider, this may be the biggest penalty ever issued by the FTC and related to the Facebook-based investigation following the Cambridge Analytica scandal with user privacy violations. This social network.

This will be the biggest monetary penalty Facebook faces ever, but this figure is still quite modest compared to the annual profit of the world’s largest social network. Investors seem to ignore concerns about the impact of this when Facebook shares rose about 8% in the after-hours trading on April 24, to $ 197 / share.

Facebook said that if the reserve for the above fine is not left, the company ‘s earnings per share in the first quarter will be $ 1.89, significantly higher than analysts’ forecast of $ 1.62.

“In the first quarter of 2019, we deducted about $ 3 billion for the ongoing FTC investigation,” a Facebook spokesman said. “This issue has not been resolved and we estimate the loss for this incident is about 3 – 5 billion USD”.

In the first quarter of the year, Facebook reached $ 15.08 billion in revenue, exceeding the forecast of $ 14.97 billion by analysts, up 26% over the same period last year. The profit per share of the company reached 0.85 USD, compared with the forecast of 1.62 USD of analysts after deducting the above provision.

By the end of the first quarter of 2019, Facebook had 1.56 billion daily active users and 2.38 billion monthly users.

Meanwhile, the total number of daily users on Facebook’s “application family” increased from 2 billion in the previous quarter to 2.1 billion, while the number of monthly users remained at 2.7 billion. Earlier, Facebook said at one point the company would stop publishing data on the daily and monthly usage of Facebook apps, and only provide general figures for “app families”.

The number of Facebook application users is significantly affected after the company’s scandal and is tending to be “overtaken” by the Instagram app. In the past two years, Facebook has been besieged by a series of scandals, from the personal information case of 10 million users illegally used by political consulting firm Cambridge Analytica, to the role of social networking platform. This is in spreading hostile statements in Myanmar.

Facebook’s daily user activity in the region – Source: Facebook.

However, Facebook’s quarterly financial report shows that the number of social network users still remains stable and slow in Europe after going flat last year.

One of the issues that investors are most concerned about now is continuous growth of Instagram, even when the core Facebook application business slows down and when the company applies an advertising model with New Stories feature on all applications. Another major concern is Facebook’s move to privacy and how it affects business, as well as the company’s e-commerce potential and growth from Stories. .

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