Facebook expects to pay up $5-billion for privacy breaches

Federal Trade Commission looking into whether Facebook broke its own 2011 agreement on user privacy

In this March 28, 2018, file photo, a visitor poses for a photo with the Facebook logo reflected on her sunglasses at the company’s headquarters in Menlo Park, Calif. (AP Photo/Marcio Jose Sanchez, File)

Facebook said it expects a fine of up to $5 billion from the Federal Trade Commission, which is investigating whether the social network violated its users’ privacy.

The company set aside $3 billion in its quarterly earnings report Wednesday as a contingency against the possible penalty but noted that the “matter remains unresolved.”

The one-time charge slashed Facebook’s first-quarter net income considerably, although revenue grew by 25% in the period. The FTC has been looking into whether Facebook broke its own 2011 agreement promising to protect user privacy.

Investors shrugged off the charge and sent the company’s stock up more than 9% to almost $200 in after-hours trading. EMarketer analyst Debra Aho Williamson, however, called it a “significant development” and noted that any settlement is likely to go beyond a mere dollar amount.

READ MORE: Can Zuckerberg really make a privacy-friendly Facebook?

“(Any) settlement with the FTC may impact the ways advertisers can use the platform in the future,” she said.

Facebook has had several high-profile privacy lapses in the past couple of years. The FTC has been looking into Facebook’s involvement with the data-mining firm Cambridge Analytica scandal since last March. That company accessed the data of as many as 87 million Facebook users without their consent.

The 2011 FTC agreement bound Facebook to a 20-year privacy commitment; violations could subject Facebook to fines of $41,484 per violation per user per day. The agreement requires that Facebook’s users give “affirmative express consent” any time that data they haven’t made public is shared with a third party.

The now-defunct Cambridge Analytica, which provided political data services to the 2016 Trump campaign and others, had wide access to normally private user data. It exploited a Facebook loophole that allowed it to see the data of people’s friends, and not just people who explicitly permitted access when they took a personality quiz. While Facebook did have controls in place that allowed people to restrict such access, they are found buried in the site’s settings and are difficult to find.

In addition to the FTC investigation, Facebook faces several others in the U.S. and Europe, including one from the Irish Data Protection Commission , and others in Belgium and Germany . Ireland is Facebook’s lead privacy regulator for Europe. The FTC is also reportedly looking into how it might hold CEO Mark Zuckerberg accountable for the company’s privacy lapses.

The social network said its net income was $2.43 billion, or 85 cents per share in the January-March period. That’s down 51% from $4.99 billion, or $1.69 per share, a year earlier, largely as a result of the $3 billion charge.

Barbara Ortutay, The Associated Press

Like us on Facebook and follow us on Twitter

Just Posted

Justice rules Sagmoen gave statement of own free will

Defence had been seeking to have Curtis Sagmoen’s video interview with police deemed inadmissible

Photos: Armstrong Shamrocks, Team Slovakia unite through lacrosse

Final score irrelevant - Armstrong won handily - as sports and sportsmanship take front seat

Communities scare up food bank donations

Vote for your favourite scarecrow in Armstrong-Spallumcheen with food ballot

Photos: Dog agility on full display in Lumby

Village’s Royals Stadium site of two days of sanctioned trials, hosted by Dog’O’Pogo agility group

Armstrong blossoms at Communities in Bloom awards

City wins pair of honours, as does District of Sicamous, at provincial awards gala in Coquitlam

VIDEO: ‘Thrones,’ ‘Fleabag’ top Emmys

Billy Porter makes history as first openly gay black man to win best drama-series acting Emmy

Three B.C. moms to launch CBD-infused water

Three friends say benefits may include anxiety relief, pain management

B.C. students empowered to ‘shift the vote’ this election

B.C. Federation of Students launches ‘Our Time is Now’ campaign

MEC and LUSH stores to close on Friday for global climate strikes

Retailers will be closed on Sept. 27 so that staff can march in demonstrations

Hybrid vessels part of B.C. Ferries’ plans to reduce emissions

Island Class vessels, coming by 2022, part of ferry corporation’s broader strategy

LETTER: Liberals, Conservatives weak on climate action

If we elect Liberal or Conservative governments, we abandon hope of a future for our children

LETTER: Trudeau controversy a non-issue

Brownface was a meaningless act of costuming

VIDEO: Grizzly bears fight along northern B.C. highway in rare footage

Cari McGillivray posted the head-turning video, shot near Stewart, B.C., to social media

Give severely addicted drug users injectable medical-grade heroin, guideline says

CMAJ article outlines best practices for innovative treatment that’s been lacking in overdose crisis

Most Read