Facebook expects to pay up to $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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Police ask for help to identify suspect in alleged Surrey break-and-enter

Surrey RCMP say two men ‘kicked down the front door’ of the home

Surrey monitoring traffic as vehicles again clog city streets

Compared with city’s 2019 weekly average, deepest volume reduction was in late March with up to 46 per cent less vehicles

Art’s Scarecrow Festival to return in September

Sixth annual event will be different than previous events because of the pandemic

‘Lifting Hands’ mural on White Rock wall celebrates community’s COVID efforts

High school students, grads inviting health-care workers, emergency crews to add handprints

Surrey’s top cop is keynote speaker at Surrey Board of Trade AGM

Asssistant Commissioner Brian Edwards will be on deck at Tuesday’s ‘virtual’ meeting

B.C. records new COVID-19 death, 85 more cases; Horgan calls on celebrity help

This brings the total number of active confirmed cases to 531 across the province

B.C. announces multi-year plan to double treatment beds for youth with addiction

This will bring the total number of new beds specific to those 12 to 24 years old to 247 province-wide

B.C. man who nearly died from COVID-19 reflects on one-month battle

Robert Billyard was in an induced coma to ensure his body would not fight the ventilator to breathe

Man wanted for ramming police car and almost hitting bystanders in Abbotsford

Police say Lorne Guilbault ‘engages in high-risk criminal driving behaviour’

Wedding party bear sprayed at Okanagan campsite irks locals

Latest criminal activity at the Meadows leaves locals frustrated

Paramedics fired for allowing patient to crawl for treatment on Downtown Eastside: court documents

The man spent three days in intensive care and three months recovering in hospital from sepsis

Feds seeking private consultant to design firearm buyback program

The ban covers some 1,500 models and variants of what the government considers assault-style weapons

Face masks for teachers can impact learning on young children, experts say

Face coverings, mandatory in most indoor public places across the province, can help limit the spread of COVID-19

Most Read