Facebook expects to pay up to $5bn in FTC fine

Facebook revealed it expects to pay up to $5bn in fines to the US Federal Trade Commission (FTC) for allowing the misuse of its user data during the last US presidential elections, even as it tries to resolve two investigations and another two lawsuits related to the same matter.

First quarter revenues increased by 26% to just over $15bn, but its net income was cut roughly in half versus a year ago as the social media network opted to book an estimated $3bn charge for potential legal expenses “in connection with the inquiry of the FTC into our platform and user data practices”.

“We estimate that the range of loss in this matter is $3bn to $5bn. The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”

The fine, the first slapped on the company in the wake of the Cambridge Analytica scandal, was announced last March but the final sum had yet to be revealed.

American regulators claimed Facebook had violated the terms of the 2011 settlement requiring the platform to obtain the “express consent” of its users before sharing their data with third parties.

Despite the massive hit to its bottom line from the record-setting fine, the company still earned more than $2.4bn over the first three months of 2019, and with the cash now set aside for the penalty it remained to be seen to what extent it might simply revert to business as usual.

A settlement with the FTC could force changes to its business practices.

In its first quarter update, the company also said the number of people who checked their Facebook accounts on a daily basis jumped by 8% versus a year ago to 1.56bn.

The number of people who checked Facebook monthly also grew by 8%, reaching 2.38bn.

Separately, Bloomberg reported that the social media giant was in "advanced" talks with several state governments in the US regarding the possible breach of local consumer protection laws, although the quantum of any damages that they might seek was unknown.

An agreement might reportedly be "weeks" away, one source told Bloomberg, and might changes to its business practices.

Those potential damages were not covered in the provision announced by the company on Wednesday evening.

Facebook was also under a criminal investigation by federal prosecutors in New York and two lawsuits.