Plagued By Data Breaches, Facebook Expects To Be Hit $5 Bn In Fines

Facebook said it expects to be hit by $3 Bn to $5 Bn fine by US Federal Trade Commission (FTC) for the ongoing investigation in Cambridge analytical data scandal. In its first-quarter financial report released yesterday, the social networking platform has registered a net profit of $24 Bn. This is 51% less as compared to the company’s profit in Q1 of FY2018.

“We have recorded an accrual of $3 Bn in connection with the inquiry of the FTC into our platform and user data practices, which accrual is included in accrued expenses and other current liabilities on our condensed consolidated balance sheet. We estimate that the range of loss in this matter is $3 Bn to $5 Bn,” Facebook said in a media statement.

The company reported an average of 1.56 Bn daily and 2.38 Bn monthly active users in March 2019. In addition, it has been estimated that more than an average of 2.1 Bn users interact with Facebook’s family of services including Instagram, WhatsApp, or Messenger, on a daily basis.

Further, the mobile advertising revenue of the company made up for around 93% of the total advertising revenue in the first quarter of 2019. This is a small leap from the first quarter of 2018 when it recorded 91% of the advertising revenue from mobile advertising.

Facebook’s Data Privacy Concerns

Since the Cambridge Analytica row erupted in public in early 2018, which compromised data of 87 Mn people across the world including 5.62 Lakh Indians, Facebook has been under immense scrutiny from governments and data privacy advocates around the world. Cofounder and CEO Mark Zuckerberg has had to address the US and UK lawmakers on questions about Facebook’s data privacy policy, its business model, ad targeting and more in several high-profile deliberations.

Later in September 2018, Facebook had again reported a security breach affecting 50 Mn accounts after its engineering team discovered a security issue.

More recently in March 2019, Facebook had said that as part of a routine security review in January 2019, it found that some user passwords were being stored in a readable format within its internal data storage systems. However, the company later fixed the issue and notified affected users.

Earlier this month, Facebook had admitted to unintentionally collecting email contacts of 1.5 Mn new users without their consent. This had affected any user who had tried creating a Facebook account with less popular email domains such as Yandex or GMX, since 2016.

“We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet,” Mark Zuckerberg, Facebook founder and CEO said at yesterday’s financial release.