Facebook is bracing itself for a record fine from the US Federal Trade Commission following the Cambridge Analytica scandal and numerous privacy breaches after the social media giant revealed it had set aside $3bn (£2.33bn), despite the fact that it has persistently denied any wrong-doing.
Even then, that might not be enough, with Facebook admitting the penalty could be as high as $5bn – 100 times larger than the current FTC record fine levied against a tech company.
The pre-emptive move has been revealed in Facebook’s first quarter earnings, in which it stated: “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.”
Even so, Facebook’s Teflon coating appears to be as strong as ever, with revenue rising by 26% year on year for the first three months of 2019 to $14.91bn. Daily active users also went up, 8% year-on-year to 1.56 billion, while monthly active users also increased by 8% to were 2.38 billion.
The $3bn write-down did trigger a 51% drop in profits to $2.43bn compared to the same period last year, although this still represents a daily profit of $27m for the quarter.
In a conference call to analysts, chief executive Mark Zuckerberg claims that at least 2.1 billion people use one of its apps, from Facebook to Instagram to WhatsApp, every day. The prospects for growth were strong, he maintained.
Zuckerberg added: “We had a good quarter and our business and community continue to grow. 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.”
Socialbakers CEO Yuval Ben-Itzhak said it is no surprise that despite the headlines and privacy questions, brands continue to pour their ad dollars into Facebook services in order to reach their audiences at scale.
He added: “At the same time, users are also not abandoning their use of the app. Social media has become a habit with consumers. As such, they are asking Facebook to improve its platform in regards to privacy vs. changing their own habits.”
“Our data shows that marketers looking to drive value for their businesses via digital marketing find more value in terms of scale and audience engagement from Facebook and its suite of services than from competing platforms. With 2.7 billion monthly active users, Facebook’s family of apps is still where most consumer-to-brand engagement happens online.”
4C Insights chief marketing officer Aaron Goldman agrees: “Facebook continues to prove itself as an indispensable part of the marketing mix. It provides a breadth of reach and depth of targeting that’s hard to replicate on other platforms. With Instagram continuing to orient more around commerce, the app is poised to contribute even bigger growth. Meanwhile, Messenger and WhatsApp are waiting in the wings as Stories adoption increases and the format becomes a standard advertising opportunity across the Facebook family of apps.”
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