SAN FRANCISCO: Facebook said on last Wednesday, It expected to be fined around $5 billion from the Federal Trade Commission for privacy violations. The penalty would be a record by the agency against a technology company.
The social network revealed the amount in its quarterly financial results on Wednesday, saying it estimated that a one-time charge of $3bn to $5bn in relation with an”ongoing inquiry” by the commission.
Facebook added that “the matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”
Facebook has been in negotiations with the ruler for months over a financial sentence for claims that the company violated a 2011 solitude consent decree. That year, the societal network guaranteed a series of measures to secure its customers’ privacy after an investigation found that its handling of data had harmed consumers.
The FTC opened a new investigation last year after Facebook came under fire again. This time, the company accused of not protecting its users’ information from being collected without their approval by Cambridge Analytica, the consulting firm that was building voter profiles for the Trump campaign.
Excising a sizeable penalty on Facebook would be a landmark for the FTC, whose largest fine to get a tech company was $22m against Google in 2012 for misrepresenting the ways they used some online monitoring tools. The board is riding a wave of anti-tech sentiment as questions about how technology companies have led to misinformation, election meddling and information privacy problems have stacked up.
For Facebook, a $5 billion fine would amount to a portion of its $56 billion in annual earnings. Any resolution would also relieve some of the regulatory pressure that’s been intensifying against the company within the last two and a half years.
Even as the negotiations continue, Facebook’s business remains robust. Net income dropped 51 percent from a year ago to $2.4 billion because of the expected one-time charge related to the F.T.C. investigation. The company has more than $40 billion in cash reserves.
Last month, Mark Zuckerberg, Facebook’s founder and chief executive, said he planned to start shifting people toward private conversations and away from public broadcasting on social media, which is likely to help the company manage issues of toxic content and misinformation. On Wednesday in a conference call, Mr. Zuckerberg repeated that vision.
“People want a stage that’s as powerful on solitude as you can,” Mr. Zuckerberg said. He added that”we just don’t understand” how the change would affect the company’s business.
Mr. Zuckerberg also said he welcomed regulations, an idea that he has increasingly been expressed about this year.
“I think it’s necessary,” he said. “Getting these problems right is more significant than our pursuits. And I think that regulation can help establish trust when people know that the right methods of government and accountability are in place.”