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

Just Posted

SidFest 7 ready to rock the Mary Winspear Centre

The Bankes Brothers and Madrona Drive headlining May 24 concert

Carbon dioxide at highest levels for over 2.5 million years, expert warns of 100 years of disruption

CO2 levels rising rapidly, now higher than at any point in humanity’s history

Mad Hatter’s Ball offers laughs in support of Boys and Girls Club

Annual fundraising event features improv performances at McPherson Playhouse May 24

Penelakut filmmaker Steve Sxwithul’txw finds success in film and TV

Cop-turned-storyteller reaches back to his past for Tribal Police Files

Choir offers a capella take on Beatles hits

Soundings will perform concerts in Oak Bay and Sidney May 24 and 25

VIDEO: Horseshoe pitching association appeals to Greater Victora youngsters

Youth horseshoe pitching club offers fun for all ages, says GVHPA

Canadian killed in Honduras plane crash

The crash happened in the Roatan Islands area, according to officials

B.C. ferry stops to let black bear swim past near Nanaimo

Queen of Oak Bay brakes for wildlife in Nanaimo’s Departure Bay

Mother dead, child in critical condition after carbon monoxide poisoning at Shuswap campground

The woman was found unresponsive insider her tent and the youth was taken via air ambulance to hospital

Canada’s parole officers say correctional system has reached breaking point

About half of Canada’s federal parole officers work inside penitentiaries and correctional institutions

Montreal researchers create audible hockey puck for visually impaired players

Three years ago, Gilles Ouellet came up with the idea for a puck that makes a continuous sound

Vancouver Island MusicFest: ‘House bands’ from the golden age of rock and R&B

Some of America’s greatest session musicians are coming to the Comox Valley this summer

Former B.C. Greyhound bus drivers head to Penticton for goodbye party

Big bash runs until Sunday, funded by drink cans left behind on busses over the years

Boy, 12, arrested after allegedly pulling a knife on another child at a Surrey park

The child was later released into his parents’ custody as Surrey RCMP continue their investigation

Most Read