Facebook provides $ 5 billion fine for FTC



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Facebook (FB) said Wednesday that he was expecting an ongoing investigation by the Federal Trade Commission to result in fines ranging from $ 3 billion to $ 5 billion.

The company has set aside $ 3 billion in legal costs related to the investigation, which has reduced its profit for the first three months of 2019. Facebook's profit for the quarter is set at 2. , $ 4 billion, a decrease of 51% over the same period of the previous year.

"This case is not resolved and the payment amount remains uncertain," Facebook financial director David Wehner said Wednesday during a conference call with analysts at the end of the report. on the results. "However, we estimate that this range of losses ranges from $ 3 billion to $ 5 billion".

A spokesman for the FTC declined to comment.

The confirmation by Facebook of a massive fine, which had been the subject of rumors over the past few months, did not seem daunting for investors though. Facebook shares rose 10 percent after trading hours on Wednesday after the news.
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The fine would be the first financial penalty imposed on Facebook in the United States since the revelation of the Cambridge Analytica scandal in March. Since then, Facebook has also been reviewed by the public for having offered more data from its users to businesses than it had previously admitted.

Both incidents raised the possibility that Facebook breached a 2011 consent agreement with the FTC, requiring the social network to have a "complete privacy program" and "explicit consent" from users before sharing their data.

Previous fines imposed by the FTC on technology companies had little strength. In 2012, the FTC sentenced Google to a $ 22.5 million fine for violating a previous confidentiality agreement with the agency. The same year, for the first time, Google has exceeded the $ 50 billion annual business figure.

However, former FTC officials had previously told CNN Business that the agency might feel more pressured to report its fine against Facebook, in light of the public's increased attention scandals of confidentiality of the data of the company.

Even without the fine, analysts expected the company to record a rare decline in earnings, while Facebook said it would invest heavily in infrastructure and in efforts to protect the platform against abuses.

The company had previously stated that it expects its total expenses to increase by 40% to 50% in 2019 compared to the previous year, as it invests more in data centers, augmented reality technologies and virtual and in security.

At a conference in February, Wehner called the security efforts "big investment of billions of dollars", which is "important for the long-term sustainability of the company." But on Wednesday 's phone call, Wehner reported that spending this year could be lighter than expected, not to mention the money set aside for the FTC' s fine.

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Last month, CEO Mark Zuckerberg said the company would favor private, encrypted and ephemeral conversations through its products, with the goal of repositioning Facebook as a "privacy-focused" platform.

"People want to use private and public platforms," ​​Zuckerberg said during a conference call on Wednesday. "This responds to both the interests of our community and those of our company."

That said, Zuckerberg admitted that some aspects of moving to more privacy-centric features could be detrimental to the company. "Reducing data permanence can have an impact," he said.

Despite all its scandals, the Facebook ad sales sector continues to grow. Facebook's revenue for the quarter reached $ 15 billion, up 26% from a year earlier.

"Advertisers remain stuck on Facebook, despite its many challenges," said Debra Aho Williamson, Senior Analyst at eMarketer. "What interests them most is its vast user base and targeting capabilities, and both continue to provide them with strong performance."

But its advertising platform may face challenges. According to Wehner, Facebook expects "advertising targeting hurdles to be more pronounced" in the second half of the year, in part due to product changes and changes in user behavior in the second half of the year. following the important data protection regulations in Europe.

Donna Borak from CNN contributed to this report.

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