In the first quarter reports of Facebook, it is expected to pay $ 5bn fine to the US Federal Trade Commission (FTC) resulting in 51% year-on-year decline in its net income. The fine was imposed by FTC in connection to an inquiry conducted on the user data practices on their platform.
The net income for the fiscal year has been reduced to $2.4bn after accounting for this hefty fine. Debarring this fine, the Facebook revenue has surpassed the analytics expectations with an operational margin recorded to be 20 points higher at 22%. The continued revenue growth of Facebook has marked $ 15bn for the first quarter before accounting this fine.
It is worth notable that the matter is unresolved and no assurance to the timings or terms have been finalized yet. “We have estimated the loss range between $3bn to $5bn in this matter,” The Facebook official said.
Back in March 2018, an investigation was carried out by FTC on the privacy practices of Facebook for its user data in response to the revelations of Cambridge Analytica. The investigation was focused on whether or not the Facebook 2011’s agreement with FTC has been violated by providing the user data to Cambridge Analytica.
Google has already faced the largest penalty so far on account of privacy lapse in 2012 with a fine of $22.5m.The shares of Facebook have risen by 9% in after-hours trading due to the otherwise strong revenue records, bypassing the analytics expectations in terms of active users and total revenue.
While addressing the investors over a conference call, Mark Zuckerberg remarked on a plan to create an encrypted messaging platform which is ‘privacy-focused’, his views on the regulations and the other crucial social issues faced by the internet.
‘Family of apps’ was announced in March by Facebook to bring all the messaging platforms together with an aim to create ‘privacy-focused communications platforms’. This new service is anticipated to take five years or longer, mentioned by Zuckerberg.
He also mentioned that Facebook is strengthening the privacy of the users without impacting its business meaningfully. During the last quarter, the Facebook was alleged with the international outrage over the disseminating and broadcasting the video of terrorist killing 50 worshippers and Muslims in Christchurch, other revelations of improper data practices and intensified scrutiny by the lawmakers and regulators in UK and US.
