Facebook sets aside $3bn to cover anticipated US privacy violations fine

Facebook posts record profits but braces for Federal Trade Commission fine that could total $5bn

Social networking giant Facebook has set aside $3 billion in anticipation of fines over privacy violations expected to be levied by the Federal Trade Commission (FTC).

And the company may need to find even more money, with Facebook indicating that the fine could be as high as $5 billion.

The news comes as the company reported record first-quarter net income of $2.43 billion on revenues of $14.98 billion.

"We estimate that the range of loss in this matter is $3 billion to $5 billion," the company admitted. It continued: "The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome."

The FTC started its investigation into Facebook last March, shortly after reports claiming that the company allowed organisations linked to Cambridge Analytica to collect data from millions of users without their explicit consent.

Cambridge Analytica went on to claim that it could use the data to target political advertising.

Specifically, the watchdog is looking at whether Facebook violated a 2011 consent order it reached with the FTC over its privacy practices; as part of that settlement, Facebook agreed to ask for users' permission before sharing their data more broadly than their privacy settings specified.

While this expected legal expense resulted in a 51 per cent year-on-year decline in net income for Facebook, the company noted that, without it, its earnings per share would have beaten analyst expectations.

What's more, despite reports that users have been abandoning the social network following the high-profile privacy scandal, Facebook claimed that its monthly user base nevertheless grew by eight per cent, to 2.3 billion.

"We had a good quarter and our business and community continue to grow," Zuckerberg said on an earnings call with financial analysts. "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."

Zuckerberg added that the company's plans to combine Instagram, Messenger and WhatsApp onto a single "privacy-focused communications platform" could take "five years or longer".

"We're going to intentionally take a longer period of time than we might have in order to get safety right," he said. "A few years ago we probably would have rolled this out and then dealt with issues later."

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