Facebook braces for $3B to $5B fine over privacy lapses

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Facebook is bracing to be smacked with a record-setting fine over privacy lapses — to the tune of $5 billion, the company said Wednesday.

The Mark Zuckerberg-led social network revealed the staggering figure in announcing its first-quarter earnings, which beat Wall Street’s expectations and sent the stock soaring nearly 8 percent in late trading.

The Menlo Park, Calif., company said it expects to pay $3 billion to $5 billion to settle a looming Federal Trade Commission privacy probe. Facebook already has already set aside $3 billion toward the potential settlement last quarter, the firm said.

“The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome,” Facebook said in a statement.

The looming penalty dwarfs the previous record-holder, Google, which in 2012 was fined $22.5 million by the regulator for misleading users on how they could limit online tracking tools.

The FTC opened its Facebook probe in March 2018, following reports that research firm Cambridge Analytica had hoovered up the personal data of nearly 90 million Facebook users to better target them with political ads during the 2016 presidential election.

The investigation seeks to determine whether Facebook violated the terms of a 2011 consent decree it signed with the FTC, which restricted the ways it could share users’ personal data.

News of the fine did nothing to discourage investors, who flocked to the stock on strong earnings.

Facebook, which has seen its stock grow nearly 40 percent this year, reported a 26 percent increase in ad sales in the first quarter, to $14.9 billion. Analysts had forecast only $14.8 billion.

Monthly active users rose 8 percent, to 2.38 billion, beating estimates of 2.37 billion.

Costs soared 80 percent, to $11.8 billion, in the three months ended in March as the social network, which was rocked by privacy scandals last year, spends heavily to improve content and security across its platforms.

Excluding items, including the potential FTC penalty, the company earned $1.89 per share, better than analysts’ expectations of $1.63 per share.

“The fine is background noise to the Street this quarter, and guidance is a step in the right direction for Facebook and the tech space,” Wedbush Securities analyst Dan Ives told The Post. “It’s a major feather in the cap for Zuck,” he said of the fine, which Wall Street had worried could be much worse.

Facebook shares were up 7.9 percent in extended trading, at $196.94.

With Reuters



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