Facebook has told investors it’s probably on the hook for up to $5 billion in fines – a record-high penalty for a tech company in the US – as a Federal Trade Commission probe continues into its violations of users’ privacy.
Citing “a $3.0 billion legal expense accrued in the first quarter of 2019 related to the ongoing US FTC matter” in its quarterly financial statement, Facebook later admits the penalty might be higher: “We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion,” the statement reads, adding that “the matter remains unresolved, and there can be no assurance as to the timing or terms of any outcome.”
The FTC is investigating Facebook on charges it repeatedly and catastrophically failed to safeguard users’ data, from allowing Cambridge Analytica to scrape 85 million users’ information to permitting corporations like Microsoft and Netflix to access users’ messages and other personal info as part of secret data sharing partnerships. Investigators have reportedly found plentiful evidence that Facebook violated a 2011 FTC agreement requiring it to get permission from users before sharing their data with third parties – and to notify the FTC when third parties have misused this data.
The Facebook investigation began in March 2018 in response to the Cambridge Analytica revelations, but several additional privacy scandals have come to light since then, putting pressure on the FTC to impose the maximum in fines. The regulator can ask for up to $41,000 for each violation it finds. If Facebook declines to settle – and the Washington Post reported earlier this year that they had “expressed concern” with the FTC’s demands – the case could go to court.
While $5 billion may not seem like much next to the $15.1 billion in revenue Facebook has reported for the first quarter of 2019, such penalties do add up, especially as Facebook has seen its value drop in response to a seemingly endless string of scandals and European regulators have begun to impose restrictions on its ability to hoover up users’ data unimpeded.
Facebook founder Mark Zuckerberg has pivoted to a reformist rhetoric as he waits for the hammer to fall. “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,” a statement included with the earnings numbers claims. Meanwhile, Facebook has hired one of the reported architects of the US PATRIOT Act – widely considered to have crippled Americans’ privacy rights – as its new general counsel.