Facebook: Not saying we've done anything wrong but... we're just putting $3bn profit aside for an FTC privacy fine

Net income halved as antisocial network preps for big slap

Facebook's financial figures for its first quarter of 2019, published Wednesday, had an interesting twist.

The Mark Zuckerberg-run biz set aside $3bn of its profits, effectively halving its net income, to foot an expected fine from America's trade watchdog for seemingly running roughshod over people's privacy.

The size of the pot surprised many – even privacy campaigners have only been asking for $2bn – though the end cost may be even higher. Facebook said the Federal Trade Commission (FTC) could demand as much as $5bn over allegations of privacy-busting practices.

Here are the full figures [PDF] for the three months to March 31, summarized:

Revenues were strongish for the first quarter at $14.9bn, up 26 per cent year-on-year but down nearly $2bn on the previous quarter's results.

Net income was where Facebook took the real hit, with profits down 51 per cent on the year to $2.43bn due to setting aside that $3bn for the FTC. That said, Zuck & Co still pulled in $27m in pure profit every day of the quarter, which isn't too shabby by any standard.

Earnings per share were also hit as a result of the profit withholding. GAAP EPS was halved from last year to just $0.85 per share, missing Wall St's expectations by $0.76.

Daily (1.56bn) and monthly (2.38bn) active users of Facebook's apps both rose by eight per cent, and Zuckerberg claimed that at least 2.1 billion people use one of its apps, from Facebook to Instagram to WhatsApp, every day. The prospects for growth were strong, he asserted.

Zuckerberg photo Facebook

'We don't want a camera in everyone's living room' says bloke selling cameras in living rooms. Zuckerberg, you moron


"We had a good quarter and our business and community continue to grow," Zuckerberg told financial analysts on a conference call earlier today. "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."

The behoodied one used the call to outline his plans for the future of his network. The basic idea, he said, was that people need public spaces and private spaces, and while Facebook has the public space sorted, it now needs to provide netizens with "a digital equivalent of the living room," a private cyber-zone in other words. Facebook, don't forget, sells an internet chat gizmo that's designed to sit in your living room.

This private nattering platform Facebook is planning will be based around WhatsApp, with small meeting spaces, end-to-end encryption on all messages, and with the site's servers operating in a country where the government couldn't demand access.

"We don't know how this will play out yet," he said. "But the fastest growing areas of our industry are small groups and messaging."

Facebook shares closed at $182.58 apiece, down 0.65 per cent, but were up 7.59 per cent in after-hours trading due to revenues beating Wall Street's expectations, and non-GAAP EPS of of $1.89 beating estimates by $0.27. ®

Psst... Facebook just hired Jennifer Newstead, a co-author of America's PATRIOT Act, and Kevin Bankston, a policy wonk and critic of that anti-terror law.

Similar topics

Narrower topics

Other stories you might like

  • Zuckerberg sued for alleged role in Cambridge Analytica data-slurp scandal
    I can prove CEO was 'personally involved in Facebook’s failure to protect privacy', DC AG insists

    Cambridge Analytica is back to haunt Mark Zuckerberg: Washington DC's Attorney General filed a lawsuit today directly accusing the Meta CEO of personal involvement in the abuses that led to the data-slurping scandal. 

    DC AG Karl Racine filed [PDF] the civil suit on Monday morning, saying his office's investigations found ample evidence Zuck could be held responsible for that 2018 cluster-fsck. For those who've put it out of mind, UK-based Cambridge Analytica harvested tens of millions of people's info via a third-party Facebook app, revealing a – at best – somewhat slipshod handling of netizens' privacy by the US tech giant.

    That year, Racine sued Facebook, claiming the social network was well aware of the analytics firm's antics yet failed to do anything meaningful until the data harvesting was covered by mainstream media. Facebook repeatedly stymied document production attempts, Racine claimed, and the paperwork it eventually handed over painted a trail he said led directly to Zuck. 

    Continue reading
  • FTC urged to protect data privacy of women visiting abortion clinics
    As Supreme Court set to overturn Roe v Wade, safeguards on location info now more vital than ever

    Updated Democrat senators have urged America's Federal Trade Commission to do something to protect the privacy of women after it emerged details of visits to abortion clinics were being sold by data brokers.

    Women's healthcare is an especially thorny issue right now after the Supreme Court voted in a leaked draft majority opinion to overturn Roe v Wade, a landmark ruling that declared women's rights to have an abortion are protected by the Fourteenth Amendment of the US Constitution.

    If the nation's top judges indeed vote to strike down that 1973 decision, individual states, at least, can set their own laws governing women's reproductive rights. Thirteen states already have so-called "trigger laws" in place prohibiting abortions – mostly with exceptions in certain conditions, such as if the pregnancy or childbirth endangers the mother's life – that will go into effect if Roe v Wade is torn up. People living in those states would, in theory, have to travel to another state where abortion is legal to carry out the procedure lawfully, although laws are also planned to ban that.

    Continue reading
  • FTC signals crackdown on ed-tech harvesting kid's data
    Trade watchdog, and President, reminds that COPPA can ban ya

    The US Federal Trade Commission on Thursday said it intends to take action against educational technology companies that unlawfully collect data from children using online educational services.

    In a policy statement, the agency said, "Children should not have to needlessly hand over their data and forfeit their privacy in order to do their schoolwork or participate in remote learning, especially given the wide and increasing adoption of ed tech tools."

    The agency says it will scrutinize educational service providers to ensure that they are meeting their legal obligations under COPPA, the Children's Online Privacy Protection Act.

    Continue reading

Biting the hand that feeds IT © 1998–2022