Expecting to pay up to $5B for Cambridge Analytica, Facebook sets aside $3B for FTC fines

Posted:
in General Discussion edited April 24
Facebook is preparing to pay a record-setting fine to the U.S. Federal Trade Commission for privacy violations following the Cambridge Analytica fiasco, as the social network is earmarking $3 billion to go towards its expenses and a potential $5 billion fine, depending on how it negotiates with the regulator.




The FTC has been in negotiations with Facebook for a few months, with both sides keen to work out some kind of settlement over the matter to avoid heading towards a protracted and expensive courtroom tussle. While the value of the fine remains unknown, it has the potential to be the highest the FTC will ever level against a tech firm, far above the 2012 fine paid by current record holder Google of $22.5 million.

In its first-quarter earnings report, Facebook advises it estimated "a probable loss and recorded an accrual of $3.0 billion in connection with the inquiry of the FTC into our platform and user data practices." While it has set aside $3 billion, it is prepared to pay more, estimating the loss could be in the range of $3 billion to $5 billion.

"The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome," the filing advises. The amount could even end up being smaller than $3 billion, as Facebook could in theory agree to changes in how it operates its business and increased security in exchange for a smaller fine.

While substantial, the quarterly results also reveal the estimated fine may not affect Facebook's finances that much, now that it has set aside cash. The $3 billion is approximately 6% of its on-hand cash and marketable securities, with the company reporting $2.4 billion in profit on $15.1 billion in sales, up 26 percent year-on-year.

The Cambridge Analytica data collection lasted for over two years. Over that time, Facebook generated approximately $19 billion in profit alone.

The FTC started its investigation into Facebook in March 2018, after the discovery of the Cambridge Analytica scandal, where Facebook user data and that of their connected friends were compiled and used to build voter profiles for some 71 million Americans, even those not opting in to the data collection, which may have been used by participants in the 2016 US Presidential Election.

Comments

  • Reply 1 of 15
    facebook should lose more than 100 billion dollars or even more.  They have the money.  An old axiom here, never trust advertisements where ever they're published.
    Redryder1mdriftmeyerwatto_cobra
  • Reply 2 of 15
    Whatever happened to the good all days, like tar and feathering, he has the money, I want to see him humiliated in some public manner.
    edited April 24 AppleExposedwatto_cobra
  • Reply 3 of 15
    olsols Posts: 42member
    Pay the fine and then business as usual - I don’t think so
    Redryder1watto_cobra
  • Reply 4 of 15
    "In terms of average revenue per user, Facebook reported $6.42 for the first quarter of 2019, up 16 percent year-over-year. It also reported daily active users of 1.56 billion, up 8 percent year over year." - from 9to5Mac article

    Until this is negatively affected, FB is going to be FB and continue FB'ing. They will weather any storm because their users typically don't care about the things that matter to the tech nerd crowd. They are well on their way to building a WeChat type of environment where almost every aspect of a users digital life can be accessed and managed through their software... without leaving... ever.  FB allows the masses to live their best life, be it real or imagined.  This fine, as large as it may be, will be viewed as the cost of doing business as long as the revenue per user and daily active user numbers remain positive.

    cornchipsilverwarlocn2itivguymdriftmeyerwatto_cobra
  • Reply 5 of 15
    irelandireland Posts: 17,649member
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    Redryder1cornchipmacseekerMplsPfotoformatJanNLn2itivguyairnerdmac_dogchasm
  • Reply 6 of 15
    kimberlykimberly Posts: 238member
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    Exactly.
    Redryder1n2itivguyairnerdmac_dogchasmwatto_cobra
  • Reply 7 of 15
    dewmedewme Posts: 2,125member
    $5B sleaze payments are just a cost of doing business for Zuckerberg & Co. No big deal, he’ll just have to cut back a little bit on the option package on his next corporate jet to swat this fly off his conscience. 
    cornchipairnerd
  • Reply 8 of 15
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    Unfortunately, we will never see this happen. FB has all the money to hire top-notch lawyers. These execs will never set foot for a second in any jail.
    watto_cobra
  • Reply 9 of 15
    Eric_WVGGEric_WVGG Posts: 645member
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    Worth noting that part of Elizabeth Warren's presidential platform is making it easier to prosecute executives. https://www.nytimes.com/2019/04/22/business/dealbook/elizabeth-warren-finance-executives.html
    mac_dogchasmwatto_cobra
  • Reply 10 of 15
    Eric_WVGG said:
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    Worth noting that part of Elizabeth Warren's presidential platform is making it easier to prosecute executives. https://www.nytimes.com/2019/04/22/business/dealbook/elizabeth-warren-finance-executives.html
    There's a difference between pandering to your voters and actually doing it.
    airnerdemig647watto_cobra
  • Reply 11 of 15
    MplsPMplsP Posts: 1,560member
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    We need to actually start holding executives accountable. Either financially or with prison time. Until then nothing will change. They will continue with their crap, and if they get let go they just cash in their $10M severance package while the rest of the 99% deals with the fallout of their crooked leadership. If Zuckerberg had to pay $10 for every leak, you know damn well they would stop.
    n2itivguywatto_cobra
  • Reply 12 of 15
    MplsP said:
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    We need to actually start holding executives accountable. Either financially or with prison time. Until then nothing will change. They will continue with their crap, and if they get let go they just cash in their $10M severance package while the rest of the 99% deals with the fallout of their crooked leadership. If Zuckerberg had to pay $10 for every leak, you know damn well they would stop.
    Except that it makes no sense unless they are directly involved (with whatever the issue is) and there is evidence proving it. There's another article on AI today about a lawsuit over defective sleep/wake buttons. Is Tim Cook responsible for that? What about the engineers who designed and tested the sleep/wake button and its flex cable? Aren't they more accountable than Tim Cook? Do you think he should go to jail if there's an iCloud breach? Because I'm pretty sure TC isn't the one actually running the data centers and monitoring traffic and securing the servers.

    Can any of Facebook's leaks of data or poor data management be directly linked to specific decisions made by Zuckerberg? If so, then sure, hold him responsible. But if someone far below him made a coding error or checked the incorrect box why should Zuckerberg do the time? Should Jeff Bezos be headed to prison since Amazon employees could tie the Echo recordings they're transcribing to a name and physical address of who was speaking when the recording was made?

    Should we also start sending parents to jail when their kids break the law?
    edited April 25
  • Reply 13 of 15
    MplsP said:
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    We need to actually start holding executives accountable. Either financially or with prison time. Until then nothing will change. They will continue with their crap, and if they get let go they just cash in their $10M severance package while the rest of the 99% deals with the fallout of their crooked leadership. If Zuckerberg had to pay $10 for every leak, you know damn well they would stop.
    Except that it makes no sense unless they are directly involved (with whatever the issue is) and there is evidence proving it. There's another article on AI today about a lawsuit over defective sleep/wake buttons. Is Tim Cook responsible for that? What about the engineers who designed and tested the sleep/wake button and its flex cable? Aren't they more accountable than Tim Cook? Do you think he should go to jail if there's an iCloud breach? Because I'm pretty sure TC isn't the one actually running the data centers and monitoring traffic and securing the servers.

    Can any of Facebook's leaks of data or poor data management be directly linked to specific decisions made by Zuckerberg? If so, then sure, hold him responsible. But if someone far below him made a coding error or checked the incorrect box why should Zuckerberg do the time? Should Jeff Bezos be headed to prison since Amazon employees could tie the Echo recordings they're transcribing to a name and physical address of who was speaking when the recording was made?

    Should we also start sending parents to jail when their kids break the law?
    Something about a captain of the ship… 

    Muse common sense here. 😒
    MplsPwatto_cobra
  • Reply 14 of 15
    kimberlykimberly Posts: 238member
    MplsP said:
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    We need to actually start holding executives accountable. Either financially or with prison time. Until then nothing will change. They will continue with their crap, and if they get let go they just cash in their $10M severance package while the rest of the 99% deals with the fallout of their crooked leadership. If Zuckerberg had to pay $10 for every leak, you know damn well they would stop.
    Except that it makes no sense unless they are directly involved (with whatever the issue is) and there is evidence proving it. There's another article on AI today about a lawsuit over defective sleep/wake buttons. Is Tim Cook responsible for that? What about the engineers who designed and tested the sleep/wake button and its flex cable? Aren't they more accountable than Tim Cook? Do you think he should go to jail if there's an iCloud breach? Because I'm pretty sure TC isn't the one actually running the data centers and monitoring traffic and securing the servers.

    Can any of Facebook's leaks of data or poor data management be directly linked to specific decisions made by Zuckerberg? If so, then sure, hold him responsible. But if someone far below him made a coding error or checked the incorrect box why should Zuckerberg do the time? Should Jeff Bezos be headed to prison since Amazon employees could tie the Echo recordings they're transcribing to a name and physical address of who was speaking when the recording was made?

    Should we also start sending parents to jail when their kids break the law?
    Of course executives are ultimately responsible, why do you think they are paid so much ? The Cambridge Analytica scandal is hardly a coding error.  Get real.
    edited April 25 watto_cobra
  • Reply 15 of 15
    n2itivguy said:
    MplsP said:
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    We need to actually start holding executives accountable. Either financially or with prison time. Until then nothing will change. They will continue with their crap, and if they get let go they just cash in their $10M severance package while the rest of the 99% deals with the fallout of their crooked leadership. If Zuckerberg had to pay $10 for every leak, you know damn well they would stop.
    Except that it makes no sense unless they are directly involved (with whatever the issue is) and there is evidence proving it. There's another article on AI today about a lawsuit over defective sleep/wake buttons. Is Tim Cook responsible for that? What about the engineers who designed and tested the sleep/wake button and its flex cable? Aren't they more accountable than Tim Cook? Do you think he should go to jail if there's an iCloud breach? Because I'm pretty sure TC isn't the one actually running the data centers and monitoring traffic and securing the servers.

    Can any of Facebook's leaks of data or poor data management be directly linked to specific decisions made by Zuckerberg? If so, then sure, hold him responsible. But if someone far below him made a coding error or checked the incorrect box why should Zuckerberg do the time? Should Jeff Bezos be headed to prison since Amazon employees could tie the Echo recordings they're transcribing to a name and physical address of who was speaking when the recording was made?

    Should we also start sending parents to jail when their kids break the law?
    Something about a captain of the ship… 

    Muse common sense here. 😒
    Speaking of captains, when has the captain of a police force gone to jail because one of their officers killed someone wrongly?kimberly said:
    MplsP said:
    ireland said:
    I wonder how Facebook might change if execs also got prison time, in addition to these fines.
    We need to actually start holding executives accountable. Either financially or with prison time. Until then nothing will change. They will continue with their crap, and if they get let go they just cash in their $10M severance package while the rest of the 99% deals with the fallout of their crooked leadership. If Zuckerberg had to pay $10 for every leak, you know damn well they would stop.
    Except that it makes no sense unless they are directly involved (with whatever the issue is) and there is evidence proving it. There's another article on AI today about a lawsuit over defective sleep/wake buttons. Is Tim Cook responsible for that? What about the engineers who designed and tested the sleep/wake button and its flex cable? Aren't they more accountable than Tim Cook? Do you think he should go to jail if there's an iCloud breach? Because I'm pretty sure TC isn't the one actually running the data centers and monitoring traffic and securing the servers.

    Can any of Facebook's leaks of data or poor data management be directly linked to specific decisions made by Zuckerberg? If so, then sure, hold him responsible. But if someone far below him made a coding error or checked the incorrect box why should Zuckerberg do the time? Should Jeff Bezos be headed to prison since Amazon employees could tie the Echo recordings they're transcribing to a name and physical address of who was speaking when the recording was made?

    Should we also start sending parents to jail when their kids break the law?
    Of course executives are ultimately responsible, why do you think they are paid so much ? The Cambridge Analytica scandal is hardly a coding error.  Get real.
    Ha ha! Yes. Find an executive who thinks their compensation is based on potential jail time for the mistakes of others. Get real, yourself. 

    (And I didn’t say CA was a coding error, nice try putting words in my mouth)
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