Facebook is preparing for a $5 billion FTC fine

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Facebook faces $5 billion fine from FTC

On April 24, Facebook reported its earnings for the first quarter of 2019. Despite being embroiled in controversy for the past year, the company is in a pretty good place financially. It enjoyed a 26 percent revenue bump compared to Q1 2018, bringing in a total of $14.9 billion in the first three months of the year.

The company even managed to bolster its daily active user numbers by eight percent.

Though the firm’s robust financial performance likely delighted stakeholders, its presentation did include one worrying aspect. The social network revealed it’s reserving assets in anticipation of a massive Federal Trade Commission (FTC) fine. Specifically, the corporation anticipates the agency will hit it with a penalty of between $3 billion and $5 billion.

History Making Fine

In February, reports emerged that Facebook was in negotiations with the FTC regarding its role in the Cambridge Analytica scandal. The government claims the firm violated a user privacy 2011 agreement by letting a third-party group harvest consumer data.

Facebook and the FTC have kept their negotiations private, but industry analysts predicted the Silicon Valley giant would face a fine of unprecedented size. Technically, the agency has the authority to impose a trillion dollar penalty on the conglomerate. However, tech sector experts predict the regulatory body will issue a sanction in the low ten figures.

If the FTC saddles the Silicon Valley giant with a $3-5 billion fine, it will be the largest it’s ever given a tech company. However, as The Verge noted, the fact that the corporation can limit the impact of such a staggeringly large financial hit to one quarter suggests a more severe penalty is in order. For instance, Democratic Presidential candidate Elizabeth Warren argued the powerful firm should be dismantled.

Regardless of how things wrap up with the FTC, Facebook regulatory issues are far from over.

Domestic and Foreign Investigations

On Thursday, the New York Times reported the New York State Attorney General is investigating the platform for illicitly collecting the email data of 1.5 million people. The organization wants to know why the unauthorized data collection program was started and how many users were affected.

The District of Columbia is also pursuing legal action against Facebook for its part in the Cambridge Analytica scandal.

In addition to these things on its domestic front, Facebook is dealing with considerable scrutiny abroad for its business and data handling practices. Canadian authorities are looking to bring charges against the firm for allowing third parties to access its citizens’ user information. Last year, British regulators fined Facebook $645,000 for its poor data security. Additionally, U.K. leaders are considering establishing a new agency specifically to police social media.

Similarly, the Irish Data Protection Commission is currently investigating the Big Tech firm for violating European data collection laws. If the commission finds the service guilty, it has the authority to issue a $2.23 billion penalty.

While the FTC’s fine may not affect Facebook’s bottom line all that much, a series of global sanctions might hurt the company’s profits so much, it might actually change its policies.