Facebook warned it could have to pay out fines of up to $5 billion to settle a Federal Trade Commission inquiry into its data privacy practices. The matter “remains unsolved” and timing of the conclusion is unclear and the fine could range from $3 billion to $5 billion when the FTC investigation concludes, according to the company.
Along with the disclosure, the social media giant topped Wall Street’s expectations for quarterly revenue. Facebook reported revenue of $15.08 billion in the first quarter, beating the $14.98 billion forecasted by Wall Street analysts according to Refinitiv. Earnings per share was 85 cents, without the charge, EPS would have been $1.89.
Shares rose in after-hours trading.
"We had a good quarter and our business and community continue to grow," said Mark Zuckerberg, Facebook founder and CEO. "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 social media company has faced unprecedented scrutiny in recent months amid a series of data privacy mishaps, including revelations that British firm Cambridge Analytica improperly accessed the data of up to 87 million users. Facebook vowed to invest in stronger data privacy controls, warning that the investments could weigh on revenue growth in the short term.
A multi-billion dollar fine would shatter previous records. The FTC fined Google $22.5 million in 2012 after it violated an agreement with the watchdog.
The platform had 1.56 billion daily active users and 2.38 billion monthly active users in the first quarter, roughly in line with Wall Street’s expectations.