FTC wanted to fine Facebook tens of billions of dollars for privacy violations, says WaPo

Federal Trade Commission

The Federal Trade Commission endorsed a roughly $5 billion settlement with Facebook Inc. (NASDAQ: FB) earlier this month over a long-running investigation into the company’s privacy violations.

However, a new report in the Washington Post, says the FTC wanted to hit the social media behemoth with tens of billions of dollars in fines for mishandling users’ private information, instead of the $5 billion settlement the agency reached with company.

The report also goes on to say that the federal government nearly held Facebook co-founder and chief executive Mark Zuckerberg personally accountable for the Cambridge Analytica scandal, where the personal data of millions of Facebook users was harvested without their consent.

Cambridge Analytica was a UK political consultancy firm that worked on President Donald Trump’s campaign in the 2016 election. It is accused of used data of more than 86 million Facebook users without permission. The firm used the data to target U.S. voters in the election.

The FTC dropped some of the harsher penalties it initially had in mind after Facebook lawyers resisted the demands of the 105-year-old regulator and threatened to sue it, according to the Washington Post, which cited people familiar with the matter. Facebook generated revenues of $55 billion last year, so the $5 billion fine is a slap on the wrist.

Facebook stock has gained more than 53% so far this year. The Silicon Valley giant is scheduled to report its second quarter financial results after the closing bell on Wednesday, July 23. Analysts expect the company to post earnings of $1.87 share on revenue of $16.51 billion in the quarter.

Facebook Inc Profile

Facebook is the world’s largest online social network, with more than 2 billion monthly active users. Users engage with each other in different ways, exchanging messages and sharing news events, photos, and videos.

On the video side, the firm is in the process of building a library of premium content and monetizing it via ads or subscription revenue. Facebook refers to this as Facebook Watch. The firm’s ecosystem consists mainly of the Facebook app, Instagram, Messenger, WhatsApp, and many features surrounding these products.

Users can access Facebook on mobile devices and desktop. Advertising revenue represents more than 90% of the firm’s total revenue, with 50% coming from the U.S. and Canada, and 25% from Europe. With gross margins above 80%, Facebook operates at a 40%-plus margin. – Warrior Trading News