Facebook believes that a Federal Trade Commission (FTC) probe into the company’s handling of the Cambridge Analytica scandal could end up costing it between $3 billion and $5 billion.
The social network disclosed to investors in its quarterly earnings report on Wednesday that it had already set aside $3 billion as a legal expense. Facebook said that it had not yet reached a settlement with the agency, and it’s unclear when the case would be resolved.
An FTC spokeswoman declined The Hill’s request for comment, but any multibillion-dollar fine over privacy violations would be a record for the U.S.
It might not do lasting damage to Facebook, however, which revealed on Wednesday that it had made more than $15 billion in revenue through the first three months of 2019.
The legal expense does appear to have eaten into the company’s bottom line for the quarter. Facebook posted $2.4 billion in profits for the last three months, half of its haul in the first quarter of last year, despite a 26 percent revenue increase.
Facebook’s shares shot up 10 percent in after-hours trading after the quarterly earnings was posted, prompting concern from some tech critics that the fine would not be enough to rein in the tech giant.
“Last month, I said that a fine in the low billions of dollars would amount to a slap on the wrist for Facebook,” Rep. (D-R.I.), who chairs a House antitrust subcommittee, wrote in a tweet. “Tonight, we learned that’s how Wall Street sees it too — as a slap on the wrist. If the FTC won’t act, Congress has to.”
The FTC announced launched the investigation a year ago after it was revealed that Cambridge Analytica, a political consulting firm, had obtained Facebook user data on millions of people without their knowledge or consent.
The agency said it would be looking into whether Facebook violated a 2011 consent agreement that required it to implement a strong privacy program and to be more transparent about what was being done with user data.
Under that agreement, Facebook could theoretically be subject to fines upwards of a trillion dollars.
Facebook has maintained that it did not violate the settlement.
More worrisome for the massive social network than paying a few billion in fines is the possibility that the FTC cracks down on Facebook executives such as CEO, chairman and co-founder . To settle the probe, the FTC could also push for restrictions to some of Facebook’s business practices.
In the call with investors Wednesday afternoon, Facebook executives declined to discuss a potential settlement with the FTC and whether it might force changes to Facebook’s data practices.
—Updated at 6:02 p.m.