Facebook is reportedly set to be slapped with a $5bn (£4bn) fine over data privacy violations.
The social media giant has reached a settlement with the US Federal Trade Commission (FTC), according to Reuters, following a probe into the firm’s use of handling consumer data.
Facebook was under investigation over allegations that it inappropriately shared information belonging to some 87m customers with Cambridge Analytica, a data mining consultancy firm.
The fine, which is the largest ever imposed by the FTC, is in line with what the company had forecasted it would pay in a recent financial update.
hares in the firm, which has come under fire for its data policies in recent years, closed up two per cent on Friday night after reports of the settlement emerged.
In May shareholders at the firm’s annual general meeting voted to allow Mark Zuckerberg to stay on as both chief executive and chairman, despite some investors calling for his removal in the dual role after a troubled year.
The Facebook founder, who has pledged to reinvent the platform’s priorities in the wake of several data rows, owns 60 per cent of the firm’s voting shares.
Mark Zuckerberg's Libra cryptocurrency project may just strengthen his stranglehold on our user data. Financial stability is another huge concern.
Regulators will be watching closely when Facebook Inc. unveils its cryptocurrency project this week. Their vigilance is warranted.
Mark Zuckerberg, the social network’s founder, isn’t going to gamble with what remains of his public image by replicating the worst excesses of the Bitcoin craze. He’s not trying to create a speculative currency; a potential wave of mom-and-pop investment losses is the last thing he needs. He just wants a digital medium of exchange for use on his apps. Nevertheless, his bid to launch an online payments revolution carries plenty of risks, from antitrust concerns to the threat that it might pose to financial stability.
Weekend media leaks suggest that Facebook’s “Libra” project will be a continuation of its past efforts to expand its payments business and keep customers within the walled garden of its social media apps by creating their very own money.
While Zuckerberg is poised to unveil a team of partners – reportedly including eBay Inc., Farfetch Ltd., Spotify Technology SA, Uber Technologies Inc. and Vodafone Group Plc – so far this feels very much like Facebook’s baby. Tellingly, it’s not one that the big banks or the other Silicon Valley and Seattle giants seem ready to adopt quite yet, unless Zuckerberg surprises us with some bigger names at the launch. The target customer base for these new digital tokens looks certain to be the 2.6 billion-strong users of Facebook, WhatsApp and Instagram.
While Facebook will no doubt assure us that this project is all about making the lives of its customers ever easier, giving them the ability to actually buy stuff in a way that Bitcoin has rarely offered, it’s hard to square it away with the political effort to curb Big Tech’s monopolistic tendencies (regardless of that roster of launch partners and their $10 million participation fees).
It’s crucial that Libra doesn’t become a protective glue that binds Zuckerberg’s social networks even more closely together at a time when many regulators want to break them up. Libra will be presented as an open-source partnership whose benefits are available to all, but to what extent will it really be held at arm’s length from the Zuckerberg empire? Indeed, if the financial and business benefits of using Libra accrue mainly to Facebook, it will merely enshrine its market dominance.
As such, regulators must find out who will own the giant new datasets. They might even want to push the case that this kind of data should be made available to governments or rivals to avoid the problems of the past, where a handful of companies ended up owning all of the information about our online activities.
While Facebook barely makes any money from its payments business today – with payments and other fees accounting for less than 2% of last year’s $55.8 billion of revenue – some analysts reckon Libra could change things. Barclays is reportedly predicting $19 billion in additional revenue by 2021 if the tokens gain traction. Libra is scheduled to launch across a dozen countries in 2020. That’s a lot of potential data and new sources of revenue.
Financial stability is a worry too and regulators should ask for transparency on how Libra is structured. The token is expected to be a “stablecoin,” which is pegged to existing fiat currencies such as the U.S. dollar or the euro. That will damp price volatility, unlike the free-wheeling Bitcoin, whose price in the past five years has gone from $600 to $19,000, and now to $9,000. Regulatory oversight of which currencies are held in reserve to back the Libra coin would go some way to building faith in Facebook’s capacity to redeem tokens when customers ask for it.
While no one wants to choke innovation unnecessarily, Facebook hasn’t exactly done much to earn everybody’s trust in recent years. Any chance to put the necessary controls in at the beginning, rather than firefighting down the road, should be grabbed by the regulators.
Read More: Bloomberg
Facebook shares tumbled 7.5% Monday following a Wall Street Journal report that said the FTC will be able to examine the effect of Facebook's practices on digital competition.
Facebook's drop shaved more than $38 billion from its market cap, bringing it to about $469 billion. Facebook is already under investigation by the FTC over its handling of user data and has said it is expecting a fine of up to $5 billion.
Shares of other tech giants took a hit over similar concerns. Amazon's stock fell 4.6% Monday following a Washington Post report that the top U.S. antitrust enforcement agencies have a new agreement on tech oversight. The drop shaved more than $40 billion from its market cap, bringing it to $833 billion.
And shares of Google parent company Alphabet were down 6.1% after the Journal reported Friday that the Justice Department is readying an antitrust investigation of Google. The stock lost about $47 billion from its market cap, bringing it to about $721 billion.
Antitrust regulation has remained a distant threat in recent years as scandals like Cambridge Analytica brought the scale of tech power into focus for the public. In the lead-up to the 2020 presidential election, "break up big tech" has become a rallying cry for some, including Democratic presidential candidate Sen. Elizabeth Warren of Massachusetts.
But a new reported agreement between the Federal Trade Commission and the Department of Justice brings that threat a bit closer to reality. The FTC will take the lead on oversight of Amazon, while the DOJ will have greater jurisdiction over Google, according to the Post. The FTC previously closed an investigation of Google without taking action, but now the DOJ will take another look into Google's practices in search and other areas, according to the Journal.
Calls for Mark Zuckerberg's power to be reined in continue to grow louder – not that it matters.
That much was clear during Facebook's annual shareholders meeting on Thursday, where Zuckerberg faced numerous calls for his power to be checked. On the agenda were four shareholder proposals that called for new checks on Zuckerberg's power:
A proposal calling for more shareholder a power
A proposal calling for an independent board chair (not Zuck)
A proposal which compared Zuckerberg's control of the company to a "dictatorship," for shareholder input in elections to the board of directors
A proposal to explore "strategic alternatives," including breaking up Facebook into separate companies
But going over these initiatives were mostly a symbolic gesture as Facebook's board, once again, easily voted down all shareholder proposals. As Bloomberg pointed out earlier this week, such proposals are all essentially dead on arrival, since Zuckerberg controls the vast majority of the company's most powerful shares.
Zuckerberg seemed mostly unfazed by all this. He said addressing the "social issues" facing the company is one of his top priorities.
"This is an important period for the company...we're fighting to do the right thing every day," he said.
Still, shareholders in attendance made it clear they want to see Facebook change.
During the meeting's Q&A period, one questioner asked Facebook's lead independent director, Susan Desmond-Hellmann, if she was willing to exercise her authority to call a board meeting without Zuckerberg in order to oust the CEO.
She said no. "That's not the direction we want to take the company or the board," she said.
Another attendee posed a similar question to Zuckerberg, asking if he would respond to people who want him to give up some of his power. Facebook's founder sidestepped the question by repeating his calls for increased regulation.
"I do acknowledge there are limits to what an individual company should deciding," he said.
That wasn't really an answer to the question that was asked, but it was a deft move that allowed the CEO to avoid addressing calls for him to step down or relinquish his control directly.
Most of all, it was a powerful reminder to Zuckerberg's critics that he's not going away any time soon.
Social media giants, Facebook said it could face a fine of up to $5 billion as the result of an investigation by the Federal Trade Commission, US Today reports.
The agency has been investigating Facebook for possible privacy violations but has not announced any findings yet.
The company set aside $3 billion in its quarterly earnings report Wednesday as a contingency against the possible penalty.
The one-time charge slashed Facebook’s first-quarter net income considerably, although revenue grew by 25% in the period.
The FTC has been looking into whether Facebook broke its own 2011 agreement promising to protect user privacy.
Investors shrugged off the charge and sent the company’s stock up nearly 5% to $190.89 in after-hours trading.
Facebook has had several high-profile privacy lapses in the past couple of years.
The FTC has been looking into Facebook’s involvement with the data-mining firm Cambridge Analytica scandal since last March.
That company accessed the data of as many as 87 million Facebook users without their consent.
Facebook has dominated the tech news for months with a variety of privacy issues, from hacked accounts to user data stolen to Russian bots spying on us. But now the social media giant is making headlines for a different reason.
Facebook officials say they want to install a massive underwater fiber optic cable, just not for the U.S.
The multi-stage project is reportedly named "Simba" - yes, like "Simba" from The Lion King. Its goal is to connect the entire continent of Africa to the internet, increasing accessibility while also driving down bandwidth prices significantly, which could make it easier to sign up new users. And it could be a major disruption to the current service provider model. For the most part, internet service connects continents by way of underwater fiber optic cables capable of carrying massive amounts of data. There are a dozen such cables between the Northeastern United States and Europe alone, and many more connecting the hubs of Asia and the Mideast.
But getting into the fiber optic business would be a big jump for Facebook - one already made by some of their rivals. Google has a major investment in running fiber optic cables through its subsidiary, Google Fiber. But Google's plan is to provide far more connectivity than is needed at the moment, hoping to avoid costly upgrades; it's a way of future-proofing what is expected to be an expensive and labor-intensive process. In contrast, Amazon has announced they want to blanket the globe with high-speed internet service using thousands of small satellites, not fiber-optics.
As for when the ring of fiber will be placed around Africa, it's hard to say. The details of the project are still being worked out and there's an obvious lack of infrastructure in many areas at the moment. But Facebook's 'Whatsapp' messenger program is already popular in the region, providing a potential blueprint for how to proceed with the "Simba" project.
- Fox News
Facebook on Friday said it had removed 200 pages, groups and accounts from its social media platforms in the Philippines, citing misleading behaviour to boost messages favouring some politicians in the country.
The move was made ahead of mid-term elections in the Philippines on May 13, when half of the 24-member Senate seats, all House of Representatives seats and tens of thousands of local postings will be up for grabs.
The social media giant said about 3.6 million people were following the 67 pages, 68 accounts and 40 groups on Facebook and 25 Instagram accounts that were taken down following an investigation.
The removed pages, accounts and groups were found to be engaged in “coordinated inauthentic behaviour,” said Nathaniel Gleicher, head of Facebook’s cybersecurity policy unit.
“What we saw is this cluster of pages groups and accounts, a combination of authentic and fake accounts that were basically being used to drive messaging on behalf of, and related to, local candidates,” he said.
Gleicher said the accounts were made to appear as normal and legitimate to boost messages in favour of certain political candidates.
“They were designed to look independent, but in fact, we can see that they were coordinated on the back,” he said in Manila.
“They would post about local news, they would post things about the upcoming elections, local candidates.”
“A lot of messaging was pro, sort of supporting the candidates they were working on behalf of, some would be attacking political opponents of those candidates,” he added.
Facebook users have continued to rise despite a series of data privacy scandals and criticism over its attempt to stem toxic content.
The social media giant said the number of people who logged into its site at least once a month jumped 9% last year to 2.32 billion people.
Fears the firm's scandals could put off advertisers also proved unfounded with annual revenues up 30% on last year.
The rise came despite campaigns which urged people to shun the tech giant.
Founder Mark Zuckerberg said the firm had "fundamentally changed how we run the company to focus on the biggest social issues".
The strong financial performance comes amid continuing concerns over how the social media firm handles users' personal data and privacy after the Cambridge Analytica data sharing scandal and fears the network has been used as a political tool.
Facebook paid teens to mine device data
Facebook 'less popular with UK children'
The company's shares have lost almost a third of their value since July when it warned about slowing revenue growth and they remain near a two-year low.
But they jumped over 9% in after-hours trading after profit and revenue beat analyst forecasts.
Facebook's total profit for 2018 was $22.1bn (£16.9bn), up 39% on 2017.
User growth was particularly strong in India, Indonesia and the Philippines, but flat in the US and Canada.
The mind boggles. In 2018 Facebook saw the Cambridge Analytica scandal, political manipulation, fake news, data breaches and accusations of deeply unethical behaviour.
Despite this, profits are up by almost 40%. Facebook isn't just surviving, it's thriving.
In the face of severe turbulence, Mark Zuckerberg's company has proven to be resilient.
But while users appear to be turning a blind eye, the same won't be said for regulators - Facebook knows huge fines are likely coming its way.
The question is how damaging those fines will be, and what other measures might be put in place that might clip the wings of a company that many lawmakers feel is too powerful.
George Salmon, analyst at Hargreaves Lansdown, said Facebook's revenue growth in the final three months of the year was its weakest since the firm listed on the Nasdaq stock exchange in 2012, but said the figures were still "reassuring".
"Only time will tell if Mark Zuckerberg's ambitious plans to revolutionise Facebook pay off, but these results will go a long way towards regaining the trust of Wall Street - analysts had been jittery after a tumultuous 2018 which included the trials and tribulations of the Cambridge Analytica scandal and a reset on strategy," he added.