Facebook is to set aside $5bn to cover a mammoth privacy fine levied by the US Federal Trade Commission over the Cambridge Analytica scandal, eating into $15bn of revenue generated over the first quarter.
The social network was further hit by a $3bn legal bill incurred in fighting the fine, all of which conspired to feed into a 51% year-on-year decline in net income to $2.4bn. When the one-off effects of this penalty are excluded however its operating margin would have actually increased.
In a statement Facebook wrote: “We estimate that the range of loss in this matter is $3.0bn to $5.0bn,” the company said. “The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”
In an attempt to get back on the front foot chief executive Mark Zuckerberg has pledged to build a ‘privacy-focused’ private messaging platform by merging the communication portions of Facebook, WhatsApp and Instagram – although this remains at least five years off.
In the UK Facebook has come under mounting political pressure to strengthen its content moderation policies following a succession of scandals.