The Federal Trade Commission voted to fine Facebook around $5 billion for violations of the FTC’s consumer-privacy rules, according to multiple media reports — the biggest privacy-related fine in the commission’s history.
The $5 billion figure may be a record-breaker, but it represents less than Facebook reported in net profit ($5.43 billion) for the first quarter of 2019 alone.
Facebook shares rose in late trading Friday, as investors were reassured that the FTC fine wouldn’t be worse than expected. The social media giant’s stock closed up 1.8% for the day. The news was first reported by the Wall Street Journal.
In reporting Q1 results, Facebook told investors it expected it would have to pay as much as $5 billion to settle the FTC probe. In anticipation of the charges, Facebook set aside $3 billion in the quarter.
The FTC fine will likely decrease Facebook’s 2019 earnings per share by 60 cents per share, and investors will “likely look past the headwind” given that is it “one-time in nature,” Cowen & Co. analyst John Blackledge wrote in a note Friday.
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The $5 billion fine still needs to be OK’d by the Department of Justice, but DOJ “rarely” rejects FTC settlements, the New York Times reported. The FTC has been investigating whether Facebook violated a 2011 consent decree with the commission after it was revealed last year that the company improperly shared information on millions of users with now-defunct U.K. political consulting firm Cambridge Analytica.
As part of a settlement with the FTC, Facebook has agreed to submit to more comprehensive oversight of how it manages user data but the agreement will not restrict its ability to collect and share data with third parties, according to the NYT report.
The commission OK’d the fine against Facebook by a 3-2 vote along party lines, with the three Republican-appointed commissioners voting in favor of it, per reports.