Facebook Brushes Aside $5B Fine With Strong Second Quarter
The social media giant, in its earnings report, revealed that it was informed by the FTC in June that the agency had opened an antitrust investigation into the company.
On the heels of a $5 billion Federal Trade Commission fine over its handling of user data, Facebook on Wednesday reported second-quarter earnings that show it has felt little impact from the increased scrutiny over its business practices.
The social networking giant made $16.9 billion in revenue during the quarter, up 28 percent from the same period a year earlier, and brought in earnings of 91 cents per share, beating Wall Street's expectations on both. The report included a $2 billion expense related to the FTC settlement, $3 billion of which it had recorded during the first quarter, and a $1.1 billion income tax expense.
Meanwhile, Facebook grew its user base by 8 percent to 1.59 billion daily active users and 2.41 billion monthly active users. The company also said that more than 2.1 billion people use one of its family of apps — Facebook, Instagram, WhatsApp and Messenger — everyday on average.
The majority of the company's user growth comes from outside the U.S. and Canada, where it added just 1 million daily users, and Europe, where its user base was stagnant. It added 15 million users in Asia-Pacific and 9 million in territories like South America that it categorizes as "Rest of World."
The strong quarter was enough to boost Facebook's stock as much as 3 percent after-hours despite news of the FTC settlement.
The FTC on Wednesday morning levied the $5 billion fine as part of a larger settlement with Facebook over charges that it deceived users about its use of private information. The agency also ordered Facebook to add new levels of accountability to its corporate structure to hold the company more accountable for the decisions it makes regarding user data. Among the requirements, Facebook's board will now be required to create an independently appointed privacy committee, and CEO Mark Zuckerberg and the committee's independent compliance officers will undergo regular audits over their compliance with the FTC's privacy program.
The fine is the largest that the FTC has imposed on a company over users' privacy, but it is just a fraction of the $56 billion in revenue that the company earned last year.
The settlement with the FTC comes amid increased government scrutiny over the technology giants. Facebook, in its earnings report, revealed that it was informed by the FTC in June that the agency had opened an antitrust investigation into the company. The Department of Justice has also opened an antitrust review of online platforms including Facebook.
Facebook shares closed the day up slightly more than 1 percent to $204.66.