The FTC’s investigation was launched in March 2018 after the Observer revealed that the political consultancy Cambridge Analytica had improperly obtained the private information of more than 50m Facebook users. Facebook had agreed under a 2012 consent decree stemming from a previous FTC investigation into privacy concerns to better protect user privacy. The investigation centered on whether this decree had been violated.
The $5bn fine would be the largest ever levied by the FTC against a technology company, and the largest ever against any company for a privacy violation. It is at the upper limit of what Facebook said that it was expecting when it disclosed in April 2019 that it was nearing the end of negotiations with the FTC and expected a fine of between $3bn and $5bn.
As part of the agreement, Facebook will now reexamine the ways it handles user data, but the settlement will not restrict the company’s ability to share data with third parties, reports said.
Critics say the changes required of Facebook are not substantial enough, and the fine will hardly make a dent in Facebook’s bank account. The company had more than $15bn in revenue in the first three months of 2019.
“This isn’t a fine, it’s a favor to Facebook, a parking ticket which will clear them to conduct more illegal and invasive surveillance,” said Matt Stoller, a fellow at the Open Markets Institute who specializes in monopoly power.
“Congress should start defunding the FTC and move the money to state enforcers like Karl Racine who believe in enforcing the law,” he added, referring to the attorney general of Washington DC, who is currently pursuing a lawsuit against Facebook over the Cambridge Analytica case.
Investors appeared to agree, and Facebook’s stock price jumped more than 1% when the news broke just before trading closed for the weekend.
David Cicilline, the Democratic congressman who chairs the House subcommittee on antitrust issues, reacted to the news on Twitter, saying: “The FTC just gave Facebook a Christmas present five months early. It’s very disappointing that such an enormously powerful company that engaged in such serious misconduct is getting a slap on the wrist.”
Cicilline will have an opportunity to express his concerns directly to a Facebook executive on Tuesday, when representatives of major Silicon Valley tech companies are set to testify at a hearing of the antitrust subcommittee. The hearing and fine come as Facebook faces increased scrutiny over antitrust concerns and its privacy practices. Senator Ron Wyden of Oregon said the fine shows Facebook’s size makes it difficult to hold accountable.
“This reported fine is a mosquito bite to a corporation the size of Facebook,” he said. “And I fear it will let Facebook off the hook for more recent abuses of Americans’ data that may not have been factored in to this inadequate settlement. The only way to assure Americans that our private data will be protected is to pass a strong privacy bill, like the one I plan to introduce in the coming weeks.”
The company is expected to come up against more regulatory challenges as it seeks to launch its new cryptocurrency Libra in 2020. On Thursday, Donald Trump tweeted Libra “will have little standing or dependability”. The House financial services committee is holding a panel on 17 July on Facebook’s plans for Libra.
Lawmakers say the ruling and relatively small fine show federal privacy laws are needed.
“Given Facebook’s repeated privacy violations, it is clear that fundamental structural reforms are required,” Senator Mark R Warner of Virginia said. “With the FTC either unable or unwilling to put in place reasonable guardrails to ensure that user privacy and data are protected, it’s time for Congress to act.”
Mark Zuckerberg, Facebook’s chief executive, plans to integrate the social network’s messaging services — WhatsApp, Instagram and Facebook Messenger — asserting his control over the company’s sprawling divisions at a time when its business has been battered by scandals.
The move, described by four people involved in the effort, requires thousands of Facebook employees to reconfigure how WhatsApp, Instagram and Facebook Messenger function at their most basic levels.
While all three services will continue operating as stand-alone apps, their underlying messaging infrastructure will be unified, the people said. Facebook is still in the early stages of the work and plans to complete it by the end of this year or in early 2020, they said.
By stitching the apps’ infrastructure together, Mr. Zuckerberg wants to increase the utility of the social network, keeping its billions of users highly engaged inside its ecosystem. If people turn more regularly to Facebook-owned properties for texting, they may forgo rival messaging services, such as those from Apple and Google, said the people, who declined to be identified because the moves are confidential.
In a statement, Facebook said it wanted to “build the best messaging experiences we can; and people want messaging to be fast, simple, reliable and private.” It added: “We’re working on making more of our messaging products end-to-end encrypted and considering ways to make it easier to reach friends and family across networks.”
Knitting together Facebook’s apps is a stark reversal of Mr. Zuckerberg’s previous stance toward WhatsApp and Instagram, which were independent companies that he acquired. At the time that Facebook bought the firms, Mr. Zuckerberg promised WhatsApp and Instagram plenty of autonomy from its parent company. (Facebook Messenger was a homegrown messaging service, spun out of the main Facebook app in 2014.)
WhatsApp and Instagram have since grown tremendously, prompting a change in Mr. Zuckerberg’s thinking, said one of the people. The chief executive now believes tighter integration will benefit Facebook’s entire “family of apps” over the long term by making them more useful, the person said. Mr. Zuckerberg had floated the integration idea for months and began promoting it more heavily to employees toward the end of last year, the people said.
The effort has caused internal strife. Instagram’s founders, Kevin Systrom and Mike Krieger, abruptly left Facebook last fall after Mr. Zuckerberg began weighing in more. WhatsApp’s founders, Jan Koum and Brian Acton, also departed for similar reasons.
More recently, dozens of WhatsApp employees clashed with Mr. Zuckerberg over the integration plan on internal message boards and during a contentious staff meeting in December, said four people who attended or were briefed on the event.
The changes may also raise questions of data privacy because of how user information may be shared between the services. Today, WhatsApp requires people to register only a phone number to sign up for the service.
By contrast, Facebook and Facebook Messenger ask users to provide their real identities. Matching Facebook and Instagram users to their WhatsApp handles could give pause to those who prefer keeping their use of each app compartmentalized.
“As you would expect, there is a lot of discussion and debate as we begin the long process of figuring out all the details of how this will work,” Facebook said in a statement.
In many countries, people often rely on only one or two text messaging services. In China, WeChat, which is made by Tencent, is popular, while WhatsApp is heavily used in South America. But Americans are fragmented across multiple services, like Apple’s iMessage, SMS and various Google chat apps.
For Facebook, the changes provide a better chance at making money from Instagram and WhatsApp, which currently generate little revenue even though they have vast numbers of users. Instagram has 1 billion monthly active users, while WhatsApp has 1.5 billion.
Mr. Zuckerberg does not yet have specific plans for how to profit from the integration of the services, said two of the people. But a more engaged audience could lead to new forms of advertising or other services for which Facebook could charge a fee, they said.
One business opportunity involves behavior around Facebook Marketplace, a free Craigslist-like product where people can buy and sell goods on the social network. The service has grown popular in Southeast Asia and other markets outside the United States.
When the apps are knitted together, Facebook Marketplace buyers and sellers in Southeast Asia would be able to reach out and communicate with each other using WhatsApp — which is popular there — rather than using Facebook Messenger or another, non-Facebook text messaging service. Eventually, that could lead to new ad opportunities or services for profit, said one of the people.
Within Facebook, some employees said they were confused as to why Mr. Zuckerberg found putting the messaging services together so compelling. Some said it was jarring because of his past promises about independence.
When Facebook acquired WhatsApp for $19 billion in 2014, Mr. Koum talked publicly about user privacy and said, “If partnering with Facebook meant that we had to change our values, we wouldn’t have done it.”
Early last month, during one of WhatsApp’s monthly Tuesday staff meetings, it became clear that Mr. Zuckerberg’s mandate would be a priority in 2019, according to a person familiar with the matter. One WhatsApp employee then ran an analysis on the number of potential new users in the United States that the integration plan could bring to Facebook, said two people familiar with the study. The amount was relatively meager, the analysis showed.
To assuage concerns, Mr. Zuckerberg called a follow-up meeting with WhatsApp employees later in the week, three of the people said. On Dec. 7, employees gathered around microphones at WhatsApp’s offices to ask Mr. Zuckerberg why he was so invested in merging the services. Some said his answers were vague and meandering. Several WhatsApp employees have left or plan to leave because of Mr. Zuckerberg’s plans, the people said.
Unifying the infrastructure for WhatsApp, Instagram and Facebook Messenger is technically challenging. Unlike Facebook Messenger and Instagram, WhatsApp does not store user data or messages. It is the only one of the three services to currently use end-to-end encryption by default.
Encrypted messaging has long been supported by privacy advocates who fear governments or hackers may intrude into people’s personal messages. But it will raise other issues for Facebook, particularly around its ability to spot and curb the spread of illicit activity or disinformation.
Last year, researchers had difficulties tracking disinformation on WhatsApp ahead of the Brazilian presidential election, before eventually finding ways to do so. WhatsApp has recently placed limits on how many times a message can be forwarded on its service, in an attempt to reduce the distribution of false content.
Up to 1,500 apps may have had improper access to photos that weren’t yet shared by Facebook users, including in draft posts, from Sept. 13 to Sept. 25, the company said Friday in a post on its developers’ blog.
A company spokeswoman said Facebook found and fixed the bug on Sept. 25 after an internal team made the discovery. The impact of the breach isn’t yet clear, including whether any developers accessed the photos during the window when they were improperly made available.
Facebook’s privacy safeguards have become a mounting problem for the company. Earlier this week, the Menlo Park, Calif. company opened a 24-hour pop-up shop in New York City designed to educate holiday shoppers and tourists about its privacy controls and the steps individuals can take to safeguard their data.
Facebook’s disclosure Friday also comes as it faces a range of regulatory inquiries into how it safeguards user privacy, treats its competitors and controls access to its platform.
Earlier this year, Facebook said the data related to as many as 87 million people may have been improperly shared with Cambridge Analytica, a political analytics firm. At the time, Chief Executive Mark Zuckerberg said: “We have a responsibility to protect your information. If we can’t, we don’t deserve it.”
The latest incident also exposes Facebook to fresh scrutiny from European regulators, who earlier this year enacted legislation requiring internet companies like Facebook to inform them about breaches within 72 hours.
Facebook said it informed Ireland’s Data Protection Commission, which is the company’s lead privacy regulator in Europe, about the incident on Nov. 22. The company said it spent roughly two months after learning of the glitch trying to determine the scope of the incident and whether it was required to disclose it. The company said it believes it is in compliance with European law.
In a statement, Graham Doyle, head of communications for the Data Protection Commission, said the regulator started a “statutory inquiry” this week to see if Facebook complied.
Facebook then waited several weeks to announce the breach publicly because it needed to build a notification page and translate it into multiple languages, the spokeswoman said. Facebook automatically translates posts presented in the news feed in more than 60 languages. “We’re sorry this happened,” wrote Tomer Bar, engineering director at Facebook, in the blog post.
Early next week, Facebook will roll out tools for third-party app developers to determine which people might have been affected by the application program interface bug that led to the potential exposure of the photos. Facebook said it would work with the developers to delete affected users’ photos.
Any developer that doesn’t certify within two months that it deleted any photos it improperly obtained will lose access to the Facebook platform, the company said.
The company, which will notify people potentially affected through an alert on Facebook, also recommended users log into any apps with Facebook authorization to check or update photo-sharing permissions.
Facebook has been fined €10m by Italian authorities for misleading users over its data practices.
Today’s Stock Market News
Today’s Stock Market News
The two fines issued by Italy’s competition watchdog are some of the largest levied against the social media company for data misuse, dwarfing the £500,000 fine levied by the British Information Commissioner’s Office in September – the maximum that body is able to issue.
The Italian regulator found that Facebook had breached articles 21, 22, 24 and 25 of the country’s consumer code: Misleading users in the sign-up process about the extent to which the data they provide would be used for commercial purposes.
Emphasising only the free nature of the service, without informing users of the “profitable ends that underlie the provision of the social network”, and so encouraging them to make a decision of a commercial nature that they would not have taken if they were in full possession of the facts.
Forcing an “aggressive practice” on registered users by transmitting their data from Facebook to third parties, and vice versa, for commercial purposes.
The company was specifically criticised for the default setting of the Facebook Platform services, which in the words of the regulator, “prepares the transmission of user data to individual websites/apps without express consent” from users.
Although users can disable the platform, the regulator found that its opt-out nature did not provide a fully free choice. As an additional penalty, the authority has directed Facebook to publish an apology to users on its website and on its app.
In a statement, a Facebook spokesperson said: “We are reviewing the Authority’s decision and hope to work with them to resolve their concerns. This year we made our terms and policies clearer to help people understand how we use data and how our business works. We also made our privacy settings easier to find and use, and we’re continuing to improve them.”
Italy’s antitrust authorities have pressed hard against Facebook for data misuse. In 2017, the same authority issued a €3m fine against the company for “inducing” users of its WhatsApp messaging service to share data with the main Facebook app.
In that ruling, the regulator criticised WhatsApp for misleadingly implying that users could continue to use the service only if they agreed to the data transfer.
Facebook considered charging companies for access to user data several years ago, The Wall Street Journal reported Wednesday, citing internal Facebook emails in an unredacted court document.
Facebook employees also discussed encouraging advertisers to spend more money on the service in exchange for increased access to user information, the emails in the document reportedly show. Monetizing its user data would mark a dramatic about-face of the social media giant’s longstanding policy of not selling that information.
During testimony before Congress in April about the company’s data handling practices in the wake of the Cambridge Analytica scandal, Facebook CEO Mark Zuckerberg said: “I can’t be clearer on this topic. We don’t sell data, that’s not how advertising works.”
The emails are reportedly included in a cache of internal Facebook documents seized recently by a representative of the UK Parliament. The seized documents were obtained during the discovery process in a lawsuit filed by defunct app maker Six4Three that claims Facebook created privacy loopholes that allowed Cambridge Analytica to obtain Facebook user data.
The documents are believed to include private internal communications among Facebook executives, including Zuckerberg, regarding Facebook’s business model. They also contain an email from a Facebook engineer alerting senior people in the company to potential Russian interference on the platform as early as 2014, a member of Parliament said Tuesday.
Damian Collins, who heads Parliament’s Digital, Culture, Media and Sport Committee, said during a hearing Tuesday that the UK government might release documents “within the next week.” The company declined to provide the full text of the emails.
Consumers and regulators on both sides of the Atlantic are trying to understand how Facebook uses the data of its 2.27 billion monthly users. Facebook has been under intense scrutiny in the past year for its practices of sharing user data, particularly after the company revealed earlier this year that analytics firm Cambridge Analytica improperly obtained personal data of millions of users.
The Facebook emails referenced in the 18-page court document that was viewed by the Journal date back to the fall of 2012. At the time, Facebook had just emerged from a rocky public offering and was struggling to generate revenue from its mobile product while operating under a data-sharing policy established years earlier under Mr. Zuckerberg.
Facebookhas been hit by major problems with its ad platform right as the biggest shopping days of the year approach.
The company said there had been significant issues with uploading ads that meant that users were unable to post any marketing content.
And the issues happened just days before Black Friday and then Cyber Monday, as users search for the best deals and advertisers rush to get their attention.
Facebook said that the problems were now fixed but that things might have taken a while to get back to normal. It might be working slower than usual, it said.
Email inboxes as well as social networks like Facebook are currently being flooded with ads from companies desperate to take some of the huge amounts of money that are spent after Thanksgiving, over Black Friday, Cyber Monday and the weekend in between.
Companies that want to do so using Facebook have to upload their ads and set them up so they can be inserted into people’s News Feeds. But as they tried to do so, they ran into the problems that meant the campaigns could not be posted.
Facebook said that live campaigns that were already running should not have been affected by the problems. But advertisers ran into issues both creating new campaigns and making changes to old ones, it said.
Facebook Inc Company Profile
Facebook, Inc. is focused on building products that enable people to connect and share through mobile devices, personal computers and other surfaces. The Company’s products include Facebook, Instagram, Messenger, WhatsApp and Oculus. Facebook enables people to connect, share, discover and communicate with each other on mobile devices and personal computers. Instagram enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends.
Messenger allows communicating with people and businesses alike across a range of platforms and devices. WhatsApp Messenger is a messaging application that is used by people around the world and is available on a range of mobile platforms. Its Oculus virtual reality technology and content platform offers products that allow people to enter an interactive environment to play games, consume content and connect with others.
Amid a plunge in the stock price, ongoing leadership turmoil and critical media coverage, just over half of employees said they were optimistic about Facebook’s future, down 32 percentage points from the year earlier, according to the survey, which was taken by nearly 29,000 employees. Fifty-three percent said Facebook was making the world better, down 19 percentage points from a year ago.
Chief Executive Mark Zuckerberg directly addressed the survey results at a question-and-answer session in early November, some of the people said, saying he and other senior officials were taking steps to address the underlying issues.
The darkening mood within the social-media giant is notable in part because its workforce has been resilient through other difficult patches in the past. That includes the period after the 2016 presidential election, when many critics were blaming Facebook for allowing fabricated news articles to pervade the platform.
But many people inside Facebook say this period feels different, in part because of the unusual turbulence at the top of the company, which has struggled to respond to its various internal and external controversies. The declining stock price has also hurt morale among employees for whom stock options are a large part of their compensation, current and former employees say.
“It has been a difficult period, but every day we see people pulling together to learn the lessons of the past year and build a stronger company,” a Facebook spokeswoman said. “Everyone at Facebook has a stake in our future and we are heads down shipping great products and protecting the people who use them.”
The biannual “pulse” survey asks employees to assess how strongly they believe in Facebook’s overall mission and whether they believe the company has a positive effect on the world, people familiar with the surveys say. It also asks them to measure their satisfaction with their individual managers and work-life balance.
These types of polls are increasingly common as companies try to gauge employee sentiment and identify any problems before they fester. There are some 30 questions on the Facebook survey, which is conducted in April and October every year.
Employees on average said they intended to stay another 3.9 years at Facebook, down from 4.3 years a year earlier. About 12% said they planned to stay less than a year. Former employees said these figures typically rose.
In survey responses, some employees indicated they were worried about Facebook’s sharpened focus on growth and frustrated over a “lack of innovation” within the company. Employees also questioned the company’s higher emphasis on the main Facebook platform over Instagram, WhatsApp and other growing services that Facebook owns.
Facebook Inc. shares continued to lag behind FANG counterparts on Thursday after a pair of analysts took opposing sides on the stock. Vertical Group says fears that the company’s revenue growth will be hurt by a shift to newer products and data privacy changes are over-exaggerated, while Cleveland Research cut sales estimates for the current quarter, citing lower spending from advertisers. Facebook fell 0.3 percent as of 12:19 p.m. in New York, while Amazon.com Inc., Netflix Inc. and Google parent Alphabet Inc. traded higher.
Facebook is the only member of the group that’s lost value in 2018, as data privacy scandals and scrutiny over its role in election meddling have weighed on user growth and spurred greater spending on things like security. Facebook has lost about 8 percent so far this month and is on track to close at its lowest since April.
The social media behemoth is expanding photo and video fact-checking capabilities to all of its 27 third-party fact-checking partners, the company said in a blogpost on Thursday. Facebook is much “better protected” against political sabotage today than two years ago, Chief Executive Officer Mark Zuckerberg said in a separate post published on Wednesday, where he detailed the steps the company has made to remove fake accounts and boost security on its popular properties.
Facebook (FB) closed at $161.36 in the latest trading session, marking a -0.42% move from the prior day. This move lagged the S&P 500’s daily gain of 0.53%. At the same time, the Dow added 0.57%, and the tech-heavy Nasdaq gained 0.75%. Coming into today, shares of the social media company had lost 9.76% in the past month. In that same time, the Computer and Technology sector gained 0.86%, while the S&P 500 gained 2.16%.
Wall Street will be looking for positivity from FB as it approaches its next earnings report date. This is expected to be November 7, 2018. In that report, analysts expect FB to post earnings of $1.48 per share. This would mark a year-over-year decline of 6.92%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $13.83 billion, up 33.94% from the year-ago period. Digging into valuation, FB currently has a Forward P/E ratio of 22.89. Its industry sports an average Forward P/E of 32.9, so we one might conclude that FB is trading at a discount comparatively.
Investors should also note that FB has a PEG ratio of 1.04 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. The Internet – Services industry currently had an average PEG ratio of 2.45 as of yesterday’s close.