Facebook Expected To Pay 5 Billion$ After The App Scandal Believed To Be Causing Data Leaks

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The cost of Facebook total revenue has climbed to a whopping 3Billion U.S$ after the investigations were held regarding Facebook data policy and privacy’s preventive measures.

Facebook said on Wednesday that its operating costs rose to $11.7 billion in the three months ending March 31, up 80 percent from the year-earlier period. The company set aside $3 billion to deal with the issue.

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It said in its quarterly earnings release, noting that the final loss from any government fines could be as much as $5 billion.

The company made a profit of $22 billion last year on $56 billion in total revenue or a profit margin of 45%. Still, the potential cost of an FTC penalty grabbed the attention of Facebook analysts.

“This is a significant development, and any settlement with the FTC may impact the ways advertisers can use the platform in the future,” eMarketer Principal Analyst Debra Aho Williamson said in a note.

The FTC started investigating the social networking site in the last March, Facebook was believed to hold an application which was accused of using and selling the user’s data to third-party members.

The application called the Cambridge Analytica collected a large amount of data from millions of users worldwide and sold it to other parties. Back in 2010, Facebook and its CEO agreed to the agency by abstaining from selling the data and asking for permission from users before data collection.

Read More: Facebook May Finally Prevent Your Usage Of The Messenger App Which Was Once Necessary.

However, the agreement was not fulfilled. Facebook’s monthly user base grew 8 percent, to 2.3 billion, from the year before, the company reported Wednesday. But it’s North America users stayed nearly flat, at 243 million.

Despite the signs of slowing audience growth and the long-term specter of more government regulations eating into Facebook’s profits, Wall Street remains bullish on its growth prospects.

Facebook shares have risen 39 percent since the beginning of the year, more than double the increase of the Standard & Poor’s 500 indexes. “In terms of advertising and commerce, it’s a spectrum,” Zuckerberg said, citing the popularity of ads on
Facebook’s Instagram. “The private network will lend itself to transactions.”

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