Facebook has indicated that it has created a $3 billion budget for costs that are expected to arise, as a result of a probe into its privacy practices by the US Federal Trade Commission. While this is a substantial provision, Facebook has alluded to the fact that the costs of the investigation could total as much as $5 billion.
The probe is being carried out in response to the Cambridge Analytica data scandal. This was a 2018 political scandal in which the revelation was made that the personal data of millions of Facebook users was harvested by Cambridge Analytica. This was done without the consent of the users.
Additionally, questions are being raised about Facebook’s Instagram platform, as a security lapse late last month affected millions of users. In this instance, the passwords of these users were stored in a plaintext format without the addition of any layers of encryption. To make matters worse, Facebook did not give an accurate report on the number of users that were affected as it was initially stated that hundreds of thousands of users were affected. The company waited until last week to reveal that the affected user base was in the millions.
Facebook is also under fire from the New Zealand privacy commissioner who described the social media platform’s team as “morally bankrupt pathological liars”. These comments were made following the tragic Christchurch attacks in which 50 persons were killed. The killings were livestreamed on the Facebook platform. Chairman and CEO of Facebook, Mark Zuckerberg, stated in an interview after the attacks that there are no plans to make changes to the live technology.
Still Going Strong
Despite all this, Facebook is still reporting success as sales have risen by 26%, monthly users are up by 8%, and the share price increased by 40% in the year to date.