Facebook is setting aside $3 billion to cover the expected costs, including an anticipated fine, related to an ongoing investigation with the Federal Trade Commission over its privacy practices, the company said today. The expenses could go as high as $5 billion, Facebook said.
The figure may sound massive, but Wall Street is giddy. In after-hours trading on Wednesday, Facebook's stock price shot up more than 8%, signaling that investors consider the estimated fine to be a slap on the wrist that could've been far worse.
"A fine in the low billions of dollars wouldn't hold Facebook into account," Rep. David Cicilline, chair of the Subcommittee on Antitrust, Commercial and Administrative Law, told BuzzFeed News earlier this year. "Fines have to be so high that they change the behavior of the company and it's no longer just the cost of doing business."
In its earnings statement, Facebook said it had set $3 billion aside in anticipation of the settlement. And while that hurt its net profits, the company's revenue in the first three months of 2019 still grew by 26% over last year to $15 billion, and its massive global user base remains engaged.
After announcing the anticipated settlement, Facebook's market capitalization climbed by approximately $40 billion in just over an hour of after-hours trading.
BuzzFeed News has reached out to Facebook for comment.