Facebook Continues Making Money Despite Controversy

People continue joining and signing in to Facebook and that means the social media giant continued to rake in large sums of money through selling ads regardless of a privacy scandal.

The earnings report released by the social media company shows exactly that, even though data from more than 87 million users was misused but had little effect on new members signing up or advertisers spending money.

Facebook’s numbers were big for the first three months of 2018. During the quarter, 1.45 billion users visited the site daily and over 2.2 billion monthly. Revenue from advertising was up by 50% to over $12 billion.

Facebook stock was up 7% in trading after hours following the release of the financials.

The strong financial numbers show that the scandals that have plagued the company – including data leaks, fake news and censorship accusations – have not yet affected profits.

Thus far any damage sustained from the Cambridge scandal appears to have been contained, although the next 3 to 6 months could be difficult with regulators and lawmakers said one analyst.

Facebook is expecting to dramatically increase its spending during 2018, as it has predicted spending $15 billion which is equal to almost two and half times what was spent in 2017.

The cost have been driven by the investments made by the company in artificial intelligence as well as security, which is a category that has staff for moderation of content, said CFO David Wehner, who said the company is spending more money on that (security) than had been anticipated.

Analysts on Wall Street did not seem to worry much about the increased spending but did question on their conference call the effect that new stricter European privacy laws would have on the business.

The new privacy laws or GDPR, allow the consumer to more easily opt out of sharing their own data and impose stiffer penalties for breaches of data.

Facebook as well as other companies that are data-reliant have gradually been introducing new privacy controls for some of their users on the lead up to the laws going into effect on May 25.

Advertising on Facebook is very specific and allows a business to focus on one target for example women who live in Los Angeles and are interested in beachwear.

The worry is if users implement the new privacy controls it could limit the ability of advertisers to target them directly and if the ads’ effectiveness goes down, the price that Facebook can charge for the same will drop as well.