Facebook Escapes Recent Data Privacy Scandals with Big Profit Gain

Facebook Escapes Recent Data Privacy Scandals with Big Profit Gain

Facebook Inc. continued to add users and saw revenue soar in the first quarter despite facing its worst crisis in company history over the mishandling of personal data belonging to millions of unsuspecting users.

Nearly all of Facebook's advertising revenue, 91%, is from mobile advertising, a year-on-year increase from 85%. It's also rolling out ad transparency tools giving users the ability to see who is running a political ad, who they're targeting, how much they're paying and what other messages they're sending out.

The results are some much-needed good news for the California company, which has been in damage control mode for weeks, fighting to contain the fallout from the Cambridge Analytica scandal and reassure users.

Facebook now has 27,742 employees - an increase of 48 per cent y-o-y. Operating costs were lower than forecast by analysts but CEO Mark Zuckerberg warned they will continue to eat into Facebook's profits as it adds 20,000 workers to address security and privacy concerns in the wake of the Cambridge Analytica scandal and the rise in scepticism abut the company.

Cambridge Analytica, a data firm with ties to President Donald Trump's campaign, accessed information from as many as 87 million Facebook users without their knowledge.

Facebook shares climbed more than 4.7 percent to United States dollars 167.33 in after-hours trades that followed release of the earnings figures.

Facebook's struggles with mobile have impacted the company before, most notably when Facebook was slow to move its advertising business to mobile after its 2012 IPO and its stock tanked.

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Facebook appears to have weathered a string of controversies - over foreign election meddling, fake news, shady advertising and misuse of data - with hardly any affect on its bottom line so far.

Facebook CEO Mark Zuckerberg recently testified at two Congressional hearings at which he fielded lawmakers' questions about the company's continued stumbles with data privacy and how it meant to prevent future disasters.

"Most are disturbed at an individual level with what happened, but there's nothing that made Facebook overly toxic - yet", he said.

Chief Financial Officer David Wehner told analysts on a call that expenses this year would grow between 50 percent and 60 percent, up from a prior range of 45 percent to 60 percent. It is projected to report daily active users of 1.45 billion, the average of analyst estimates, compared with 1.4 billion in the fourth quarter.

In another sign public anger directed at Silicon Valley hasn't hurt business, Twitter and Alphabet, Google's parent company, also reported strong financial results this week.

Facebook also has plenty of properties where it's starting to make more money beyond the main social network, like the popular chat apps WhatsApp and Messenger and the photo-sharing app Instagram, which is expected to reach a billion users this year.

Steps outlined by Zuckerberg to address these areas include restricting the data developers can access; building more artificial intelligence tools to detect and remove fake accounts ahead of elections in both the U.S. and Europe last year, and doubling the headcount working on security and content review to more than 20,000 by the end of this year.

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