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Facebook posts strong first quarter despite privacy scandal

The data exploitation scandal that hit Facebook has not yet had an adverse impact on advertising revenues or user activity, according to first quarter financial results

Facebook had a strong first quarter despite the data sharing scandal, with revenue up 49% compared with the first quarter of 2017 to $11.97bn and profits up 63% to $4.9bn

The company’s financial performance seems hardly dented due to the data privacy scandal involving London-based data mining firm Cambridge Analytica that broke towards the end of the quarter.

Advertising revenue was up 50% compared with the same period a year to $11.79bn and the crucially important mobile advertising revenue reportedly represented approximately 91% of advertising revenue for the first quarter of 2018, up from approximately 85% of advertising revenue in the first quarter of 2017.

The average number of daily active users in March rose to 1.45 billion, a 13% increase year-on-year. And the average number of monthly active users for March also rose by 13%, to 2.2 billion.

However, because the privacy scandal emerged only towards the end of the quarter, the true impact of it may only be seen the current quarter as the implications of the case are considered and the #DeleteFacebook campaign has had longer to run.

Facebook is also among 30 organisations under investigation by the UK’s privacy watchdog for misusing personal data for political and other purposes.

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The Information Commissioner’s Office has described the scandal as a “game changer” and has promised a thorough investigation. "Despite facing important challenges, our community and business are off to a strong start in 2018,” said Mark Zuckerberg, Facebook founder and CEO.

“We are taking a broader view of our responsibility and investing to make sure our services are used for good,” he said. “But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together.”

Facebook has responded to the revelations about its data collection and sharing practices by announcing a raft of improvements to its privacy tools and to the way that it collects and shares user data. It has also introduced a verification process for political advertisers.

In the latest move to win back trust, Facebook published its previously sectred content moderation guidelines.

Facebook has indicated that it plans to comply with the requirements of the EU’s General Data Protection Regulation (GDPR) in Europe at least, but the social network’s chief financial officer, Dave Wehner, warned that GDPR could lead to a fall in users and revenue in Europe as users start tightening up their accounts to block targeted advertising.

“While we don’t expect the changes will have a significant impact on ad revenue, any change in our ability for us and advertisers to use data can impact our optimisation potential at the margin,” he said.

GDPR-compliant settings

Despite pledging to roll out GDPR-compliant settings to all Facebook users, the chief operating officer, Sheryl Sandberg, said the settings “would not be exactly the same format”.

Because of this, Facebook does not expect there to be any impact on advertising revenue outside of Europe, indicating that those settings would not make a difference to the way Facebook uses people’s personal data, according to The Guardian.

Facebook even reported an increase in headcount to 27,742 as of March 31, 2018, an increase of 48% year-over-year.

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