Facebook: Read This Buried Warning In Earnings Report

Cambridge Analytica isn't alone.

Franco Bouly | Flickr Creative Commons

Most of Facebook’s quarterly report sounds surprisingly optimistic, exceeding analysts’ estimates and causing its stock to jump 9.1 percent on Thursday. But deep in the report’s “risk factors” section is a buried warning: expect more firms like Cambridge Analytica.

Ever since it was discovered that data analytics firm Cambridge Analytica harvested private information from over 87 million Facebook users, lawmakers and investors have questioned whether CEO Mark Zuckerberg can prevent such a data breach from happening again. The company’s quarterly report, published Thursday, did not mention the firm by name but suggested there are more just like it and more discoveries are expected.

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“We anticipate that we will discover and announce additional incidents of misuse of user data or other undesirable activity by third parties,” the report states on page 46. “We may also be notified of such incidents or activity via the media or other third parties. Such incidents and activities may include the use of user data in a manner inconsistent with our terms or policies, the existence of false or undesirable user accounts, election interference, improper ad purchases, activities that threaten people’s safety on- or offline, or instances of spamming, scraping, or spreading misinformation.”

In April, Zuckerberg appeared before the House Energy & Commerce Committee to give testimony on the Cambridge Analytica data breach, revealing that he, too, was affected. Zuckerberg fielded several questions about how Facebook has handled hate speech, misinformation, and privacy leaks, but how lawmakers intend to proceed with possible regulation remains unclear.

The company’s latest report suggests that not only are more discoveries en route — whether first discovered by Facebook or from outside investigations — but that each will catalyze more scrutiny from regulators and Facebook users alike. “Any such discoveries may also subject us to additional litigation and regulatory inquiries, which could subject us to monetary penalties and damages, divert management’s time and attention, and lead to enhanced regulatory oversight,” the report says.

As ominous as this section sounds, it was buried deep enough into the report that investors felt undeterred. Facebook shares surged 9.1 percent on Thursday thanks to the company’s first-quarter profits. Meanwhile, Facebook users must continue to be wary.

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