Facebook’s Privacy Scandal Appears to Have Little Effect on Its Bottom Line

Facebook has weathered many past scandals — including outcries over misinformation on its site and Russian interference on its platform ahead of the 2016 presidential election — with hardly any effect on its business.

But now the social network is undergoing its worst crisis in its 14-year history, and facing a torrent of criticism about its privacy practices and the way it handles user data.

On Wednesday, Facebook showed that the controversy is so far doing little to its bottom line. The Silicon Valley company reported a 63 increase in profit and a 49 percent jump in revenue for the first quarter, driven by continued growth in its mobile advertising business. Mobile advertising represents more than 90 percent of Facebook’s advertising revenue.

The company also said that it had 1.45 billion daily active users and 2.2 billion monthly active users as of March, in line with analysts’ expectations.

“Despite facing important challenges, our community and business are off to a strong start in 2018,” Mark Zuckerberg, Facebook’s chief executive, said in a statement. “We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together.”

The earnings report followed plenty of tumult for Facebook, with a controversy erupting last month when The New York Times and other news outlets reported that millions of Facebook users’ private information had been harvested by Cambridge Analytica, a political firm with ties to the Trump campaign. The revelations drew alarm from regulators and lawmakers and Mr. Zuckerberg appeared at two congressional hearings this month to answer questions about Facebook’s role and responsibilities.

Much of the fallout from these issues did not show up in Facebook’s first-quarter results because the revelations occurred only at the end of that period. The full extent of the fallout may not show up in Facebook’s earnings for some time.

Facebook faces other challenges. Next month, strict new European privacy regulations are set to take effect, which require tech companies to seek people’s consent before accessing their data.

In January, Facebook tried to soothe investors after announcing changes to its News Feed that demoted news. The company said then that it had experienced its first decline in the number of people who use Facebook on a daily basis in the United States and Canada; it also reported a dip in the amount of time spent on the platform. Mr. Zuckerberg said at the time that the changes would make Facebook more valuable over the long term.

Content originally published on https://www.nytimes.com/2018/04/25/technology/facebook-privacy-earnings.html by SHEERA FRENKEL and KEVIN ROOSE