Facebook to pay $5B fine, faces antitrust probe.

Facebook Inc. is still adding users and exceeding analysts’ estimates for advertising sales, showing that the size and power of its social network have so far been unhindered by new regulatory constraints and criticism of its business model.

In its second-quarter earnings report, the company also disclosed that the U.S. Federal Trade Commission (FTC), which earlier Wednesday announced the settlement of an inquiry into Facebook’s privacy practices, has opened a formal antitrust investigation into its business. In June, the agency was given jurisdiction over the social network as the U.S. government stepped up scrutiny of the biggest technology companies.

Facebook has been embroiled in constant crisis over leaks of users’ data, the spread of violent or false content on its apps, and scrutiny of its power to influence public discourse. That hasn’t deterred advertisers, who have flocked to Facebook’s sites for the broad reach and precise targeting they offer. While growth at the main Facebook app has slowed, the company is still adding users quickly on other properties, and has embarked on a project to weave its platforms together, creating an even bigger network. A total of 2.7 billion people use at least one Facebook-owned app — Facebook, Instagram, WhatsApp or Messenger — every month.

“Despite horrific headlines for almost two years, usage trends remain strong,” said Benjamin Schachter, an analyst at Macquarie. As long as the users are still coming, “we think advertisers will continue to show up.”

Menlo Park, Calif.-based Facebook said second-quarter sales rose 28 per cent to US$16.9 billion, compared with an average analyst projection of US$16.5 billion. The company said 1.59 billion people log into the main social-media service daily. Shares were little changed in extended trading following the report.

The financial results came hours after the announcement of a US$5-billion settlement with the FTC — a deal that doesn’t require the company to alter how it collects data or uses personal information for targeting advertising. Facebook set aside US$2 billion in the recent period to cover the remainder of that settlement, after allocating US$3 billion in the previous quarter.

Besides the FTC settlement, the company said it will pay US$100 million to resolve U.S. SEC claims that it misled investors about misuse of personal information.

The U.S. Department of Justice has opened an inquiry into possible antitrust violations by Facebook and other tech companies.

Including the costs set aside for the settlements and a tax-related charge, Facebook said second-quarter profit was US91 cents a share.