WhatsApp Ireland sees profits increase after cutting provisions set aside for fines

Profits at WhatsApp Ireland surged in 2022 to €41.1m after the company slashed administrative expenses, particularly the cash set aside to pay regulatory fines, new company accounts show.

In January 2022, the Data Protection Commissioner (DPC) fined WhatsApp €5.5m for breaches of GDPR legislation. WhatsApp and its parent company Meta — which also owns Facebook and Instagram — have faced numerous fines in recent years from the DPC over a range of issues.

According to recently filed company accounts, turnover at WhatsApp Ireland Ltd increased to €56.1m last year from €41m in 2021 — an rise of €15.1m largely attributed to a growth in service fees received from “another group company as a result of an increase in business activity during the year”.

The company said administrative expenses decreased from €39.3m in 2021 to €15.8m in 2022 driven by the impact of “measuring regulatory compliance provisions at the present value” as well as by a “decrease in the best estimate of these provisions during this year”.

However, WhatsApp said that some of the savings were offset by increased expenses incurred relating to the direct costs of the provision of services to WhatsApp LLC, including those relating to consultants and facilities.

Regulatory compliance provisions are estimates of administrative fines against the company.

WhatsApp said the estimates are based on the advice from outside legal counsel, regulatory correspondence received to date, relevant mitigating factors, comparison with similar matters and other factors. 

As of January 1, 2022, the company had €238m set aside for “regulatory compliance provisions” which decreased to €193.4m over the course of the year.

The company said this reduction was due to the measurement of provisions at the present value of the best estimate as of December 31, 2022, by way of discounting, as well as a “movement in the best estimate of the regulatory compliance provisions during the year”.

As a result of all of this, the company posted a profit for 2022 of €41.1m — after receiving a tax credit of €300,000 — which is up from €1.8m in 2021.

The company employs 80 people with the cost of salaries and bonuses during 2022 coming to €9.15m.

In May, Meta was hit by a record fine by the DPC of €1.2bn for personal data breaches and ordered to stop the unlawful processing and storing of EU user data in the US within six months. The company said it would appeal this decision. 

Earlier this year, Meta went to the Irish High Court in an effort to quash an earlier fine of €265m by the DPC for an alleged breach of EU privacy rules regarding the personal information of about more than 500 million Facebook users.