The shares of social media giant Facebook again took a tumble at the stock market after the US Federal Trade Commission (FTC) confirmed an investigation into the company following the Cambridge Analytica scandal.
In an unusual step taken on Monday, the FTC announced that it “takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook”.
The consumer protection regulator took the decision to investigate due to the significant public interest due to the data breach of some 50 million users to a political consulting firm, Cambridge Analytica.
Facebook shares fell almost $11 at the NASDAQ after opening at $160.70 in the morning. This is the biggest ever fall in the shares since July 2017 and the sharpest fall in a span of 11 days since Facebook’s debut at the stock exchange on 18 May 2012.
On 16 May, when Facebook suspended Cambridge Analytica, its shares were trading at $185.09.
At the time of writing, Facebook’s shares recovered slightly and were trading at $160.06 or 0.42 per cent.
The Mark Zuckerberg-led social media giant has lost around $70 billion in the market since the revelation of the data breach.
In comparative terms, the loss – valued at 4.59 lakh crore in rupees – is more than the individual market capital of some of India’s biggest companies such as the State Bank of India and Infosys, whose market capitals stand at Rs 2.18 lakh crore and Rs 2.52 lakh crore, respectively.
“Today, the FTC is confirming that it has an open non-public investigation into these practices,” Efe news quoted Acting FTC Bureau of Consumer Protection Director, Tom Pahl, as saying.
“The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers. Companies who have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements,” a statement said.
Pahl explained that the FTC is acting against firms that do not abide by the “Privacy Shield” agreement regulating data transfer with the European Union and against companies that undertake “unfair acts” that harm consumers or violate the FTC Act.
Rob Sherman, Facebook’s deputy privacy chief, said in a statement last week that the social networking firm remains “strongly committed to protecting people’s information,” adding that “we appreciate the opportunity to answer questions the FTC may have”.
London-based Cambridge Analytica, which collaborated with the election campaign of Donald Trump in the run-up to the 2016 vote, used the leaked information to develop a computer programme to predict the decisions of US voters and influence them.
In 2011, Facebook had promised to ask for the consent of its users before making certain changes in their privacy preferences, as part of an agreement with the government, which accused the firm of abusing consumers by sharing with third parties more information than users had authorized.
Breaking that agreement could result in the tech firm facing a fine of $40,000 per violation, the CNBC financial network said.
Facebook CEO Mark Zuckerberg admitted on March 21 that it was a “breach of trust” to allow an app developed by Cambridge University professor Aleksandr Kogan to collect data for Cambridge Analytica, and he added that the firm would “fix” the problem by, among other things, investigating all apps that could access users’ personal data before 2014 and banning any developer that “does not agree to a thorough audit”.
The ripples of the breach touched India too. The ruling Bharatiya Janata Party (BJP) and the opposition Congress have been accusing each other of using CA for political purposes.
Intensifying its attack on Congress chief Rahul Gandhi, the BJP said on Thursday the Gandhi scion’s entire social media campaign was being managed with the help of political data analytics firm, Cambridge Analytica.
On 22 March, Union Law Minister Ravi Shankar Parasad said, “Rahul Gandhi’s entire social media campaign has been managed with the help of Cambridge Analytica during elections and they also held several meetings. Will Congress Party depend on data theft and manipulation to win elections? Congress has maintained conspicuous silence on their ties with Cambridge Analytica.”
Hitting back at the BJP, the Congress said the party availed services of CA in 2010.
Link: Cambridge Analytica handled Rahul Gandhi’s social media campaign: BJP
The Congress also said CA’s India partner is Ovelina Business Intelligence, being run by the son of a JD-U MP, while the LinkedIn profile of Himanshu Sharma, who is the Vice President of OBI, lists achievements like achieving Mission 272+ for the BJP and elections in other states.
(With inputs from agencies.)