Abu Dhabi, UAEMonday 17 June 2019

Screw tightens on Facebook over data scandal

Drawing unwelcome attention after the disclosure that it released the personal data of 50 million users to an analytics firm that helped elect President Donald Trump

Facebook is coming under increasing pressure to explain how UK firm misused its data. Loic Venance/AFP
Facebook is coming under increasing pressure to explain how UK firm misused its data. Loic Venance/AFP

Facebook’s grim week is getting grimmer.

The company on Tuesday was beset on two continents by governments suddenly focused on data security and investors unliked its stock to the point that it lost $60 billion in value.

The Menlo Park, California, company, whose social network is a ubiquitous venue for social and political life, is drawing the unaccustomed unwelcome attention after the disclosure that it released the personal data of 50 million users to an analytics firm that helped elect President Donald Trump. The company, Cambridge Analytica, has been implicated in dirty tricks in elections around the globe.

Facebook has struggled to respond to the fast-moving imbroglio, and even Facebook workers have been in the dark. The company held a staff meeting today to answer their questions and address staff questions about what Facebook knew and when. Chief executive Mark Zuckerberg plans to address employees on Friday at a previously scheduled all-hands meeting.

Mr Zuckerberg may have to do a tour of European parliaments to appease policymakers. Damian Collins, head of a UK parliament committee investigating the impact of social media on recent elections, invited Mr Zuckerberg to answer for a “catastrophic failure of process”. Shortly thereafter an invitation followed from European Parliament President Antonio Tajani.

Separately, EU Justice Commissioner Vera Jourova said she also plans to discuss the matter with Facebook during a visit in the US this week while Italian telecommunications regulator AGCOM requested Facebook to provide information on data use.

Mr Zuckerberg and chief operating officer Sheryl Sandberg haven’t yet spoken publicly about the data leak, despite the global firestorm. When Mr Zuckerberg addresses staff on Friday, he’s certain to face questions about the controversy.

The US Federal Trade Commission (FTC) is looking into whether Facebook broke the terms of a 2011 consent decree. The FTC is the lead agency for enforcing companies’ adherence to their own privacy policies and could fine the company if it finds Facebook violated the agreement.


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Facebook said it would conduct staff-level briefings of six congressional committees Tuesday and Wednesday. That includes House and Senate judiciary committees, as well as the commerce and intelligence panels of both chambers.

Senator Dianne Feinstein, the top Democrat on the Senate Judiciary Committee, said it would "be helpful for Facebook to testify about how the company protects user privacy and what steps it’s taking to combat bad actors".

The attorney generals of New York and Massachusetts sent demand letters to the company, the first step in a joint investigation.

Facebook’s stock price fell as much as 6.2 per cent in New York and the stock was down over 11 per cent since Friday’s close, giving up $60bn in market capitalisation. That’s more than the total value of Tesla.

The world’s largest social media network was sued in San Francisco federal court Tuesday by shareholders in a class action who said they suffered losses after the disclosure that Cambridge Analytica improperly obtained profile information on 50 million users.

Free fall aside, Wall Street analysts remain upbeat. Buy recommendations continue to roll in and price targets reflect a potential return of 35 per cent.

Out of the 43 analysts who recommend buying Facebook shares, not one has downgraded the stock over the crisis. However, many acknowledge that bad publicity could keep the stock under pressure.

Meanwhile, over at Cambridge Analytica, the political consulting company whose own troubles engendered Facebook’s, was also rocked Tuesday.

Cambridge Analytica’s board suspended chief executive Alexander Nix after he was shown on video discussing entrapping politicians with bribes and prostitutes and spreading disinformation.

Britain’s Channel 4 News aired the third part of an undercover investigation that showed Mr Nix bragging of running research, data and targeting for the Trump campaign and deriding US policymakers. He also said the company used an email server to communicate with clients and eliminate evidence of contact.

Kenya’s opposition party demanded a probe after Channel 4’s disclosure that Cambridge Analytica spread propaganda amid election-related violence that left 92 people dead.

Facebook users don’t have to look far for instructions on how to extricate themselves or their data: Across the Twitterverse and blogospheres, outraged users have said they’re deleting their accounts and how-to instructions are making the rounds. Tech sites have published guides on how to deactivate or control carefully curated social media accounts.

The brushfire comes at an inauspicious moment. Daily active user growth in the US and Canada declined from 185 million in the third quarter to 184 million in the period, the company reported last quarter. That signals the first loss on a quarter-over-quarter basis in the company’s history.

Updated: March 21, 2018 08:52 AM