Facebook
Inc. shares fell the most in two months Monday as
American and European officials demanded answers to
reports that a political advertising firm retained
information on millions of Facebook users without
their consent.
Politicians
on both sides of the Atlantic are calling on Chief
Executive Officer Mark
Zuckerberg to appear before
lawmakers to explain how U.K.-based Cambridge
Analytica, the advertising-data firm that helped
Donald Trump win the U.S. presidency, was able to
harvest the personal data.
Facebook
has already testified about how its platform was used
by Russian propagandists ahead of the 2016 election,
but the company never put Zuckerberg himself in the
spotlight with government leaders. The pressure may
also foreshadow tougher regulation for the social
network.
A
top U.K. lawmaker on Monday backed sweeping new powers
for the nation’s privacy watchdog.
“The
time has now come for us to look at giving more powers
to the information commission in the U.K.,” Damian
Collins, a Conservative and chair of the U.K. Digital,
Culture, Media and Sports Committee, told LBC radio in
an interview on Monday.
Facebook
on Friday said that a professor used Facebook’s
log-in tools to get people to sign up for what he
claimed was a personality-analysis app he had designed
for academic purposes. To take the quiz, 270,000
people gave the app permission to access data via
Facebook on themselves and their friends, exposing a
network of 50 million people, according to the New
York Times. That kind of access was allowed per
Facebook’s rules at the time. Afterward, the professor
violated Facebook’s terms when he passed along that
data to Cambridge Analytica.
Facebook
fell as much as 5.2 percent to $175.41 Monday in New
York, wiping out all of the year’s gains so far. It
was the biggest intraday drop since Jan. 12.
Zuckerberg’s
Fortune Falls $3.8 Billion Over Data Exploitation
Facebook
found out about the breach in 2015, shut down the
professor’s access and asked Cambridge Analytica to
certify that it had deleted the user data. Yet the
social network on Friday suspended Cambridge from its
system, explaining that it had learned the information
wasn’t erased. Cambridge, originally funded by
conservative political donor Robert Mercer, on
Saturday denied that it still had access to the user
data, and said it was working with Facebook on a
solution.
A
researcher who worked with the professor on the app is
now currently an employee at Facebook, which is reviewing whether
he knew about the data leak.
The
denials and refutations did little to ease the
criticism. Damian Collins, a British lawmaker, said
Sunday that Zuckerberg or another senior executive
should appear in front of his committee because
previous witnesses have avoided difficult questions,
creating “a false reassurance that Facebook’s stated
policies are always robust and effectively policed.’’
He added in an interview on British radio Monday that
Zuckerberg should "stop hiding behind his Facebook
page and actually come out and answer questions about
his company.”
The
next few weeks represent a critical time for Facebook
to reassure users and regulators about its content
standards and platform security, to prevent rules that
could impact its main advertising business, according
to Daniel Ives, an analyst at GBH Insights.
“Changes
to their business model around advertising and news
feeds/content could be in store over the next 12 to 18
months,” Ives wrote in a note to investors.
Facebook,
meanwhile, has sought to explain that the mishandling
of user data was out of its hands and doesn’t
constitute a “breach” – a definition that would
require the company to alert users about whether their
information was taken, per U.S. Federal Trade
Commission rules.
Menlo
Park, California-based Facebook no longer allows app
developers to ask for access to data on users’
friends. But the improper handling of the data raises
systemic questions about how much companies can be
trusted to protect personal information, said Nuala
O’Connor, president and CEO of the Center for
Democracy & Technology.
“While
the misuse of data is not new, what we now see is how
seemingly insignificant information about individuals
can be used to decide what information they see and
influence viewpoints in profound ways,” O’Connor said
in a statement. “Communications technologies have
become an essential part of our daily lives, but if we
are unable to have control of our data, these
technologies control us. For our democracy to thrive,
this cannot continue.”
For
more on Facebook, check out the Decrypted podcast: