Facebook stock drops 10.5% this week after reports of FTC probe and UK summons of Zuckerberg in data scandal
Facebook stock drops after reports of FTC probe and UK summons of Zuckerberg in data scandal
The probes follow a weekend of turmoil for Facebook after reports that Cambridge Analytica gained access to the data of more than 50 million users.
Shares of Facebook fell as much as 5 percent Tuesday, after falling as much as 8 percent on Monday.
UK officials are also investigating the alleged mishandling of data.
By Sara Salinas March 20, 2018 Ago CNBC.com
The Federal Trade Commission is investigating whether the use of personal data from 50 million Facebook users by Cambridge Analytica violated a consent decree the tech company signed with the agency in 2011, Bloomberg reported Monday.
The probe follows a weekend of turmoil for the social media giant. Reports this weekend said the research firm improperly gained access to the data of more than 50 million Facebook users.
"We are aware of the issues that have been raised but cannot comment on whether we are investigating. We take any allegations of violations of our consent decrees very seriously as we did in 2012 in a privacy case involving Google," a spokesman for the FTC said Tuesday.
Facebook said Tuesday it expected to receive a letter from the FTC with questions, but has not been informed of a formal probe.
A violation of the consent decree could carry a penalty of $40,000 per violation, which could mean a fine conservatively estimated to be "many millions of dollars in fines" for Facebook, The Washington Post reported over the weekend, citing a former FTC official.
Facebook will brief members of congressional intelligence committees, commerce committees and judiciary committees Tuesday and Wednesday, NBC News reported.
Facebook has maintained the mishandling of data was the result of abuse on the part of Cambridge Analytica and app developer Aleksandr Kogan.
"We reject any suggestion of violation of the consent decree. We respected the privacy settings that people had in place. Privacy and data protections are fundamental to every decision we make," Facebook said in a statement to the Post on Saturday.
The consent decree requires that Facebook notify users and receive explicit permission before sharing personal data beyond their specified privacy settings.
Weekend reports by The Observer newspaper in the U.K. and The New York Times allege Facebook users willingly provided their data to a psychology quiz app developed by Kogan, who then passed the data along to Cambridge Analytica without the users' knowledge — constituting a potential violation.
"We remain strongly committed to protecting people's information. We appreciate the opportunity to answer questions the FTC may have," Rob Sherman, deputy chief privacy officer at Facebook said in a statement.
The company held a meeting Tuesday for employees to ask questions of the deputy general counsel about what happened with Cambridge Analytica and what the company will do next, according to a source familiar with the meeting.
Shares of Facebook fell as much as 5 percent Tuesday, after skidding as much as 8 percent on Monday.
UK officials are also investigating, ordering auditors hired by Facebook to stand down and summoning CEO Mark Zuckerberg to provide evidence for review.