Facebook Share Plunges Following Allegations of Data Sharing
On Wednesday, Facebook plummeted 7.3 percent following the burst of bad news, and that includes the news about how it shared more user data than previously thought and a lawsuit from the Washington, D.C., attorney general.
On Tuesday, the New York Times published a story alleging how Facebook shared unprecedented amounts of data with partners. This news was based on internal documents from Facebook followed by interviews with former employees. The report says Facebook allowed companies, like Spotify, Bing and the Royal Bank of Canada to access user’s private messages. Some companies were even allowed to view certain information from users’ Facebook friends without explicit consent, said the report.
This news has hit the Facebook shares badly. After an earnings report warning of slowing sales, Facebook is witnessing the second-steepest fall this year. This follows a 19 percent drop on July 26. Facebook is the only major tech company to see its stock below the red line. By the end of Wednesday’s Federal Reserve meeting, it suffered the worst when the Nasdaq Composite Index closed down 2.17 percent.
The allegations, as reported in Times, could put Facebook in trouble of being found in violation of its 2011 agreement with the Federal Trade Commission. The agreement required Facebook make clearer how it shared data with third-parties and banned it from sharing friends’ data without their consent. Facebook reportedly considers its “partners” to be extensions of its core business, rather than third-parties.
The FTC is yet to make a statement on the Times investigation of an earlier story, but the commission has confirmed it was looking into Facebook’s privacy practices following the Cambridge Analytica scandal.
In a blog post responding to the article, Facebook said, “To be clear: none of these partnerships or features gave companies access to information without people’s permission, nor did they violate our 2012 settlement with the FTC.”
The news was followed by an announcement on Wednesday morning that the attorney general’s office of Washington, D.C., would sue the company for “failing to protect its users’ data”.