UPDATE: Facebook Stock Plummets After Data Breach Incident
UPDATE. Some interesting details have come to light. UK’s Channel 4 has exclusive video showing Cambridge Analytica going over some explicit, illegal details in its dealings. Link They just followed that up minutes ago with news that authorities will be conducting a search of CA’s premises with an official warrant! Facebook can’t be excited about this..
BREAKING: Channel 4 just announced that authorities have gained a warrant to search CA building TONIGHT! @ZevShalev
— Tracie (@traciemac_Bmore) March 19, 2018
This weekend news broke of a massive data breach involving Facebook’s user data. As we reported on Saturday confidential information from tens of millions of Facebook users ended up in the hands of data analytics firm Cambridge Analytica, and that the information had not been deleted despite Facebook demands dating back to 2015.
The outcome? Facebook (NASDAQ:FB) is down over 6% as of this writing representing over a $30 billion loss of market cap for the social media giant. Facebook’s drop today is the largest in the S&P 500 and easily outpaces today’s overall 1% down market.
This latest development involving Facebook comes during a time of growing controversy around whether the site was being used by data firm Cambridge Analytica to collect information about users and change their voting habits. Cambridge Analytica was known to be employed by the Trump campaign organization to help market to undecided voters.
Wall Street analysts remain unphased on Facebook as regulators begin to look closer
Regulators too are chiming in. The head of European Parliament said on Monday that EU lawmakers will look into these recent reports on users’ data misuse, adding that its an “unacceptable violation of citizens’ privacy rights”. This arrives after Facebook was already facing the threat of new regulation from U.S. Congress and questions about personal data protections after the reports from the New York Times and London’s Observer over the weekend.
The ensuing fallout has prompted Sen. Amy Klobuchar of Minnesota, to request CEO Mark Zuckerberg to testify before the Senate Judiciary Committee.
Even Edward Snowden chimed in after the news broke. He states that FB isn’t a social media platform but a cleverly disguised surveillance tool.
Businesses that make money by collecting and selling detailed records of private lives were once plainly described as "surveillance companies." Their rebranding as "social media" is the most successful deception since the Department of War became the Department of Defense.
— Edward Snowden (@Snowden) March 17, 2018
Investors would be wise to keep their eyes peeled and ears open on any regulatory action governments may take as it will not only have a massive effect on public perception (and thus many investors), it will also be precedent setting simply due to the social media’s massive size and clout.