Facebook shares have continued to fall following news that user data was improperly acquired by political consulting firm Cambridge Analytica. Since Facebook acknowledged the data breach, shares dropped 13%, and the company has lost more than $70 billion in market value.
Federal Trade Commission begins investigation
Facebook came under fire on March 16, when newspapers began reporting that Cambridge Analytica had harvested Facebook member data and used it to target U.S. and British voters during their respective elections. In the wake of the news, U.S. regulators and state attorneys began putting pressure on Facebook to release details on how the company monitors the way app developers use data collected on users and how Facebook prevents misuse of that information.
When the Federal Trade Commission (FTC) confirmed an investigation into Facebook’s privacy practice on Monday, Facebook shares fell as much as 6.5%. The FTC generally confirms an investigation only in cases where there is significant public interest. Tom Pahl, acting director of the FTC’s Bureau of Consumer Protection, said the FTC is taking the investigation very seriously.
By the day’s low session on Monday, the company had lost $100 billion in market value. Facebook shares briefly dipped below $150 — its lowest since July 2017 — but later closed at $160.06. As of March 16, Facebook has shed over $70 billion.
Advertisers leave Facebook
In addition to increased scrutiny from the FTC, Facebook also faces discontent from users and advertisers. A movement urging users to delete Facebook has been trending on Twitter, including detailed explanations on how to properly terminate an account. After criticizing Facebook via tweet, Elon Musk closed SpaceX and Tesla’s pages. Similarly, companies such as Mozilla Corp and Commerzbank decided to suspend all advertising on Facebook. It will be interesting to see how Facebook weathers this storm as the FTC moves forward with its investigation.
