A staggering 6.8 % of the total value of Facebook shares was wiped yesterday, cutting its market value by nearly $40 billion.
The unprecedented dive in stock prices follows investors concerns about claims of a collusion with Cambridge Analytica in using 50 million Facebook profiles for political purposes, which they fear could grievously damage the company's advertising business.
This new controversy presents a fresh threat to Facebook's already damaged reputation from claims that Russia used the social media outlet to influence US voters in the election with "fake news", as Trump would put it himself.
Facebook usually sends lawyers to speak on its behalf whenever its called upon to to face a grilling by US Senators, but this matter is so serious that Mark Zuckerberg is now facing calls to explain in person in front of the US Congress how a consultancy firm that worked on US President Donald Trump's election campaign gained improper access to Facebook data of 50 million Facebook users.
It's being reported that Cambridge Analytica harvested the private data of Facebook users to develop techniques to help influence the 2016 US presidential election.
Authorities in the US, the EU and the UK have all said they will investigate the matter. And senior US politicians are calling for Mark Zuckerberg to testify about privacy breach, amongst rumours that there could be new legislation introduced to stamp out such practise.
The heat has been ever further turned up with new revelations by Channel 4 News that certain powers-that-be within Cambridge Analytica even bribed people and also used former spies and Eastern European prostitutes to entrap politicians!
Claims that are obviously all being strenuously denied by the company.
Facebook revealed yesterday that they've now contracted digital forensics firm Stroz Friedberg to conduct a "comprehensive audit" of Cambridge Analytica.
The social media giant claims that the Facebook profiles were leaked by an assistant professor from Cambridge University who lied and violated their policies by passing on the data with the help of a psychology testing app he had built.
Cambridge Analytica has stated that it deleted the data when they discovered that it was not obtained in line with Facebook’s terms of service.
The Facebook Chief Executive will now hold an emergency meeting to discuss the crisis with its staff this morning, it's being reported by US media outlets.
“They’ve got problems. They may have defences but I think they’re going to be subject to very, very intense scrutiny,” says David Vladeck, who is a former director at the US Federal Trade Commission (FTC) that oversaw the 2011 user privacy settlement with Facebook.
He said what happened was a “a clear violation” of the agreement made in 2011.
Facebook could face fines of $40,000 per affected user if it violated its agreement with the FTC.
But Facebook says it “rejects any suggestion that it violated the consent decree. We respected the privacy settings that people had in place”.
Also this morning, the internet is full of stories about Facebook's security chief Alex Stamosis stepping down from his post. It's being claimed that he was unhappy with how the Russian crisis was handled.
According to the New York Times this morning, several Facebook employees are saying that Stamos personally told them that he had planned to leave the company back in December, but was persuaded by management to stay until August.
In a tweet, he stated: "Despite the rumors, I'm still fully engaged with my work at Facebook. It's true that my role did change. I'm currently spending more time exploring emerging security risks and working on election security".
Despite the rumors, I'm still fully engaged with my work at Facebook. It's true that my role did change. I'm currently spending more time exploring emerging security risks and working on election security.— Alex Stamos (@alexstamos) March 19, 2018
He also added: "There are a lot of big problems that the big tech companies need to be better at fixing. We have collectively been too optimistic about what we build and our impact on the world."
He also wrote on Twitter: "I have always felt that the individuals who actually work on these problems should be engaged publicly. Doing so means balancing one's personal beliefs with their responsibility to their co-workers and employers. I don't know how to do that in this media environment."
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