Shares of Facebook Inc. rose 0.6% in premarket trade Monday, to bounce slightly after suffering their worst week in six years, after the social media giant took out full-page ads in newspapers over the weekend to apologize for a "breach of trust" in the wake of a data-privacy scandal. The stock had tumbled 13.9% last week, the worst week since it fell 16.5% during the week ending May 25, 2012. The stock's worst week was a 17.6% decline the week ending July 27, 2012, which was about 2 1/2-months after it went public. Separately, the company tried to dispel over the weekend reports that people's call and text history were being logged without permission, by saying, "This is not the case." Facebook said logging call and text history was by users' choice, and was a feature that can be turned off. After last week's selloff, the stock had lost 9.4% over the past three months, but was still up 13.6% over the past 12 months, while the Nasdaq 100 had climbed 21.3% and the S&P 500 had gained 11.5% over the past year.
by Tomi Kilgore
The US Federal Trade Commission has confirmed that it is investigating Facebook over its privacy practices, following recent revelations that data firm Cambridge Analytica harvested and exploited tens of millions of users’ data without their permission. Facebook’s stock renewed its downward slide, bringing the company’s total loss of market value to around $90 billion since the scandal broke 10 days ago.
“The FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices,” said Tom Pahl, acting director of the FTC’s Bureau of Consumer Protection, in a statement.
The FTC will look into whether Facebook had violated a 2011 consent decree imposed by the regulator, in which the company promised not to share user data without their consent. In 2014, an app developed by a Cambridge University professor accessed the data of up to 50 million people, which he later passed onto Cambridge Analytica, a Trump campaign consultant.
If the FTC finds Facebook at fault, each violation could cost the company $40,000. Facebook faces multiple other probes, hearings, and investigations in several countries.
Here’s the full FTC statement:
“The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers. Foremost among these tools is enforcement action against companies that fail to honor their privacy promises, including to comply with Privacy Shield, or that engage in unfair acts that cause substantial injury to consumers in violation of the FTC Act. Companies who have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements. Accordingly, the FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices.”
Read next: Facebook is being investigated by the FTC. Here’s what it will ask
Getty Images
News of a massive data breach hit Facebook hard last week.
Shares are at their lowest since July 2017.
Baird and Co. analyst Colin Sebastian says usage metrics are down, coinciding with the breach.
Watch Facebook in rel time here.
Facebook users are becoming increasingly less enthusiastic about the platform, according to a survey conducted by Baird and Co. following the news of political research firm Cambridge Analytica's hack into 50 million user accounts.
In a note to clients sent out Monday, Baird analyst Colin Sebastian said while there is no evidence of users deleting their accounts, Facebook usage metrics are looking shaky.
"Our latest survey indicates some additional decline in usage/engagement, particularly among younger demographics, coinciding with recent headlines around data privacy," Sebastian wrote.
Baird's survey asked users which platforms they are using more or the same amount of time. Facebook was the sharpest decliner in the survey.
This visual shows how Facebook's decline in favorability.
Markets Insider
"In our survey, 32% of respondents indicated stable/increasing Facebook usage in 1Q18, down from 38% in 4Q17 and 43% in 1Q17)," the note said.
"Among respondents age 25-34, Instagram showed the largest sequential uptick in favorable responses (27% indicated stable/growing usage vs. 19% in 4Q17), which supports the view that younger cohorts abandoning the core Facebook app are likely shifting usage to other Facebook-owned properties," Sebastian added.
And while there is some evidence advertisers are pulling back on spending, he thinks that'll be "short lived" because of Facebook's dominant share of internet users.
"There are few channels available that can match Facebook's return on ad spend," he said.
Sebastian lowered his price target to $210 a share, citing "the potential for brands and small businesses to pause some Facebook campaigns until headlines subside."
Facebook shares are down more than 18% since news of the breach broke.
Markets Insider
Shoshana is a Verdict reporter covering global business, economics, and finance. She can be reached at shoshana.kedem@verdict.co.uk
The public is losing trust in Facebook’s ability to protect privacy and democracy, according to polls in Germany and the US, out yesterday.
In the US less than half (41%) of people trust the social media network to abide by privacy laws, a survey of 2,200 people conducted last week by Reuters and Ipsos found.
This compares with 66% who said they trust Amazon, and 62% who trust Google (owned by parent company Alphabet). Meanwhile, 60% of people in the US trust software giant Microsoft to follow privacy laws.
Another survey published in Germany’s most popular Sunday paper Bild and conducted by Kantar showed that 60% of people in Germany fear that Facebook and other social networks are harming democracy.
Around a third (33%) of those surveyed in the German poll thought social media had a positive effect on democracy, while 60% believed it had a negative impact.
Adding pressure to Facebook, today the deadline expires for CEO Mark Zuckerberg to respond to a call to appear before UK members of parliament to answer questions about the Cambridge Analytica data scandal.
Why it matters:
The measure of social media sentiment comes as the world’s largest social media platform Facebook faces a storm of criticism for leaking the data of millions of its users in 2014 through the UK-based analytics firm Cambridge Analytica.
Facebook also ran an ad campaign in UK and US Sunday newspapers apologising to users for the “breach of trust”.
The ads, signed by Zuckerberg, said:
You may have heard about a quiz app built by a university researcher that leaked Facebook data of millions of people in 2014. This was a breach of trust, and I’m sorry we didn’t do more at the time. We’re now taking steps to ensure this doesn’t happen again.
The UK’s the Observer, the Sunday Times, the Mail on Sunday, the Sunday Mirror, the Sunday Express and the Sunday Telegraph, and US newspapers the Washington Post and Wall Street Journal all published similar ads.
3 Things That Will Change the World Today Get the Verdict morning email
“We have a responsibility to protect your information. If we can’t, we don’t deserve it,” said the advertisements.
Dear Zuck, we printed your words because you paid us. But have this for free: advertising is not accountability. Why did you refuse our interview request?#WheresZuck pic.twitter.com/gOXjQTjXAu — Carole Cadwalladr (@carolecadwalla) March 25, 2018
Last week shares in Facebook plunged while the hashtag #DeleteFacebook circulated online.
After the news broke $58 billion was wiped off the US giant’s market cap as Zuckerberg made an attempt at damage control.
Shares in the social media company fell from $176.80 on Monday to around $159.30 by Friday night.
Ahead of the US market opening this morning the Facebook share price was down 0.3% in the pre-market — giving investors hope the sell off has run its course.
Meanwhile, some advertisers have distanced themselves from Facebook.
Internet company Mozilla and German bank Commerzbank suspended ads on Facebook while tech entrepreneur Elon Musk had the official Facebook pages for his companies Telsa and Space X deleted.
