Facebook has plumped markets

Facebook Inc. confronted an intensifying crisis as political leaders in the U.S. and Europe called for aggressive inquiries into whether the technology giant failed to stop improper access and handling of user data, scrutiny that sent the company’s stock to its biggest decline in four years.

The uproar pushed Facebook’s stock down 6.8% to $172.56 Monday, wiping out about $36 billion in market value as the episode reignited concerns over how Facebook, Alphabet Inc.’s Google and other internet firms handle user data that is at the core of advertising businesses that have made them among the richest companies on Earth.

The backlash has raised anew the prospect of tighter regulation of the social-network company and other big internet firms that already are under scrutiny for how Russia manipulated their platforms before and after the 2016 presidential election. Internally, Facebook executives and employees have fiercely debated how to respond to the additional scrutiny.

The latest controversy centers on whether Cambridge Analytica, which helped the Trump campaign in 2016, collected and used without permission data from the accounts of millions of users obtained through a Facebook app developed by an academic at the University of Cambridge. Facebook on Friday said it suspended Cambridge Analytica—along with an associated firm, the academic and another individual—as it investigates reports that the firm kept user records for years after saying it had destroyed them. Cambridge Analytica has said it complied with Facebook’s rules.

Republican and Democratic lawmakers called for tech-company leaders, including Facebook Chief Executive Mark Zuckerberg, to appear before Congress to explain how they protect user data from being exploited by third-party companies for advertising and other targeting purposes.

Source: WSJ

Trader Nikolay Georgiev

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