Facebook’s shares are dropping on Cambridge Analytica allegations
Facebook's share price has dropped more than seven per cent following allegations that data firm Cambridge Analytica mined Facebook users' data without their permission.
The social media giant's shares were down 7.28 per cent at $171.62 at the time of writing, slashing billions off of founder Mark Zuckerberg's fortune.
"Facebook is experiencing its worst trading day since 2014 amid yet another row over data mismanagement," said Fiona Cincotta, senior market analyst at City Index.
"How Facebook responds to these issues over the coming weeks will be crucial," Cincotta said, adding that a failure here could cause regulatory rules to start impacting the firm's advertising business, its main source of income.
The tech-heavy Nasdaq index was dealt a blow as other tech stocks followed Facebook's lead lower. The Nasdaq was down 2.36 per cent at 7,305.76 at the time of writing.
Facebook today said it had hired digital forensics firm Stroz Friedberg to conduct a "comprehensive audit" of UK-based Cambridge Analytica.
The social media behemoth on Friday said it had suspended the firm after learning in 2015 that a Cambridge University psychology professor had violated its policies by passing data to Cambridge Analytica from a psychology testing app he built.
Cambridge Analytica is credited with helping Donald Trump win the 2016 election campaign, but today the firm said it "strongly denies" allegations that it mined Facebook data.
"This Facebook data was not used by Cambridge Analytica as part of the services it provided to the Donald Trump presidential campaign; personality targeted advertising was not carried out for this client either. The company has made this clear since 2016," Cambridge Analytica said.
The UK's information commissioner Elizabeth Denham told Channel 4 News that Britain's data protection authority plans to seek a warrant to search Cambridge Analytica's offices on Tuesday. The broadcast also included secretly taped interviews with top execs at the data firm in which they boasted of their ability to sway elections around the world.
European ministers and US senators called for investigations into the reports, and Damian Collins, the chair of the Digital, Culture, Media and Sport (DCMS) Committee, said he would write to Mark Zuckerberg to urge him to appear to give evidence.
A spokesperson for the prime minister today said Britain was "very concerned" by the allegations.
"It is essential that people can have confidence that their personal data will be protected and used in an appropriate way,” Theresa May's spokesperson told reporters.
Margo James, the minister of state for DCMS, speaking at Advertising Week Europe, added to calls for fresh regulations.
“There are huge opportunities from data and open data but there are also huge risks to the rights of individuals and their privacy. So I think that rather than have it all out there with no regulation whatsoever, as I think has been pretty much been the case in the past, I think we have got to look at it with a balance in mind of involving ethics, involving individuals’ rights to privacy and control over their own data, and balance that with the opportunities that you rightly say exist out there," James said.