Facebook (NASDAQ:FB) shares fell as much as -7.9% today over news that lawmakers are demanding an explanation as to how 50 million users’ personal data was used to aid Donald Trump’s presidential campaign in 2016. As observers increasingly talk of big tech legislation from U.S. lawmakers, shares in Alphabet (NASDAQ:GOOG) and Twitter (NYSE:TWTR) are also down.
Facebook is in trouble over its data handling. A few years ago, Aleksandr Kogan, a psychology professor at the University of Cambridge in the UK, created a personality survey in which around 270,000 Facebook users took part. However, by completing the survey, users had to agree that Facebook could pass on their data – as well as their friends’ data – to Kogan. This was all in accordance with Facebook’s privacy guidelines at the time. The problem is that this data was then acquired by data analytics firm Cambridge Analytica. This meant that 50 million users’ personal data was now in the hands of a third party without their explicit consent, and Facebook had no idea what was happening with it.
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In fairness, Facebook’s terms prohibited Kogan to share the user data with Cambridge Analytica. The problem is what happened after he did it anyway; nothing. When Facebook learned of the data breach, it ended Kogan’s access to the user data, and then asked Cambridge Analytica to pretty-please delete the data that they illegitimately acquired. Cambridge Analytica then said ‘yes’, and promptly proceeded not to do so. On Saturday, the New York Times reported that it was this data that allowed Cambridge Analytica to provide Donald Trump’s 2016 presidential campaign with information for targeted political marketing, thus helping him achieve office.
In addition, lawmakers are critical of the fact that Facebook kept schtum about the data leak when it was discovered, failing to alert users that their information was being used without their consent.
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According to The Street, Facebook denies the accusation of a data breach in relation to Kogan’s survey, stating that: “People knowingly provided their information, no systems were infiltrated, and no passwords or sensitive information were stolen or hacked.”
Twitter shares are down -1.63% to $35.00 USD at the time of writing, while Alphabet shares are down -3.76% to $1,093.00 USD. In addition, Facebook’s plummet has dragged down the Dow Jones Industrial Average (DJI) by nearly 450 points today.
It remains to be seen whether Facebook CEO Mark Zuckerberg – who has been silent on the matter thus far – will respond to governors who are demanding an explanation, and what this will mean for big tech as a whole.
Featured image: Malay Mail/AFP/Kimihiro Hoshino
