WASHINGTON (Reuters) – Facebook Inc shares sank on Wednesday, with concerns about the ability of users to protect data led to a government lawsuit, the criticism in the U.S. Congress and the New York Times about how it had shared information with other companies.
FILE PHOTO – A 3D printed Facebook-logo is shown in front of the listed cyber-code in this image is 22 March 2016. REUTERS/dado Ruvic/Image/File Photo
The stock of the world’s largest social media company fell 7.25 percent, the biggest intraday decline since July, taking losses for the year to about 24 percent. Investors are concerned about the effect of legal and administrative efforts on the use of information policies that have upset many customers and could carry significant fines and costs.
In particular, the Silicon Valley firm has drawn global scrutiny since disclosing earlier this year that a third personality quiz spread over Facebook gathered profile information on 87 million worldwide users and sold the data to the British political consulting firm Cambridge Analytica.
Washington, D. C., Attorney General Karl Racine said the US capital was suing Facebook, accused of deceiving users, as it was known about the incident of two years before the unveiling.
Further claims Facebook users tricked by the allow of several app makers called partners “overwrite Facebook the consumers’ privacy settings and access their data without their knowledge or consent.”
Facebook said in a statement: “We are reviewing the complaint and look forward to continuing our discussions with the attorneys general in D. C. and elsewhere.”
The New York Times reported new details on Tuesday about the details of the user that are still available for these partners, a year after the conclusion of functions that need them. Facebook recognized due to expire in a blog post, but have found no evidence of wrongdoing by the partners.
In response, both the Democrats and the Republican lawmakers criticized the company and called Chief Executive Officer Mark Zuckerberg had lied at the Congressional hearings earlier this year.
The incoming chairman of the House Judiciary Committee’s antitrust subcommittee, Representative David Cicilline, tweeted: “Zuckerberg told the Conference that Facebook users had ‘full control’ over their data. Certainly he seems to have lied.”
Incoming Republican senator Josh Hawley made similar comments about Zuckerberg’s testimony.
The stock slide was the worst since the owner of Facebook, WhatsApp and Instagram warned in July that the margins would erode in the coming years as a result of the consumer and the pressure from the government to a better shielding of the data and the suppression of unwanted content.
“Facebook would have to prevent third-party misuse of the consumer data entered and maintained in a reasonable supervision of third-party applications,” according to the lawsuit filed in the Superior Court of Washington, D. C., on Wednesday.
The court could award unspecified damages and the imposition of a fine of up to $ 5,000 per violation of the district’s consumer protection law, or may be in the neighborhood of $1.7 billion, as sanctioned for each consumer affected. The lawsuit claims the quiz software the data on 340,000 D. C. residents, though just 852 users had been directly involved with it.
‘CONFUSING ‘ SETTINGS’
Facebook offered separate privacy settings around 2013 to determine friends on the network can see and what data can be accessed by the apps, so the quiz, and other services for the collection of data about users ‘ Facebook friends without many of them realizing, according to the lawsuit.
Racine told reporters that Facebook had tried to settle the case before he filed a lawsuit, as is customary during the investigation of the large companies, but that a lawsuit was necessary “for the speed of change” at the Silicon Valley company.
The british data protection authority in July to a fine of Facebook of 500,000 pounds ($631,000) for breaches of the data in the Cambridge Analytica incident.
Since then, Facebook has announced a couple of security breaches, in which the profile of data and messages up to 29 million users and 6.8 million users, respectively.
At least six U.S. states have ongoing investigations of Facebook, according to the officials.
In March, a bipartisan coalition of 37 state attorneys wrote to the company, demanding to know more about the Cambridge Analytica data and any links to the US President, Donald Trump presidential campaign.
At the same time, the Federal Trade Commission took the unusual step of announcing an investigation into whether Facebook had violated the 2011 consent decree, exposing the company to a multi-billion-dollar fine.
State attorneys general have found some success in taking on technology companies about the privacy of data. Uber Technologies Inc. [UBER.UL] in September agreed to pay $148 million as part of a data-breach settlement with the 50 U.S. states and Washington, D. C..
Agnieszka McPeak, a professor at the Duquesne University School of Law, said states will likely make claims similar to that of D. C., put pressure on Facebook in a scheme that involves both a monetary penalty and changed business practices.
“If a company faces 51 separate actions across the country for misleading practices, which have a real impact,” McPeak said.
Reporting by Lisa Lambert in Washington, D. C., and Paresh Dave in San Francisco; Additional reporting by David Shepardson and Jan Wolfe in Washington; editing by Rosalba O’brien and Phil Berlowitz