1024 Thursday 20 December 2018
What started as a ground-breaking, industry making, platform that connected people from all over the world like never before, has become a ground-breaking, industry making, platform that shares user details with companies all over the world like never before.
It’s been a tough year for Facebook. Although it was first reported on in 2015, the Cambridge Analytica scandal made international news this March as the depths of the data harvesting were exposed by a whistleblower. Facebook confirmed that the data of 87 million users had been shared and this was used in high level political campaigns including the US election and Brexit referendum. In the immediate fallout of the scandal, shares in Facebook dropped over 15%, but user confidence had been rocked sparking the #DeleteFacebook campaign. Evidence of this had grown further as the share price was rocked once again when a drop in active users was revealed in a trading update in late July and stock dropped by over 20%. Since then, shares in FB had been steadily falling before receiving a double blow to both valuation and user confidence yesterday.
Wednesday started with an article in the New York Times that revealed how Facebook was sharing user data with tech firms like Microsoft, Amazon and Spotify (+ many more) without fully disclosing it to users. The data concerned included Microsoft being allowed to see user’s friends’ lists and Netflix given the permission to see private messages. This all came after chief exec, Mark Zuckerberg, pledged to make changes to the way Facebook operates with regards to data privacy. As news of the latest data scandal came through the wires yesterday, it was then revealed that the Washington, DC, Attorney General was suing the social network over its involvement in the Cambridge Analytica scandal and other user privacy issues including the sharing of data. In the fallout of the British case against Facebook, the firm were fined a maximum penalty of £500,000 by the Information Commissioner’s Office, but the DC case could see the a penalty of up to $5,000 per user affected with a potential total of $1.7bn in fines. Stock in Facebook fell over 7% yesterday and pre-market trading today suggests further falls to come.
With its methods and practises of placing profit from sharing data over the privacy of its users coming into question once again, the first trading report of 2019 will be of great interest to investors with the number of active users likely to garner the most attention.
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