Facebook’s problems stemming from the revelations about Cambridge Analytica continue to grow, with the US Federal Trade Commission confirming in a rare public statement that is it investigating the company.
In 2011 the FTC slapped Facebook over previous privacy issues.
This morning’s news sent the company’s share price tumbling. At one stage it was down six per cent — that’s after the ten per cent fall of last week.
Investors are worried about the threat of regulatory intervention, both in the US and Europe, as a result of recent revelations. They are concerned any action by regulators to proscribe the targeted use of consumer data will damage the data-driven model underpinning Facebook’s advertising business.
In a statement issued by Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection, he said, “The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers. Foremost among these tools is enforcement action against companies that fail to honour their privacy promises, including to comply with Privacy Shield, or that engage in unfair acts that cause substantial injury to consumers in violation of the FTC Act”.
He said companies that have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements.
“Accordingly, the FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices.”
In addition to the FTC investigation, the company faces investigations by multiple US state attorneys-general, and questions from officials in Europe — including the UK’s Information Commissioner, whose staff raided Cambridge Analytica last week in London.
After a week of silence, Facebook CEO Mark Zuckerberg finally addressed the issue last week in a statement, acknowledging, “With the rise of a small number of big tech companies — and governments using technology to watch their citizens — many people now believe technology only centralises power rather than decentralises it.”