Facebook Data Breach Allegations Lead to Record Decline in Company Value
Facebook continues to face the perils of operating as a social media giant on a global scale, being marred by privacy concerns. It faced dual wrath from the American Press and government for violating privacy laws, as its shares declined over 7 percent in value on Wednesday, wiping out over $28 billion from the company’s market value. Earlier in July 2018, Facebook’s shares dropped over 19 percent, following data breach associated with the disclosure of Cambridge Analytica report.
The company’s woes turned into reality on Wednesday when a report in the New York Times suggested that Facebook allowed over 150 companies including Netflix, Bing and Spotify to access sensitive user data including private messages for millions of accounts, thus amounting to significant data breach.
In a separate case, after immense pressure from lawmakers and civil society, Washington D.C.’s attorney general filed a lawsuit against the California- based company over misleading users about the security of their data, while failing to curb the influence of third-party apps. The particular case is based primarily on the Cambridge Analytica scandal where sensitive user data was allegedly used to influence elections around the globe. Earlier in March, Facebook accepted that user data from 87 million accounts were shared with Trump-affiliated research firm Cambridge Analytica without their knowledge.
Attorney General Karl Racine said in a press release: “Facebook failed to protect the privacy of its users and deceived them about who had access to their data and how it was used. Facebook put users at risk of manipulation by allowing companies like Cambridge Analytica and other third-party applications to collect personal data without users’ permission. Today’s lawsuit is about making Facebook live up to its promise to protect its users’ privacy.”
Before the news of the lawsuit broke out, the firm had been dealing with allegations from the New York Times report alleging that it shared much more data than previously anticipated.
However, in a blog post, Facebook denied having given access to sensitive data without users’ consent. The company statement read: “To be clear: none of these partnerships or features gave companies access to information without people’s permission, nor did they violate our 2012 settlement with the FTC.” Facebook’s 2011 agreement with the Federal Trade Commission required Facebook to clearly elucidate how it shared data with third parties and partners.
However, the firm did admit that apps were indeed able to access private messages, after people “explicitly signed in to Facebook to use a partner’s messaging feature.” The firm still denies any data breach.
In an era where social media has emerged as the primary mode of communication, the risks associated with interacting on a public platform severely undermines a user’s capability to store private information on sites such as Facebook which value earnings more than creating a pleasant user experience. The probability of data breach is hence compounded in a bid to capture greater market value.
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