US: Expanded Federal probe hurts Facebook

Following news that the US government probe into the Facebook data breach connected with Cambridge Analytica has widened, shares of the company dropped 2% in early trading on Tuesday, July 3. The fall took approximately US$12 billion off Facebook’s market valuation, Reuters reported.

While shares of Facebook did lose approximately 18% of their value in the seven trading days after the news came to light, the stock had made a comeback prior to that, and has risen about 27% to date. The latest decline comes after it was reported that Facebook’s data scandal, in which Cambridge Analytica accessed the data on 87 million users without their consent, is getting further scrutiny by the Securities and Exchange Commission (SEC) and Federal Bureau of Investigation (FBI).

Citing a person familiar with the matter, The Wall Street Journal reported that the SEC and FBI are joining the Justice Department and Federal Trade Commission in looking into how and why Cambridge Analytica, which was working on President Donald Trump’s election bid at the time, was able to access the user data without consent. According to the report, Facebook and Cambridge Analytica have been conflicted as to what the social media site knew about how the data would be used.

“We are cooperating with officials in the US, UK and beyond,” a spokesman for Facebook had told WSJ. “We’ve provided public testimony, answered questions and pledged to continue our assistance as their work continues.”

According to the paper, late last week Facebook provided Congress with a 747-page document that disclosed it has given companies special access to user data. It was the first time the company diverged from CEO Mark Zuckerberg’s public statement that Facebook had restricted data from outside parties since 2015. Within that report, the social media giant said it granted 61 companies, including AOL, Nike, UPS and dating app Hinge, a “one-time” six-month extension to comply with its policy changes on user data.

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