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Facebook is being sued by its shareholders over lax data security

Facebook is being sued by its shareholders over lax data security
[Photo: Andrii Nikolaienko/Pexels]

To say Facebook is having a rough few days is becoming a bigger and bigger understatement. After revelations this weekend that a Trump campaign data analytics firm had accessed the Facebook data of some 50 million unwitting users, Facebook’s stock took a dive on Monday, dropping 5.2% to $175.41. The stock shed another 2.6% of value Tuesday, closing at $168.15, after a Bloomberg report said the Federal Trade Commission is now investigating Facebook’s data privacy practices.

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[Chart: Google]
Shareholders don’t like to see all of a stock’s 2018 growth vaporized in one day. Sometimes they get mad enough to file suit, which is exactly what a class action full of Facebook shareholders did in a federal court in San Francisco Tuesday. The shareholders claim Facebook is negligent for failing to fix privacy and data security issues it cited in an annual report filed in February 2017. So any shareholder who bought Facebook stock since then can join the class action.

The Trump campaign’s data analytics firm–Cambridge Analytica–acquired the Facebook data through a Cambridge researcher who harvested the user data via a Facebook app and a common developer API. That API, until 2015, allowed developers to collect data on a user’s friends, without their knowledge. The class action suit says Facebook violated its own data privacy policies by “allowing third parties access to personal data of millions of Facebook users without their consent.”

Regulators and lawmakers in D.C. have taken a keen interest in talking to both Facebook and Cambridge Analytica about the matter, which may relate to Russian interference in the 2016 presidential election. Channel 4 also spoke to Congressman Adam Schiff (D-CA) about the questions that the House Intelligence Committee would like to ask the two companies. “The dark arts have arrived in full force online and they need to be ferreted out,” he said.

The House committee has already interviewed executives from Facebook and Cambridge Analytica. But in an undercover Channel 4 News report, Cambridge CEO Alexander Nix, said Republicans on the committee were indifferent toward his testimony. “After five minutes–done,” Nix said of his testimony.

“They’re politicians, they’re not technical. They don’t understand how it works,” he said in the exchange. The Cambridge Analytica board of directors suspended Nix this afternoon amid a growing controversy over the firm’s election practices and investigations in the U.K. and abroad.

Meanwhile, by Tuesday evening, there was still no word from chief executive Mark Zuckerberg.

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