Facebook (NASDAQ: FB) saw its share price tumble Monday morning after the Federal Trade Commission confirmed that it is investigating the social media giant for possible violations of the FTC Act.
“The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers,” Tom Pahl, Acting Director of the Federal Trade Commission’s Bureau of Consumer Protection said in a statement Monday. “Foremost among these tools is enforcement action against companies that fail to honor 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.”
“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,” he added.
Shares of Facebook slid 5% by 11:00 AM Monday morning adding to losses beginning on March 16 after initial news reports alleged that the company had previously allowed personal data to be downloaded by app vendors. The company has lost approximately $50 billion in market capitalization due to backlash over the privacy missteps.
Facebook deputy chief privacy officer Rob Sherman responded to the FTC announcement.
“We remain strongly committed to protecting people’s information,” Sherman said. “We appreciate the opportunity to answer questions the FTC may have.”
An Ars Technica report Saturday alleged that Facebook also downloaded some smartphone users’ text and call information.
This past week, a New Zealand man was looking through the data Facebook had collected from him in an archive he had pulled down from the social networking site. While scanning the information Facebook had stored about his contacts, Dylan McKay discovered something distressing: Facebook also had about two years’ worth of phone call metadata from his Android phone, including names, phone numbers, and the length of each call made or received.
Facebook is also being sued for corporate misconduct related to the Cambridge Analytica use of user data.
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HAE is examining, among other things, whether Facebook’s Board of Directors (the “Board”) and executives breached their fiduciary duties to the Company and its shareholders in connection with the data breach. While Facebook executives now invite “regulation,” HAE believes that the vital first step to remedying the misconduct is improved corporate governance at Facebook, including action against the Board and executives that reportedly permitted this massive and longstanding data breach to continue.