The U.S. government agency in charge of protecting American consumers said it has opened an investigation into Facebook’s privacy practices. The announcement follows reports that millions of Facebook users’ profiles were used by a political consulting company to identify and influence voters in the 2016 U.S. presidential election.
“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,” said Tom Pahl in a press release. Pahl is the acting director of the Federal Trade Commission’s (FTC) Bureau of Consumer Protection.
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According to The Financial Times (may be behind paywall), the FTC’s inquiry could result in steep fines for Facebook, which signed a consent order in 2011 that required it to be forthcoming with users about how their data was being shared. The company could face fines of up to $40,000 per violation per day – every misuse of user data could count as an individual breach.
“We remain strongly committed to protecting people’s information. We appreciate the opportunity to answer questions the FTC may have,” said Rob Sherman, Facebook’s deputy chief privacy officer.
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In New York, the social media giant’s stock price (NASDAQ:FB) opened at $160.82 per share on Monday and fell to $149.67 per share at 11:20 a.m. EDT before rallying to $160.06 by the close of the market. Facebook shares have fallen nearly 16 percent since the The Observer and The New York Times first revealed Cambridge Analytica had used 50 million Facebook profiles to build software to target and influence voters in the latest U.S. presidential election.
State governments want answers
In addition to the FTC probe, attorney generals from at least 37 states came together Monday to formally request CEO Mark Zuckerberg explain Facebook’s role with Cambridge Analytica, the political consultancy firm affiliated with Donald J. Trump’s presidential campaign.
“As the chief law enforcement officers of our respective states, we place a priority on protecting user privacy, which has been repeatedly placed at risk because of businesses’ failure to properly ensure those protections,” reads the statement from the National Association of Attorney Generals.
Examples of questions directed at Zuckerberg include: Were those terms of service clear and understandable, or buried in boilerplate where few users would even read them? When did Facebook learn of this breach of privacy protections? During this timeframe, what other third party “research” applications were also able to access the data of unsuspecting Facebook users?
The letter cited concerns that Facebook takes “as much as 30 percent” of revenue from applications that developers use to gather user data.
European Union wants answers
The European Commission joined the chorus of government officials demanding answers from Facebook. Reuters reported that EU Justice Commissioner Vera Jourova sent a letter to Facebook on Monday asking whether any EU citizens were affected by “the recent scandal.” The letter was addressed to Facebook Chief Operating Officer Sheryl Sandberg.