$60-bn loss: How Facebook got unfriended by Wall Steet, Washington and EU

The company on Tuesday was beset on two continents by governments suddenly focused on data security and investors unliked its stock to the point that it lost $60 billion in value.

The Menlo Park, California, company, whose social network is a ubiquitous venue for social and political life, is drawing the unaccustomed unwelcome attention after the disclosure that it released the personal data of 50 million users to an analytics firm that helped elect President Donald Trump. The company, Cambridge Analytica, has been implicated in dirty tricks in elections around the globe.

Facebook has struggled to respond to the fast-moving imbroglio, and even Facebook workers have been in the dark. The company held a staff meeting Tuesday to address their questions about what Facebook knew and when. Chief Executive Officer Mark Zuckerberg plans to address employees on Friday at a previously scheduled all-hands meeting. 

Some of the latest developments are:

Parliaments request Zuckerberg’s presence

Zuckerberg may have to do a tour of European parliaments to appease lawmakers. Damian Collins, head of a UK parliament committee investigating the impact of social media on recent elections, invited Zuckerberg to answer for a “catastrophic failure of process.” Shortly thereafter an invitation followed from European Parliament President Antonio Tajani.

Separately, EU Justice Commissioner Vera Jourova said she also plans to discuss the matter with Facebook during a visit in the US this week while Italian telecommunications regulator AGCOM requested Facebook to provide information on data use.

US regulators would like a word

The US Federal Trade Commission (FTC) is looking into whether Facebook broke the terms of a 2011 consent decree. The FTC is the lead agency for enforcing companies’ adherence to their own privacy policies and could fine the company if it finds Facebook violated the agreement. Bloomberg

Facebook said it would conduct staff-level briefings of six congressional committees Tuesday and Wednesday. That includes House and Senate judiciary committees, as well as the commerce and intelligence panels of both chambers.

Senator Dianne Feinstein, the top Democrat on the Senate Judiciary Committee, said in a statement that that it would “be helpful for Facebook to testify about how the company protects user privacy and what steps it’s taking to combat bad actors.”

The attorneys general of New York and Massachusetts sent demand letters to the company, the first step in a joint investigation.

A loss as big as a car (company)

Facebook’s stock price fell as much as 6.2 per cent in New York before closing 2.6 per cent lower. The stock has slumped more than 9 perc ent since Friday’s close, giving up about $50 billion in market capitalisation. That’s almost as much as the total value of Tesla. The world’s largest social media network was sued in San Francisco federal court Tuesday by shareholders in a class action who said they suffered losses after the disclosure that Cambridge Analytica improperly obtained profile information on 50 million users.

Free fall aside, Wall Street analysts remain upbeat. Buy recommendations continue to roll in and price targets reflect a potential return of 35 per cent.

Out of the 43 analysts who recommend buying Facebook shares, not one has downgraded the stock over the crisis. However, many acknowledge that bad publicity could keep the stock under pressure.

Zuckerberg to address staff 

Facebook CEO Mark Zuckerberg will address employees of the social network on Friday at a previously scheduled all-hands meeting, where he’s likely to face questions about the controversy over user data improperly obtained by political-advertising firm Cambridge Analytica.

Zuckerberg and COO Sheryl Sandberg haven’t yet spoken publicly about the data leak, which has set off a firestorm of criticism around the world. On Tuesday, Facebook vice president and deputy general counsel Paul Grewal fielded inquiries from employees on the situation, according to a person familiar with the matter. Workers had questions about what Facebook knew and when, said the person, who asked not to be identified because the meeting was internal.