Facebook and Google: Profit-making at the cost of accountability?

Two companies have been making news this year on the sensitive issue of privacy. Leading technology firms Facebook (FB) and Google (GOOGL) are two entities that handle copious amounts of user data, raising concerns in various quarters about the power they hold. The concern seems to be rightful enough considering that their recent behavior has been worrying.

Facebook

Just over two weeks ago, Facebook suffered a security breach that affected the access tokens of 50 million accounts. Though Facebook took appropriate measures to diffuse the situation, regulators were not impressed with the incident or the company’s lack of clarity surrounding it.

In the latest update, the company confirmed that the breach had compromised personal and contact information and that the FBI is investigating the issue.

In June, the social media company suffered a technical glitch that briefly made users’ private messages public. Prior to this, it was revealed that Facebook could access the information of people who did not have a Facebook account through third-party websites and apps.

There were also reports that over 60 companies had access to user data after Facebook gave them a one-time extension to comply with policy changes. The cherry on this bitter sundae is the Cambridge Analytica debacle.

Facebook was also criticized for a partnership with Chinese firm Huawei Technologies for data-sharing. Huawei is under the radar of the US government for alleged links with the Chinese government. Following the backlash, Facebook said it severed its partnership with Huawei while the latter said it never collected or stored Facebook user data.

In all the above incidents, Facebook said it took measures to fix the issues and make changes to the way it handles data but concerns still seem to remain in various quarters.

Facebook faces a fine of $1.63 billion for recent security breach

Google

Search giant Google is another firm that has been coming under the spotlight quite often this year. The most recent Google + data breach and Google’s non-disclosure of the incident raised eyebrows. Although Google said it did not find any evidence of misuse, concerns on data vulnerability remain among various groups.

It has been alleged that Google tracks location data for its Maps and Search services and collects user data through many of its products. There were also reports that Google had a tie-up with Mastercard to assess the purchasing patterns of millions of cardholders. Google was also accused of monitoring emails for personalized advertising.

Google admitted to tracking locations to improve its Maps service but stopped the practice of monitoring emails due to outcries over data privacy. However, there are no confirmations regarding the Mastercard deal or the collection of data through the various services that Google offers.

Google might have to face fines for its recent breach involving Google +

Google has been accused of suppressing conservative voices through its Search results by President Donald Trump with the company responding that its search results are unbiased. The tech firm has also faced ire over its projects involving a censored search engine for China and military drones for the US government.

Those opposing the projects claimed that Google was compromising its values for profits. Google decided to end its partnership with the US government on the drone project and with regards to its entry into China, the company said it was merely exploring its options.

Data breach drives final nail in coffin for Google +

Investigations, fines and testimonies

Both companies have faced investigations and fines on matters of security and privacy. Facebook was slapped with a fine of $662,900 in the UK over the Cambridge Analytica issue and the social media giant is currently looking at a fine of $1.63 billion in the EU under the GDPR for its latest security breach. Google is also said to be facing the threat of fines for tracking locations and for its recent Google + data breach.

Following the data privacy scandal, Facebook CEO Mark Zuckerberg testified in front of Congress but offered lengthy explanations on the company’s vision and philosophy when faced with difficult questions. A few months later, COO Sheryl Sandberg told members of the Senate that a user had several options to keep their sensitive information confidential.

Google CEO Sundar Pichai has reportedly agreed to testify in front of Congress this year and it is expected that he will face several questions on topics such as search results, data security and the company’s China plans.

Regulators on Google’s tail after alleged privacy breach

Accountability

All these issues have raised many questions such as how much of your information is out there and just how safe is it. Are the major tech companies mining your data and if so, are they doing enough to protect it?

The companies have assured its users time and again that they are taking all the necessary steps to protect the data and that they do not misuse user info. The breaches bring forth worries and raise questions on accountability.

Stocks

On Wednesday, both Facebook and Google tumbled alongside their tech peers but by Thursday they started picking up. The tech rout is seen as temporary by some experts and there is faith in the ability of both companies to pick themselves up and move on.

In spite of all their shortcomings, both Facebook and Google are seen as stable investments. Facebook has managed to grow revenues and earnings consistently and in its most recent quarter, despite the controversies, its user count increased. The company appears to be competitively better positioned than its peers like Twitter (TWTR) and Snap (SNAP) and also has financial stability.

Alphabet too has posted strong results consistently and although for its most recent quarter, its earnings were impacted by a penalty imposed by the EU, the company still remains stable. Its various products are seeing growth and it has posted double-digit increases in all its segments.

As of 2:45 pm ET on Friday, Facebook was down 0.6% while Alphabet was up 1.3%.

FAANG group stocks find some footing after Wednesday’s slump