It’s definitely not a good time to be Facebook. Facebook (FB) has always raised eyebrows on the topic of user data and its protection, but the recent Cambridge Analytica incident has blown the entire thing to a whole new level. The fact that simple personal information was taken without consent or knowledge and used to influence voting behavior has left people outraged.
With confessions, apologies, outbursts, and promises, the entire incident has turned into a very smelly potpourri. Facebook and Cambridge Analytica are facing lawsuits for privacy violations and could be held liable for damages.
Facebook’s Chief Information Security Officer Alex Stamos is said to be leaving the company in August after his duties were reassigned following disagreements over investigations into Russian fake accounts.
There are outcries from all sides to delete Facebook with hashtags trending on its rival Twitter, which is hardly ‘holier-than-thou’, by the way. Even the co-founder of WhatsApp, Brian Acton, who made billions through Facebook, wants people to delete their Facebook accounts. “Et tu, Brian?”
When it comes to the stock, the last couple of days have been brutal — Facebook shares fell up to 9%.
Over the past two days, around $50 billion of its market value was wiped out. The Facebook contagion spread to Twitter (TWTR) and Snap (SNAP) too as the spotlight fell on social media as a whole. On Tuesday alone, Twitter dropped more than 10% and Snap more than 2.5%.
Twitter itself has been dealing with fake news and other regulatory problems so much so that CEO Jack Dorsey asked for help from the public to address it.
The Facebook issue hurt tech stocks in general, and shares of top companies like Apple (AAPL), Alphabet (GOOGL) and Amazon (AMZN) fell slightly. In fact, Alphabet’s drop allowed Amazon to move ahead of it to become the second most valuable company in the world.
However, Facebook and Twitter seem to have ended their losing streaks with Twitter climbing up 5% on Wednesday and Facebook moving up slightly under 1%.
There were many doubts about Facebook’s future, the legal actions against it and how the scandal would affect its popularity and most of all, its advertising revenue. There have been calls for more regulation and a change to anti-trust laws to rein in large tech companies that own a vast majority of the market share. Well, so much for the brouhaha.
Facebook has for long managed to move past similar controversies, even with doubts being cast on its data use many a time. But, it hasn’t hindered people from using the social media site. Its growing active user numbers are a testament to this fact. The stock is showing signs of recovery, and it is likely to survive.
On a slightly different note, although the use of private information without consent is completely unacceptable, perhaps a bit of personal caution is well-advised while uploading every minute detail of one’s life or personal opinion on to the vast ocean that is social media, or just the internet in general.