Wall Street has taken its first opportunity to weigh in on the fallout from the Cambridge Analytica revelation with Facebook falling on Monday morning.
The social network was down more than 5.5 percent to $175 a share in early morning trading.
The drop, if sustained through the market’s close, would be Facebook’s biggest dip in more than a year.
Facebook suspended data analytics firm Cambridge Analytica for covertly harvesting information from more than 50 million profiles. The New York Times reported on Saturday that the data was purchased to aid President Trump’s 2016 campaign.
According to the Times, ahead of the 2014 midterm elections, Cambridge Analytica received a $15 million investment from Republican donor Robert Mercer, and “wooed” Mercer political adviser Steve Bannon, better known Donald Trump’s former chief White House strategist and the ex-executive chairman of Breitbart News.
The company then paid University of Cambridge psychology professor Dr. Aleksandr Kogan for Facebook user data he had collected through an app. Sharing such information is a violation of the social media website’s policy.
Kogan’s “thisisyourdigitallife” app, which was downloaded by approximately 270,000 Facebook members, was billed as “a research app used by psychologists,” and offered users a personality prediction. In doing so, users gave consent for the app to access information about their location, content they liked, and what Mark Zuckerberg’s company qualified as some “limited information” about friends without strict privacy settings.
Facebook said on Saturday that “Kogan lied to us” by passing data collected from his app to Cambridge Analytica. Facebook said that when it learned of the violation in 2015, it removed Kogan’s app. The company added it “demanded certifications from Kogan and all parties he had given data to that the information had been destroyed.”
CEO Mark Zuckerberg isn’t just feeling the heat from investors, either; American and British politicians are demanding the chief exec testify on how such a massive breach could take place.
6 Tech Giants Shaking Up News, From Jeff Bezos to Laurene Powell Jobs (Photos)
Tech leaders are increasingly intertwined with the news business. While some want to support old properties, one set out to destroy a new one. Here they are.
Jeff Bezos – Washington Post
The Amazon founder purchased the Washington Post in 2013 for $250 million in cash. President Trump has called the paper the “Amazon Washington Post.”
The Facebook co-founder purchased The New Republic in 2012, becoming executive chairman and publisher. However, he sold the venerable political magazine to Win McCormack in 2016, saying he "underestimated the difficulty of transitioning an old and traditional institution into a digital media company in today’s quickly evolving climate."
The eBay founder is a well-known philanthropist who created First Look Media, a journalism venture behind The Intercept. Inspired by Edward Snowden's leaks. Omidyar teamed up with journalists Glenn Greenwald, Jeremy Scahill and Laura Poitras to launch the website “dedicated to the kind of reporting those disclosures required: fearless, adversarial journalism.”
The PayPal co-founder doesn’t own a news organization, but he makes this list because he essentially ended one -- Gawker -- proving once again the power of an angry billionaire. Thiel secretly bankrolled Hulk Hogan’s sex-tape lawsuit against Gawker Media because he was upset that the website once outed him as gay. Hogan won the defamation lawsuit against the site that sent its parent company into bankruptcy, and Gawker.com is no longer operating.
OK, so Facebook isn’t technically a news organization… yet. However, the company is preparing to launch its much-anticipated lineup of original content later this summer, and there are also signs that it's on the verge of becoming an even bigger media platform.
Campbell Brown, Head of News Partnerships at Facebook, confirmed last week it’s developing a subscription service for publishers willing to post articles directly to Facebook Instant Articles, rather than their native websites.
Tech is increasingly intertwined with news, for better or worse
Tech leaders are increasingly intertwined with the news business. While some want to support old properties, one set out to destroy a new one. Here they are.