Facebook loses £17,000,000,000 over Cambridge Analytica 'data breach'
BUSINESS

Facebook loses £17,000,000,000 over Cambridge Analytica 'data breach'

Offshore Technology International -
Facebook is set to lose almost £17 billion after its shares plummeted following claims that a data firm harvested 50 million Facebook users' personal details.

Shares in the world’s biggest social media site fell more than 4% in premarket trading, knocking $23.8 billion (£16.9 billion) off its market value of $538 billion (£383 billion) as of Friday’s close.

Wall Street analyst Brian Wieser said the allegations raise ‘systematic problems’ with Facebook’s business model.

It comes after allegations that private information from more than 50 million Facebook users improperly ended up in the hands of British firm Cambridge Analytica, which worked on Donald Trump’s presidential campaign and the Leave campaign ahead of the EU referendum. MPs have accused Alexander Nix, the chief executive of Cambridge Analytica, of ‘deliberately misleading’ Parliament by giving ‘false statements’, while the EU will investigate whether data misuse has taken place.

 Mr Wieser, an analyst at Pivotal Research Group, said: ‘We think this episode is another indication of systemic problems at Facebook. He said that regulatory risks for the company would intensify and enhanced use of data in advertising would be at greater risk than before.  

But it is unlikely to have a meaningful impact on the company’s business for now, he said, with advertisers unlikely to ‘suddenly change the trajectory of their spending growth on the platform’. Peter Stabler, analyst at Wells Fargo, added: ‘This episode appears likely to create another and potentially more serious public relations ‘black eye’ for the company and could lead to additional regulatory scrutiny.’ The losses would be Facebook’s biggest daily fall since a broader market pullback in February.

In January, when Facebook announced changes to its newsfeed which it said would hit user engagement in the near term, shares fell 4.5% in a day. Former Cambridge Analytica employee turned whistleblower, Chris Wylie, told Channel 4 News a ‘data grab’ had been carried out on more than 50 million profiles in 2014. He claimed it involved users being offered a small amount of money to complete a survey, on the condition they consented to share personal details through Facebook. This, it is claimed, allowed researchers to build personality and psychological profiles on millions of users.

Despite assurances at the time this was discovered in 2015 that the data had been destroyed, Facebook has since been informed this did not happen, prompting the suspension of the firm on suspicion it flouted privacy rules. Cambridge Analytica said: ‘Cambridge Analytica’s commercial and political divisions use social media platforms for outward marketing, delivering data-led and creative content to targeted audiences. They do not use or hold data from Facebook profiles. ‘No data from GSR was used by Cambridge Analytica as part of the services it provided to the Donald Trump 2016 presidential campaign. ‘Cambridge Analytica only receives and uses data that has been obtained legally and fairly. Our robust data protection policies comply with US, international, European Union and national regulations.’

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