Facebook has BILLIONS knocked off share price as US Federal Trade Commission probe launched over data harvesting scandal
FACEBOOK shares have plunged today after the US Federal Trade Commission launched an investigation into the data harvesting scandal.
Shares fell five per cent as soon as news of the investigation was made public, wiping billions off the company's value.
Shares fell from their opening price of $160.82 to a low of $150.36 moment after the FTC made the public announcement.
The move adds pressure from US and European lawmakers for Facebook CEO Mark Zuckerberg to explain how his company handles user data.
The FTC's announcement of the investigation is a rare move, but the case has garnered significant public interest since the Cambridge Analytica scandal emerged.
A full-scale investigation into Facebook could see the company fined for billions of dollars by regulators if it is found to have violated the terms of a consent decree signed with the FTC in 2011.
The decree required that Facebook notify users and receive explicit permission before sharing personal data beyond their specified privacy settings.
A violation of this could carry a penalty of $40,000 per violation.
The regulator has the power to fine, prosecute and regulate Facebook in the United States.
It was recently revealed that Cambridge Analytics had bought the data of 50 million Facebook users that was obtained without their permission.
This data was reportedly used to help get US President Donald Trump elected, and also to boost the Brexit campaign in the UK.
The alleged breach came to light thanks to a Cambridge Analytica whistleblower called Christopher Wylie.
The UK's Information Commissioner has been granted a warrant to search the data analytic's firms London offices, amid widespread concern over its work.
Mozilla has become the first major organisation to stop advertising on Facebook, amid the scandal.
The Facebook data was harvested using Cambridge psychology professor called Aleksandr Kogan's app called "thisisyourdigitallife" in 2015.
It was a personality quiz that asked Facebook users to provide information about themselves.
Through his company Global Science Research, Kogan then shared the info obtained from the app with Cambridge Analytica.
Only 270,000 Facebook users actually signed up and took personality tests, but the app also harvested data of all the Facebook friends connected to those users, without the permission of those friends.
Facebook reportedly knew about the data harvesting in 2015, and asked companies holding the data to delete it.
However, they had no way of making sure that they actually did delete it.
Dodgy data harvesting is illegal in a number of countries and violates Facebook's own data policy.
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