Photo: The Intercept
Facebook shares recently finished at $132.43, which is the company’s lowest closing share price in nearly 22 months.
Zuckerberg probably thought that the New York Times investigation would be their last headache, but it’s not the end of it for the Silicon Valley Giant. To recap, NYT was looking into Facebook’s secretive and intrusive data sharing deals, as we discussed earlier this year.
The Next Crisis
Just hours after the Times story broke Wednesday morning, Washington, D.C.’s attorney general Karl Racine filed a lawsuit against Facebook. The lawsuit is for allowing Cambridge Analytica to harvest the private data of tens of millions of users.
Lawmakers on Capitol Hill might look to Europe for ideas for holding Facebook accountable. The social network is scrutiny on every decision it makes. They may even incur huge fines that could total in the billions of dollars. Lastly, they may start to face new regulations that could undermine the very core of how they make money.
The States vs. The Social Media Giant
The lawsuit is claiming that Facebook knew that the personal data of millions was being used by Global Science Research, then later sold to Cambridge Analytica. It claims that they knew for a total of two and a half years.
Facebook tried to hide this information by suspending the consulting firm on March 16. Unfortunately, the reports were still released and the company’s share price decreased by nearly 7 percent in March.
Later in March, Facebook shares fell an additional 5 percent when reports broke that Zuckerberg had decided to testify before Congress. That day alone cost the company nearly $23 billion.
The Community Standards
Facebook’s share price continued to fall in April, dropping another four percent after the company published new rules that outlined what content isn’t allowed to be posted.
These standards were published as Facebook continued to clean up its services of harmful content. The content included things such as misinformation, hate speech and spam. Facebook saw its market value sink nearly $18 billion that day.
Biggest Drop of the Year
Facebook’s biggest drop of the year came on July 26, after they released their second-quarter results on July 25. These results showed they were missing the mark on key metrics such as revenue and advertising projections.
Facebook’s daily user base remained flat in the U.S. and Canada and started to decline by nearly 3 million daily users in Europe. This decline is what led to the huge drop, and it came after the introduction of the General Data Protection Regulation (GDPR).
The European Way
British lawmakers recently called for an antitrust probe into Facebook. This is in conjunction with increasingly vocal opposition to Facebook’s monopolistic status among EU politicians.
In the U.S. however, politicians haven’t been there to threaten Facebook and other Silicon Valley companies. But they are looking into the consent decree signed with Facebook in 2011. This decree is what barred Facebook from sharing user data without explicit permission. If Facebook is found in breach of that decree, it faces a maximum $40,000 fine per incident per user, meaning any fine could potentially run into the trillions of dollars.
