Facebook shares took a sharp fall as stock markets opened on Thursday, a day after a secret trove of documents was leaked.
Shares opened around 2.5 per cent down, wiping an estimated $9.5billion off the company’s $379billion value, but rebounded slightly to 1 per cent down 90 minutes after trading started.
The documents showed Facebook ‘aggressively’ pursued competitors, used its platform to cripple rivals, and leverage developers for advertising money, setting up conflicts with regulators and politicians around the globe.
Stock investment firm Stiefel had downgraded Facebook’s shares ahead of markets opening in New York, saying the company has made ‘too many adversaries’ for its business to thrive.
Facebook will be hoping to avoid another crash after shares in the company fell by $119billion in a day back in July, marking the single largest fall in market history.
Mark Zuckerberg saw $12billion wiped off his value as a result of the plunge.
One key issue is how Facebook took ‘aggressive positions’ against rivals and denied key competitors such as Vine access to its data, which shut down shortly after.
The EU is aggressively cracking down on tech monopolies and this summer fined Google a record $5billion for breaching its competition laws.
What are the accusations against Facebook?
Facebook is facing allegations from all over the world that it has been used to spread ‘fake news’, interfere with elections, and peddle hate.
It is also facing hugely damaging revelations of privacy data breaches among its accounts.
Here are some of the controversies it has been embroiled in:
‘Fake news’ and Russia
Facebook has come under the spotlight amid claims that Russian accounts used the platform to spread ‘fake news’ during the 2016 Brexit referendum.
In America, Russians accounts have been accused of using Facebook to harm Hilary Clinton’s prospects of being elected over Donald Trump.
In the UK, some have claimed that misleading information was used to promote Brexit in the run up to the 2016 referendum.
Cambridge Analytica Scandal:
The data of around 87 million Facebook users was harvested by the company Cambridge Analytica (CA).
It has been claimed CA used the information to assess peoples’ personalities and come up with political strategies to sway voters to back Brexit and Donald Trump.
Spread of extremism and hate
Facebook has been repeatedly criticised for not being quick enough to take extremist content down from its site.
Critics have warned that Facebook has become a safe haven for extremists who peddle hate and try to recruit jihadis to kill and maim.
What do the Facebook emails say?
1. Facebook planned to let its android app read users’ call records in which it admitted was a ‘pretty high-risk thing to do from a PR perspective’
Michael LeBeau (Facebook product manager) wrote on 4 February 2015:
‘As you know all the growth team is planning on shipping a permissions update on Android at the end of this month. They are going to include the ‘read call log’ permission… This is a pretty high-risk thing to do from a PR perspective but it appears that the growth team will charge ahead and do it.’
2. Facebook aggressively stopped rivals from accessing its users’ data to maintain dominance, causing many apps to fail. CEO Mark Zuckerberg personally approved a decision to block Twitter’s app Vine from accessing users’ Facebook friends lists.
Justin Osofksy (Facebook vice president) wrote on 24 January 2012: ‘Twitter launched Vine today which lets you shoot multiple short video segments to make one single, 6-second video… Unless anyone raises objections, we will shut down their friends API access today. We’ve prepared reactive PR, and I will let Jana know our decision.’
CEO Mark Zuckerberg replied: ‘Yup, go for it.’
3. Mr Zuckerberg said he was ‘sceptical’ that apps with access Facebook users’ data would pass this data on, as then happened in the Cambridge Analytica scandal in 2016
In a 2012 email to Sam Lessin, the company’s former VP of Project Management, Mr Zuckerberg wrote:
‘I’m generally skeptical that there is as much data leak strategic risk as you think. I agree there is clear risk on the advertiser side, but I haven’t figured out how that connects to the rest of the platform. I think we leak info to developers, but I just can’t think if any instances where that data has leaked from developer to developer and caused a real issue for us. Do you have examples of this?’
4. Facebook CEOs planned to provide user data to apps which paid Facebook a certain amount
Konstantinos Papamiltidas, Facebook’s director of platform partnerships, ordered: ‘Communicate to all apps that don’t spend that those permission[s] will be revoked.
‘Communicate to the rest that they need to spend on NEKO [a platform that Facebook uses to sell advertising] $250k a year to maintain access to the data.’
Where do the Six4Three Facebook papers come from and why is Mr Collins allowed to publish them?
The documents seized by Collins and his committee stem from a court case being heard in California between app developer Six4Three and Facebook.
Ted Kramer, who owns the developer, launched a suit against Facebook after the tech company restricted to data that one of his apps – Pinkini – could access.
The app was designed to identify bikini photos among albums posted by friends on Facebook, and the restrictions effectively killed it.
As part of the lawsuit, Kramer accuses Facebook of encouraging developers to build apps based around access to data that it then withdrew.
He also alleges that Zuckerberg sold expensive ads to developers in return for long-term access to the data.
This form of access was later exploited by Cambridge Analytica in an attempt to affect elections.
As part of his case, Kramer got his hands on documents – said to include confidential emails between senior executives, and correspondence with Zuckerberg – apparently showing they knew about issues around the privacy of user data.
Facebook fought for months to keep the documents secret, and was ultimately vindicated when a California judge ruled in its favor.
But now Collins has published the documents because he is outside of US jurisdiction and protected in his role as a minister heading up an investigation.
What is the Cambridge Analytica scandal?
Consultancy firm Cambridge Analytica had offices in London, New York, Washington, as well as Brazil and Malaysia.
The company boasts it can ‘find your voters and move them to action’ through data-driven campaigns and a team that includes data scientists and behavioural psychologists.
In 2013, Cambridge professor Aleksandr Kogan used his app, This Is Your Digital Life, to ask 270,000 Facebook users questions about their personalities.
By answering them, the users granted Kogan access to not only their profiles but to those of their friends.
He subsequently sold that information to Cambridge Analytica for $51million.
Facebook changed its rules in 2014 to limit what data such apps could access.
A year later, the company learned that Kogan had sold his findings and contacted both him and Cambridge Analytica to tell them to delete the data which they promised to do.
In March, Facebook made its announcement that it had suspended Cambridge Analytica after being warned of looming media reports that claimed not all of the information had been destroyed.
Those reports, which were informed by the accounts of whistleblowers who worked at the firm, also revealed the true scale of the breach.
It was initially estimated that the firm was able to mine the information of 55 million Facebook users even though just 270,000 people gave them permission to do so.
But Facebook later since revealed the number was actually as high as 87 million.
The data firm suspended its chief executive, Alexander Nix, after recordings emerged of him making a series of controversial claims, including boasts that Cambridge Analytica had a pivotal role in the election of Donald Trump.
The same information is said to have been used to help the Brexit campaign in the UK.