Big shock for Facebook, now investors gang-up, sue social network

Facebook Inc’s failure to safeguard privacy was blamed in an investor lawsuit in San Francisco federal court on Tuesday for a slump in its share price that followed the revelation user data was harvested without permission by a research firm connected to US President Donald Trump, said a Bloomberg report. The world’s largest social media network was sued by shareholders in a class action suit saying they suffered losses after the disclosure that Cambridge Analytica, a UK-based firm that aided Trump, improperly obtained profile information on 50 million users, the report added.
 
Facebook reportedly fell as much as 5.2 percent to $175.41 on Monday in New York, wiping out all of the year’s gains so far. It was the biggest intraday drop since January 12. The stock dropped another 2.6 percent on Tuesday to close at $168.15, after Bloomberg reported that the company is under investigation by the Federal Trade Commission, citing a person familiar with the matter.
 
According to the report, the suit would represent people who bought shares of Facebook from February 3, 2017, when Facebook filed its annual report and cited security breaches and improper access to user data, through March 19, two days after a New York Times report revealed how data from Cambridge Analytica obtained through Facebook was used without “proper disclosures or permission.” 
 
“We are committed to vigorously enforcing our policies to protect people’s information,” said Paul Grewal, deputy general counsel at Facebook. “We will take whatever steps are required to see that this happens,” he said in a statement.
 
It may be noted that news of the improper data collection is the latest in a string of discomforting revelations about the ways in which the world’s largest social media network may have been used to affect the outcome of the 2016 US presidential election. 

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Facebook is already under fire over the proliferation of “fake news” on its site and Russian actors leveraging the platform for propaganda.