Facebook shares dropped as much as 2.3% in early trading Tuesday, following a report that multiple U.S. federal agencies are investigating the social giant’s improper sharing of user data with now-defunct political consulting firm Cambridge Analytica.
In addition to the Justice Department, the FBI, the SEC and the Federal Trade Commission are also looking into Facebook’s role in the Cambridge Analytica matter, the Washington Post reported Monday, citing anonymous sources. The revelation of the additional probes suggests “the wide-ranging nature of the investigation,” the paper reported, citing sources.
The decline of Facebook’s shares came as most broader market indices were trading slightly higher during the shortened trading session heading into the July 4 holiday in the U.S., although the tech-heavy Nasdaq was down 0.1% in early trading. [UPDATE: At the 1 p.m. ET end of trading, Facebook shares had closed down 2.35%; the Nasdaq and S&P 500 were down 0.9% and 0.5%, respectively, for the day.]
In a statement, Facebook confirmed that it has been contacted by the U.S. agencies and said it is cooperating with the investigations. “We’ve provided public testimony, answered questions, and pledged to continue our assistance as their work continues,” a company rep said, according to the Washington Post.
U.S. investigators are looking specifically at what Facebook knew in 2015 — when data on upwards of 87 million users was improperly obtained by Cambridge Analytica, which had done work on behalf of the Trump presidential campaign, Facebook has since revealed. The federal probes also are exploring why Facebook didn’t disclose the details of what it knew to users and investors, as well as the congressional testimony this spring by CEO Mark Zuckerberg and other company execs, according to the Washington Post report.
In May, Facebook, as part of cleaning up the mess left in the wake of the Cambridge Analytica scandal, said it suspended 200 apps that had access to large amounts of user data prior to 2014. Facebook says that was the year it changed its policies restricting the ability of third-party apps to collect data on users’ friends, which is how a research harvested info in millions of Facebook users and then sold it to Cambridge Analytica.
Even with all the negative publicity after the Cambridge Analytica scandal erupted in mid-March, Facebook grew its worldwide user base in the first quarter of 2018. The social giant reported an average of 1.45 billion daily active users in March 2018 (up 13% year over year) and boosted net income 63% year over year, to $5 billion, in Q1 of this year.
Pictured above: Facebook CEO Mark Zuckerberg prepares to testify before a House Energy and Commerce hearing on April 11.