Facebook shares plummet amid data misuse allegations

The firm’s stock closed down 2.6 per cent, following a steep decline the day earlier after reports of Facebook’s misuse of its users’ personal data.
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Facebook shares have continued to slide amid the ongoing furore concerning the use of data collected by the social network.

The firm’s stock closed down 2.6 per cent, following a steep decline the day earlier after reports of Facebook’s misuse of its users' personal data.

Questions have followed allegations that 50 million Facebook users’ private information was misused by a political consultancy firm.

Cambridge Analytica, used by the Trump campaign in the 2016 US election, has been accused of taking personal data without users’ knowledge. The firm’s chief executive Alexander Nix has been suspended by the company’s board.

In the space of just two days, Facebook’s market value has plummeted by more than $40bn, while Twitter shares have taken a beating.

BBC’s business reporter writes: “All this happened without any new legal challenges being laid at the doors of chief executives Mark Zuckerberg and Jack Dorsey.

“However, with investigations into Facebook’s handling of user data looming on both sides of the Atlantic, investors are concerned. Increased regulations threatens the very business model on which the major social media firms are built – namely to gather the data given by users through likes, posts and shares, and use it to sell advertising space.

“The worry is that if governments begin to restrict the way in which this data is gathered and used, it would complicate the way Facebook and Twitter operate and the negative publicity might also make users more reluctant to spend time on their networks.”

Rob Sherman, Facebook deputy chief privacy officer, said: “We remain strongly committed to protecting people’s information. We appreciate the opportunity to answer questions the FTC may have.”

The scrutiny of Facebook comes after several months of pressure, following allegations that Russia used the social networks to influence the 2016 presidential election.

Calls for users to delete Facebook have gained attention since the incident.

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