What do Facebook, Goldman Sachs, Starbucks, Ford, Delta and Adidas have in common?
Here’s the answer: In the last 10 days, Facebook has lost USD 100 billion in market value. Or in other words, more than the market valuations of Goldman Sachs, (USD 97 billion) Starbucks (USD 81 billion), and double the market value of companies such as Adidas, Ford and Delta. (USD 40 billion, USD 43 billion and USD 39 billion respectively)
This is not the first instance where a company’s stock went down the rabbit hole due to data breaches. Last year, the Equifax breach dealt a major blow to the company as shares fell more than 33 percent and the firm lost USD 4 billion. A combined study by CGI and Oxford Economics points out that cybersecurity breaches dent company share prices by 1.8 percent on a consistent basis.
It’s a no-brainer what went wrong. The storm began when news reports based on a whistleblower's accounts revealed Facebook allowed the data of 50 million users to be used by Cambridge Analytica, a data analysis company involved in President Donald Trump’s election campaign.
Zuckerberg has been asked to testify before the U.S. Senate Judiciary Committee on April 10. The company’s shares plunged below USD 150 on Monday, as the US Federal Trade Commission (FTC) announced it is investigating the firm’s data practices.
According to several media outlets, Tom Pahl, acting director of the FTC’s bureau of consumer protection said in a statement Monday, “The FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices.”
Notably, US consumer protection regulator had declined to comment last week if it was investigating the company. This probe could have serious implications for Facebook – with fines up to USD 40,000 per affected user if the company is found responsible for breaking the 20-year agreement with FTC, according to a Financial Times report.