Facebook faces investigation into alleged data breach by Trump consulting firm

Facebook Inc (NASDAQ:FB) shares dropped on Monday following reports Cambridge Analytica used data gathered from profiles on the social media giant to target voters in the 2016 US general election.

Cambridge Analytica, the data firm that worked on US President Donald Trump’s election campaign, has been banned from Facebook while the social network investigates the claims.

Whisteblower, Chris Wylie, took to Twitter to say his Facebook account has also been suspended.

Suspended by @facebook. For blowing the whistle. On something they have known privately for 2 years. pic.twitter.com/iSu6VwqUdG

— Christopher Wylie (@chrisinsilico) 18 March 2018

Wylie told The Observer that Cambridge Analytica harvested data from the Facebook profiles of more than 50 million people and used it to conduct targeted political campaigns, which are thought to have contributed to the election of Trump and the Brexit vote.

Shares in Facebook fell 5.9% to US$174 each in early US deals. 

Politicians call for investigation into data breach

The allegations have led to calls for investigations and hearings to explain Facebook’s biggest ever data breaches.  

Conservative MP Damian Collins – chair of the Commons digital, culture, media and sport select committee – said he would call the bosses of both companies, Alexander Nix and Mark Zuckerberg, to provide further testimony.

Adam Schiff, the top Democrat on the House intelligence committee, urged for an investigation of Cambridge Analytica and said Facebook must explain why it would provide private user information to a company with links to Russia.

“This raises serious questions about the level of detail that Cambridge Analyticaknew about users, whether it acquired that information illegally and whether it sought to abuse that information in support of President Trump’s political campaign in the United States or Brexit in the United Kingdom,” he told the Guardian.

“The company has repeatedly touted its ability to influence voters through ‘psychographic’ targeting and has claimed it was the fundamental reason that Donald Trump won the 2016 election. Indeed, it may be that through Cambridge Analytica, the Trump campaign made use of illegitimately acquired data on millions of Americans in order to help sway the election.”

His remarks came after the Republican majority on the House intelligence committee revealed their investigation into Russia’s interference in the 2016 US general election found there was no collusion with Trump’s campaign.  The probe also concluded the Moscow did not seek to assist Trump.

Trump’s campaign team paid more than US$6.2mln to hire Cambridge Analytica in June 2016, according to the Federal Election Commission records.

Cambridge Analytica denies claims it used Facebook profiles in the campaign while Facebook has slammed reports that the alleged use of information on users is a data breach.

Facebook and Google losing share of US digital ad market

In another blow to Facebook, research company eMarketer said there are signs the company is losing its share in the US digital advertising market.

Facebook and Alphabet Inc’s (NASDAQ:GOOGL) Google have been dominating the digital ad market for years but eMarketer said there are signs platforms like Amazon.com Inc (NASDAQ:AMZN) and Snap Inc’s (NYSE:SNAP) Snapchat are eating away at their share.

eMarketer estimates the combined US digital ad market share of Facebook and Google will fall for the first time this year to 56.8% from 58.5% in 2017.

“Facebook’s user growth in the US has slowed down and is now about the same as that of internet users, while News Feed ad prices may be reaching their limit,” said eMarketer senior forecasting director Monica Peart.

However, the research firm expects Facebook’s US revenue from digital advertising will jump17%this year to US$21bn. Google’s is forecast to rise 15% to US$39.92bn.

Overall digital ad spending in the country is expected to increase 19% to US$107bn.

Story by ProactiveInvestors