WASHINGTON (Reuters) – Facebook Inc (FB.O) shares fell as much as 6.5 percent on Monday after the main U.S. consumer protection regulator said it was investigating how the social network allowed data of 50 million users to get into the hands of a political consultancy.
Scrutiny by the U.S. Federal Trade Commission, which generally confirms the existence of an investigation only in cases of significant public interest, adds to pressure from lawmakers in the United States and Europe for Facebook Chief Executive Mark Zuckerberg to explain how his company handles user data.
Facebook shares briefly dipped below $150 on Monday for the first time since July 2017, before recouping some losses. They were down 3.1 percent at $154.37 in afternoon trading.
At the day’s session low the company had lost $100 billion in market value since March 17, when newspapers first reported that Facebook member data was improperly used by consultants Cambridge Analytica to target U.S. and British voters in close-run elections.
“FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook,” the regulator said in a statement. “Today, the FTC is confirming that it has an open non-public investigation into these practices.”
The investigation is broader than looking into whether Facebook violated a 2011 consent order it reached with the FTC over its privacy practices, a person briefed on the matter told Reuters.
“We remain strongly committed to protecting people’s information,” Facebook Deputy Chief Privacy Officer Rob Sherman said in a statement on Monday. “We appreciate the opportunity to answer questions the FTC may have.”
If the FTC finds Facebook violated terms of the consent decree, it has the power to fine it thousands of dollars a day per violation, which could add up to billions of dollars.
The FTC’s move to make its probe public comes as lawmakers in the United States and Europe put more pressure on Facebook and Zuckerberg to explain the company’s privacy practices.
“Facebook’s failure to protect confidential user information likely violated specific legally binding commitments, but also basic norms and standards,” said U.S. Democratic Senator Richard Blumenthal, a member of the Senate Commerce, Science, and Transportation Committee.
A bipartisan coalition of 37 state attorneys general also wrote to Facebook on Monday, demanding to know about the company’s role in the manipulation of users’ data by Cambridge Analytica and its policies and procedures for protecting private data.
The U.S. House Energy and Commerce Committee and U.S. Senate Commerce Committee have already formally asked Zuckerberg to appear at a congressional hearing.
Earlier in the day in Europe, the European Union Justice Commissioner asked Facebook if the company is “absolutely certain” that the Cambridge Analytica incident could not be repeated.
Zuckerberg apologized last week for the mistakes the company had made and he promised to restrict developers’ access to user information as part of a plan to protect privacy. He also said sorry in full-page advertisements in British and U.S. newspapers.
“The was a breach of trust, and I’m sorry we didn’t do more at the time,” Zuckerberg said in the ads. “We are now taking steps to make sure this doesn’t happen again.”
His apologies have failed to quell discontent. Germany’s justice minister said Facebook’s promises were not enough.
“In future we will have to regulate companies like Facebook much more strictly,” Katarina Barley said after talks to which she summoned Facebook executives including European public affairs chief Richard Allan.
Advertisers and users are also unhappy.
U.S. auto parts retailer Pep Boys suspended all advertising on Facebook on Monday while consumer electronics company Sonos said in a blog post it will remove advertising for its speakers from Facebook, Instagram, Twitter and Alphabet’s YouTube for one week.
Internet company Mozilla Corp, Germany’s second-largest bank Commerzbank AG (CBKG.DE) and British advertising group ISBA all suspended advertising on Facebook last week.
Opinion polls published on Sunday in the United States and Germany cast doubt over the trust people have in Facebook.
Fewer than half of Americans trust Facebook to obey U.S. privacy laws, according to a Reuters/Ipsos poll released on Sunday, while a survey published by Bild am Sonntag, Germany’s largest-selling Sunday paper, found 60 percent of Germans fear that Facebook and other social networks are having a negative impact on democracy.
Reporting by David Shepardson; Writing by Bill Rigby; Editing by Susan Thomas