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US consumer agency probes Facebook as shares resume slide

Mar 27 2018 05:15

Washington - A US consumer protection agency said Monday it has opened an investigation into Facebook's privacy practices, in another blow to the social network struggling to deal with a growing crisis on misuse of private data.

The Federal Trade Commission confirmed news reports from last week that it had opened an inquiry over the harvesting of Facebook data on tens of millions users of the social network by the British consulting group Cambridge Analytica.

While the FTC normally refuses to comment on its probes, it took the unusual step of confirming a "non-public investigation" into Facebook over whether it mishandled private data or violated a 2011 agreement which settled an earlier probe.

"The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers," said acting consumer protection chief Tom Pahl.

"Foremost among these tools is enforcement action against companies that fail to honor their privacy promises, including to comply with Privacy Shield (the US-EU privacy accord), or that engage in unfair acts that cause substantial injury to consumers in violation of the FTC Act."

The FTC suggested that Facebook could face new legal problems if it violated the consent decree with the consumer agency in 2011 settling charges that it deceived consumers on how it handled private data.

"Companies who have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements," Pahl said in the statement.

"Accordingly, the FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook."

Shares down

Facebook shares slumped 2.3% in mid-afternoon trade Monday after the FTC announcement, having lost some 14% last week over a crisis which has wiped out some $90bn in market value.

Separately, Senate Judiciary Committee chairperson Charles Grassley said he had asked Facebook CEO Mark Zuckerberg to appear at a hearing April 10 "to discuss Facebook's past and future policies regarding the protection and monitoring of consumer data."

Grassley said he also invited Google CEO Sundar Pichai and Twitter CEO Jack Dorsey "to discuss the future of data privacy in the social media industry."

The world's biggest social network is also facing calls on both sides of the Atlantic for more information on how its user data was leaked.

A public apology by Zuckerberg has failed to quell outrage over the hijacking of personal data.

Separately, Facebook disputed reports that it had been logging call and text data surreptitiously from its users. A Facebook statement said call and text history logging "is part of an opt-in feature" for those using Messenger or Facebook Lite on Android.

"This helps you find and stay connected with the people you care about, and provides you with a better experience across Facebook," the statement said, while pointing to ways users can turn off the feature.

British authorities, meanwhile, said they were assessing data seized in a raid on the London offices of Cambridge Analytica as part of their investigation.

About 18 enforcement agents from the Information Commissioner's Office participated in the raid late Friday after getting a court order.

"This is one part of a larger investigation by the ICO into the use of personal data and analytics by political campaigns, parties, social media companies and other commercial actors," the agency said.

Cambridge Analytica, which worked on US President Donald Trump's election campaign, has been accused of illegally mining tens of millions of users' Facebook data and using it to target potential voters.

Facebook took out full-page ads in nine major British and US newspapers on Sunday to apologize to users.

"We have a responsibility to protect your information. If we can't we don't deserve it," Zuckerberg said in the ads.

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