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More investors unfriend Facebook as shadow of a bear market looms

As Washington braces for a shutdown and Wall Street wrestles with the shadow of a bear market, the broader markets tumbled during the week ended Dec. 21, with a number of tech stocks particularly impacted.

Facebook Inc. was among the major names on the Nasdaq to see its shares tumble during the week, as broader market troubles coincided with a report from The New York Times that raised fresh privacy concerns around the social media giant. Facebook shares traded at $127.17 as of midday Dec. 21, down 11.72% from their Dec. 14 close. The Nasdaq was down more than 6% during the same period, while the S&P 500 was down nearly 5%.

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Based on an investigation of internal documents, the Times reported that Facebook allowed Microsoft's Bing search engine to see the names of many Facebook users' friends without approval. In addition, the social media giant allowed Netflix Inc. and Spotify Technology SA to read the private messages of users, according to the report. It also alleged that Facebook allowed Amazon.com Inc. and Yahoo more access to user data than previously known.

Facebook denied that it gave companies access to information without user consent and rejected claims it had violated a 2012 consent order from the U.S. Federal Trade Commission.

"None of these partnerships or features gave companies access to information without people's permission, nor did they violate our 2012 settlement with the FTC," Konstantinos Papamiltiadis, Facebook's director of developer platforms and programs, wrote in a Dec. 18 blog post. He added that Amazon, Apple and Yahoo are all known "integration partners."

Microsoft Corp., too, denied it had violated user expectations of privacy, saying in a statement that it respected all user preferences while working with Facebook.

One day after the report, Karl Racine, the attorney general for the District of Columbia, filed a lawsuit against Facebook, alleging the company failed to protect users' data. The suit, filed Dec. 19, seeks an injunction that would require the institution of protocols and safeguards to monitor users' data. The suit also seeks restitution for consumers, penalties and costs.

Apple Inc. shares also had a difficult week as the company was dealt a series of blows in its long-running legal battle with Qualcomm Inc.

On Dec. 18, the Fuzhou Intermediate People's Court in China found that Apple had infringed on two Qualcomm patents related to adjusting the size and appearance of photographs and managing apps using a touch-screen device. The court issued a preliminary injunction banning the import and sales of Apple's iPhone 6s, iPhone 6s Plus, iPhone 7, iPhone 7 Plus, iPhone 8, iPhone 8 Plus and iPhone X models.

Two days later, on Dec. 20, the District Court of Munich granted Qualcomm's request for a permanent injunction to stop Apple from selling or importing iPhones to Germany that allegedly infringed on a Qualcomm patent. The patent allows a device to save the consumption of power and extend battery life.

Apple and Qualcomm have been engaged in a legal back-and-forth for years. In early 2017, Apple accused Qualcomm of engaging in an "abusive licensing model" that resulted in billions in overcharges to Apple.

Qualcomm, meanwhile, filed a complaint with the U.S. International Trade Commission in 2017 accusing Apple of infringing six of its patents. A commission judge said earlier this year that banning iPhone sales in the U.S. would not be in the public interest even though the judge agreed the phones infringed on one Qualcomm patent. As recently as Dec. 12, the commission said it would review the judge's ruling.

Apple shares were trading at $155.19 as of midday Dec. 21, down 6.55% for the week.

Outside of the tech space, CBS Corp. shares slid in line with the broader markets, falling 8.26% during the week to trade at $44.08 as of midday Dec. 21.

During the week, the company's board completed its investigation into allegations of sexual misconduct on the part of former Chairman and CEO Les Moonves and denied Moonves a $120 million severance payment that had been previously set aside. The board said it found evidence of "willful and material misfeasance" on the part of Moonves, as well as violations of company policies.

Moonves resigned in September following a July 27 article in The New Yorker detailing allegations that he sexually assaulted and threatened six women. Moonves has denied the allegations, saying he "may have made some women uncomfortable by making advances," but never used his position to harm anyone's career. He is now expected to pursue an arbitration process as he seeks severance from his former employer.

In other company news, CBS is rapidly approaching the Dec. 31 expiration of its current contract with measurement company Nielsen Holdings PLC.

The two sides are at loggerheads over the price/value relationship for CBS, which is paying $100 million annually to Nielsen. A Nielsen spokesperson said in a statement that the company expects "to arrive at a mutually beneficial agreement well in advance of Dec. 31."

Nielsen shares were down 7.78% for the week trading at $23.72 as of midday Dec. 21.