The U.S. Federal Trade Commission will investigate Facebook Inc. on the alleged violation of a consent decree over the use of personal information, Bloomberg News reported March 20, citing a source with knowledge of the matter.
The agency reportedly will look to determine whether the social networking giant allowed Cambridge Analytica LLC to receive some user data in violation of its policies.
In a statement emailed to S&P Global Market Intelligence, an FTC spokesman said the agency was aware of concerns about Facebook, but he could not comment on whether the FTC was investigating the company.
"We take any allegations of violations of our consent decrees very seriously, as we did in 2012 in a privacy case involving Google," the spokesman said. Google in August 2012 agreed to pay a $22.5 million fine to settle FTC charges that it mislead users of Apple Inc.'s Safari internet browser about Google's tracking and ad-targeting activities.
Facebook's stock continued to fall March 20, down about 5% for the day as of midday trading Eastern time and about 11% since the close of trading March 16, the date that news broke about the data mishandling. While several analysts said the near-term fallout to Facebook's advertising revenue should be minimal, they also noted "headline risk" as investors feared more regulatory scrutiny of Facebook in the wake of the incident.
British privacy regulators are seeking a warrant to examine Cambridge Analytica's servers after reports that the political data analytics firm may have improperly gained access to the personal data of 50 million Facebook users. Facebook has hired Stroz Friedberg, a digital forensics firm, to conduct an audit of Cambridge Analytica, which has agreed to comply. The company also asked Christopher Wylie of Eunoia Technologies and University of Cambridge Professor Aleksandr Kogan to submit an audit, but only Kogan has agreed to do so.
Facebook suspended the accounts of British company Strategic Communication Laboratories and its political data analytics firm, Cambridge Analytica, as well as Wylie, for violating the platform's personal data policies. The company said it learned that data voluntarily provided to a personality test app by Kogan had been improperly passed on to third parties.
A number of lawmakers in the U.S. and abroad have called for investigations into the incident.