Facebook Stuns the World with Its Latest Admission

Few people were happy when Facebook admitted that an analytics firm with ties to the Trump Campaign (Cambridge Analytica) may have improperly scrubbed the data of 87 million users. The admission drew the ire of the public and was followed by calls from Congress – and Zuckerberg himself – for more regulation.

Most people assumed this was a bombshell revelation. But as it turns out, it wasn’t even the tip of the iceberg.

In a blog post by Chief Technology Officer Mike Schroepfer, Facebook is now saying that “most” of its 2 billion users may have had their personal data skimmed from the site by "malicious actors." While Facebook insists it has disabled the feature that enabled data scraping from the site’s search function, the fact remains that the feature existed for enough time to compromise most users.

The direct quote from CEO Mark Zuckerberg himself is the tell-all of how bad this problem really is: "It is reasonable to expect that if you've had that setting on in the last several years that someone has accessed your information."

The public’s confidence in Facebook was already deteriorating, but this revelation is likely to see it plummet even further.

According to reports, ‘malicious actors’ would have been able to use the feature to obtain user information like names, hometowns and birth dates, which they could in turn potentially use for crimes like credit card fraud. Schroepfer said that "given the scale and sophistication of the activity [Facebook has] seen, we believe most people on Facebook could have had their public profile scraped in this way.”

It’s a bad situation, and it could get worse.
 

What Happens from Here?

In all likelihood, Zuckerberg can expect some intense grilling on Capitol Hill when he testifies before Congressional members on April 10. His performance may very well inspire or deter the nature of the legislation that will likely follow.

For investors and market watchers, the threat of regulation stands to be a material headwind for how the stock could perform going forward. And in the wake of this evolving scandal, Facebook stock is already starting to feel some pressure. At the same time, history suggests that Congress may have a hard time passing significant legislation, considering that it has never been able to pass a serious data privacy law despite a few attempts. The process could be a long, drawn-out battle.
 

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