Facebook chief executive Mark Zuckerberg has apologised for mistakes his company made in how it handled data belonging to 50 million of its users. Picture: REUTERS
Facebook chief executive Mark Zuckerberg has apologised for mistakes his company made in how it handled data belonging to 50 million of its users. Picture: REUTERS

Washington — The leading US consumer protection regulator and attorneys representing 37 states have stepped up pressure on Facebook to explain how the social network allowed data of 50-million users get into the hands of a political consultancy.

The US federal trade commission took the unusual step of announcing that it had opened an investigation into the company, citing reports that raise what it called "substantial concerns about the privacy practices of Facebook".

A bipartisan coalition of 37 state attorneys has written to Facebook, demanding to know more about the company’s role in the manipulation of users’ data by the consultancy, Cambridge Analytica, which used it to target US and British voters.

"These revelations raise serious questions concerning Facebook’s policies and practices, and the processes in place to ensure they are followed," the letter said. "We need to know that users can trust Facebook. With the information we have now, our trust has been broken."

Facebook shares fell as much as 6.5%, briefly dipping below $150 for the first time since July 2017, before recovering the day’s losses to close up 0.4% at $160.06. The shares are still down 13% since March 16, when Facebook first acknowledged that user data had been improperly channelled to Cambridge Analytica. The company has lost more than $70bn in market value since then.

The recovery in Facebook’s stock on Monday may have been due to investors taking advantage of the lower stock price and the belief that the latest regulatory scrutiny may not ultimately hurt the company’s relative long-term growth prospects, Wall Street analysts said.

The federal trade commission investigation was looking at more than whether Facebook violated a 2011 consent order it reached with the commission over its privacy practices, a person briefed on the matter said.

If the commission 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.

"We remain strongly committed to protecting people’s information," Facebook deputy chief privacy officer Rob Sherman said. "We appreciate the opportunity to answer questions the commission may have."

Legislators in the US and Europe continue to put pressure on Facebook and CEO Mark Zuckerberg to explain the company’s privacy practices.

The US senate judiciary committee has invited Zuckerberg and the CEOs of Alphabet and Twitter to testify at an April 10 hearing on data privacy. The US house energy and commerce committee and the senate commerce committee have asked Zuckerberg to appear at a congressional hearing.

"Facebook’s failure to protect confidential user information likely violated specific legally binding commitments, but also basic norms and standards," said US senator Richard Blumenthal.

In Europe, the EU justice commissioner asked Facebook if the company was "absolutely certain" that the Cambridge incident could not be repeated.

Zuckerberg has apologised for the mistakes the company made and promised to restrict developers’ access to user information as part of a plan to protect privacy.