Facebook stock plunges 5% after FTC confirms it's investigating the company's privacy practices in wake of Cambridge Analytica scandal

• The Federal Trade Commission publicly confirmed on Monday that it is investigating Facebook as a result of the Cambridge Analytica scandal.
• Facebook has been in hot water after news reports revealed that Cambridge Analytic had illicitly obtained data on up to 50 million users and used that data to influence voters towards Donald Trump in the US presidential election, as well as to influence the Brexit vote.
• This isn't the first time the FTC  has investigated its privacy practices. The agency looked into the company's practices several years ago and found them wanting. In 2011, Facebook entered into an agreement with the FTC that regulated how it treated its users privacy.

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The Federal Trade Commission (FTC) on Monday said that it is officially investigating Facebook. 

The FTC publicly confirmed the investigation after several news outlets reported on the probe last week, citing unnamed sources.

Facebook stock was down as much as 5% following news of the FTC probe.

Facebook has attracted the FTC's scrutiny over the Cambridge Analytica (CA) scandal. CA is a political marketing firm that illicitly obtained data on up to 50 million Facebook users, unknown to those users, and used that data to influence voters towards Donald Trump in the US presidential election and the Brexit vote.

The problem for Facebook is that this isn't the first time the FTC  has investigated its privacy practices. The agency looked into the company's practices several years ago and found them wanting. In 2011, Facebook entered into an agreement with the FTC that regulated how it treated its users' privacy.

With this latest investigation, the FTC will be looking at two main factors: Did Facebook violate any FTC regulations with its dealings with Cambridge Analytica? And did the social media company violate its 2011 agreement with the FTC?

This is coming amidst increasing calls, even from powerful people in Silicon Valley, that Facebook, and perhaps other internet companies, need to be regulated. And in the meantime, more is being revealed about just how much data Facebook has quietly been collecting on its users, including new reports that it had tracked some Android users' phone use.

Here's the official statement confirming the FTC's investigation. It references Privacy Shield, a framework between the US and Europe for how personal data must be treated by tech companies when it travels from one country to another.

"The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers. Foremost among these tools is enforcement action against companies that fail to honor their privacy promises, including to comply with Privacy Shield, or that engage in unfair acts that cause substantial injury to consumers in violation of the FTC Act. Companies who have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements. Accordingly, the FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices."

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source http://www.businessinsider.com/ftc-confirms-that-it-is-investigating-facebook-2018-3