Facebook’s Shares Plummet By $9.5bn After Leaked Documents Exposes The Company For Being Anti-Competitive
Facebook shares fell sharply a day after the release of documents incriminating the technology giant was released.
With the opening of the stock market today, the company’s shares have sold about 2.5%, wiping out about $9.5bn of the company’s $379bn.
This comes one day after a document leak that shows that Facebook has used its platform to paralyze rivals, aggressively chase competitors and take advantage of developers to get advertising money, by setting up conflicts with regulators and politicians around the world.
The leaked documents revealed that:
- Facebook planned to grant companies access to user data based on how much advertising they bought and threatened to cut off access for firms paying under a certain amount.
- Facebook programmed its Android app to see users call and text records in which it admitted was a “pretty high-risk thing to do from a PR perspective”.
- Mr Zuckerberg said he was “sceptical” that apps with access Facebook users’ data would pass data on, as then happened in the Cambridge Analytica scandal.
- Facebook used Onavo app it acquired to spy on users’ phone usage, apparently without their knowledge, to identify competitors such as Whatsapp to buy out.
Following the leak of documents, stock investment firm Stiefel downgraded Facebook’s shares from “buy” to “hold” before the opening of markets in New York, claiming that the company had done “too many adversaries” for his business to prosper.
Stiefel told CNBC:
Facebook’s management team has created too many adversaries — politicians/ regulators, tech leaders, consumers, and employees — to not experience long-term negative ramifications on its business.
One key issue is how Facebook took “aggressive positions” against rivals and denied key competitors such as Vine access to its data, which shut down shortly after. Facebook CEO Mark Zuckerberg personally approved a decision to block Twitter’s app Vine from accessing users’ Facebook friends lists.
The papers leaked by British MP Damian Collins also showed that Facebook signed deals to give companies such as Netflix and AirBnB special access to user dater and spied on Android users’ calls and texts.
Facebook strongly denied ever selling user data and insisted it only granted these companies “short term extensions” to preserve user experience.
In the midst of the fallout, Zuckerberg was forced to defend himself on Wednesday night, saying in a lengthy Facebook post that the company “never sold anyone’s data”.
The EU is aggressively cracking down on tech monopolies and recently fined Google $5billion for breaching its competition laws. While the EU has so far been silent on the Facebook leak, regulators are certain to be aware of it and will likely investigate whether the social media giant broke any laws, Daily Mail reports.
Politicians from eight world governments investigating the spread of fake news, led by British MP Damian Collins who leaked the papers, will also pile pressure on Facebook to disclose exactly how it monetises user data.
Following the document leak, on Wednesday night, a former Facebook staff described a “toxic and hostile” atmosphere at the company. One former senior employee told Buzzfeed News that workers are desperate for a change of leadership. Another said staff fear being scolded by furious bosses who are “spouting full-blown anti-media rhetoric, saying that the press is ganging up on Facebook.”
Appeal Court Dismisses PDP’s Suit Against Tinubu, Shettima
The Court of Appeal in Abuja has dismissed an appeal by the Peoples Democratic Party (PDP)…