Facebook shares has taken a sharp fall one day after documents incriminating the tech giant were leaked.
As the stock markets opened today, the company’s shares opened around 2.5 per cent down, wiping about $9.5billion out of the company’s $379billion value.
This comes one day after a document leak which shows that Facebook used its platform to cripple rivals, aggressively pursued competitors, and leverage developers for advertising money, setting up conflicts with regulators and politicians around the globe.
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 document leak, stock investment firm Stiefel downgraded Facebook’s shares from “buy” to “hold” ahead of markets opening in New York, saying the company has made “too many adversaries” for its business to thrive.
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.”