Date
20 July 2018
CEO Mark Zuckerberg said Facebook had not seen “any meaningful impact” on usage or ad sales since the scandal. Photo: Bloomberg
CEO Mark Zuckerberg said Facebook had not seen “any meaningful impact” on usage or ad sales since the scandal. Photo: Bloomberg

Facebook shares rise as Zuckerberg soothes investors

Shares of Facebook Inc. rose as much as 4.2 percent on Thursday after chief executive Mark Zuckerberg said the social network has not seen any meaningful impact on usage or ad sales in the wake of a data privacy scandal, Reuters reports.

Facebook said the personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica, up from a previous news media estimate of more than 50 million.

Zuckerberg said in a conference call with reporters that Facebook had not seen “any meaningful impact” on usage or ad sales since the scandal, although he added, “it’s not good” if people are unhappy with the company.

He also said he was not aware of any discussions on the Facebook board about him stepping down, although directors would face a challenge if they wanted to oust him because Zuckerberg is the controlling shareholder.

He said he had not fired anyone over the scandal and did not plan to. “I’m not looking to throw anyone else under the bus for mistakes that we made here,” he said.

Zuckerberg will testify about the matter next Tuesday and Wednesday during two US congressional hearings.

London-based Cambridge Analytica, which has counted US President Donald Trump’s 2016 campaign among its clients, disputed Facebook’s estimate of affected users. On Wednesday it said on Twitter it had received no more than 30 million records from a researcher it hired to collect data about people on Facebook.

The company’s shares have sunk 16 percent, wiping more than US$80 billion from its market value since March 16, when the New York Times and London’s Observer newspaper broke news of the use of its data by political consultancy Cambridge Analytica.

Some investors see the chaos as a chance to snap up shares in a service for which there is scarce alternative.

Canada’s province of British Columbia and Canada’s federal government combined investigations on Thursday, saying they had launched a joint probe into Facebook and Canadian data firm AggregateIQ, while Australian authorities said they were exploring whether the social media company had breached user privacy laws.

The California State Teachers’ Retirement System, with nearly US$1 billion in Facebook stock as of last year, also said it would question the company about privacy protections.

Despite the probes and celebrities including singer Cher, actor Will Ferrell and Tesla Chief Elon Musk deleting their accounts, Facebook’s social app downloads improved on a monthly basis both in the US and globally, according to Evercore ISI.

Facebook expanded its share of social app downloads in March by 33.2 percent from 30.1 percent, Evercore data showed.

Several Wall Street analysts said the stock’s decline presented a good opportunity to buy into the social network’s previously high-flying shares, although they cautioned that much will depend on Zuckerberg’s testimony to Congress.

“We suspect that looking back a year from now, if not sooner, this episode will have been a uniquely compelling buying opportunity in the mega-cap internet space,” Deutsche Bank analysts said.

Facebook’s chief operating officer, Sheryl Sandberg, told Bloomberg in an interview that a few advertisers had paused spending in the wake of the incident, but that the company was having reassuring conversations about how it has built privacy into its system.

Companies including US auto parts retailer Pep Boys, internet company Mozilla and German bank Commerzbank AG have suspended advertisement on the platform.

Sandberg also said a tool that allowed a researcher to gain access to personal information, complied with a privacy agreement the company signed with the US Federal Trade Commission (FTC) in 2011.

Her comments followed reports that the FTC was investigating the company over a possible violation of that agreement, which demands it to get user consent before sharing their information.

“While it’s clear that investor sentiment has been materially impacted by [the] Cambridge Analytica revelations, we believe FB is acting proactively and aggressively to tighten its privacy controls and increase the level of transparency into its practices,” Wells Fargo analyst Ken Sena said.

– Contact us at [email protected]

CG

EJI Weekly Newsletter

Please click here to unsubscribe