Facebook Stock Plunges as FTC Initiates Probe into Data Scandal

The United States Federal Trade Commission has officially opened a probe into Facebook's data practices, according to a statement released by Tom Pahl, Acting Director of the FTC's Bureau of Consumer Protection:

"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."

This isn't the first time FTC has investigated the social network over its abuse of user data. In 2011, the Palo Alto-based technology giant settled charges that it deceived consumers by "telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public". The settlement in particular highlighted the misuse of personal information by third-party apps:

"Facebook represented that third-party apps that users' installed would have access only to user information that they needed to operate. In fact, the apps could access nearly all of users' personal data – data the apps didn't need."

The settlement, in sum, barred Facebook from making further deceptive privacy claims, required it to obtain a user's explicit approval before changing the way it handles their data, and mandated that Facebook obtain periodic assessments of its privacy practices by third-party auditors for the next 20 years. If the FTC finds that Facebook failed to comply with the consent decree it agreed to in 2011, it could be liable for trillions of dollars in fines, according to experts who spoke to The Washington Post.

Facebook stock plunged further following news of FTC investigation and revelations that it records users' call logs without explicit consent, prompting the company to release a statement saying "we never sell this data, and this feature does not collect the content of your text messages or calls."