Facebook Inc. CEO Mark Zuckerberg is planning to break days of silence about his company’s mounting crisis as Washington demands answers over how the personal data of millions of his company’s users could be exploited by a consulting firm linked to President Donald Trump.
Amid bipartisan calls for him testify before Congress and scrutiny by the main U.S. privacy regulator and state attorneys general, Zuckerberg plans to speak publicly before Thursday morning in an effort to regain trust in the company, according to a person familiar with the plans. Further details of the address were still being worked out.
The uproar over Cambridge Analytica, the data firm that consulted on Trump’s campaign, has sparked new questions about how Zuckerberg could allow his network to be abused again for political ends. The stock reversed earlier losses Wednesday and was up less than 1 percent in New York.
Even before the latest revelations, senators had been calling for social media CEOs to testify about their efforts to tackle ongoing meddling on their platforms by Russia, as well as attempts to inflame social debates in the U.S. on issues like gun control. Now, it’s almost certain that some of these CEOs will be summoned for congressional hearings.
Facebook — which saw its stock value plummet by $60 billion since the revelations emerged, sparking an investor lawsuit — had sent lower-level executives to brief several congressional panels on Wednesday, but a snowstorm in Washington resulted in postponements. Even if they resume Thursday, the meetings are unlikely to satisfy lawmakers who are calling for the inquiries to extend to other companies including Twitter Inc. and Alphabet Inc.’s Google.
"There are a lot of forces converging at this moment," said Marc Rotenberg, president of the Electronic Privacy Information Center. "Obviously Cambridge Analytica is a hot button for many people in Washington, and stories that are associated with that company have raised more and more questions."
Cambridge Analytica
The furor started over revelations that Cambridge Analytica had siphoned data from some 50 million Facebook users as it built a election-consulting company that boasted it could sway voters in contests all over the world. While 270,000 users had authorized an academic to use their data for research purposes, according to reports, the researcher allegedly violated privacy rules when he handed the data off to Cambridge Analytica. The firm, which Tuesday suspended its chief executive, Alexander Nix, consulted for Trump’s campaign.
The scandal was fanned by Nix’s comments in an undercover video by London’s Channel 4 News. Nix told the reporters, who posed as potential clients, that the firm’s services included the potential to try to induce targets with bribes, entrapment by prostitutes and spreading disinformation. Cambridge Analytica has said the Facebook data at the center of the uproar wasn’t used as part of services provided to the Trump campaign.
Among the questions that Facebook will likely be asked in Washington are when it became aware that Cambridge Analytica had obtained the data and why users were not notified.
Parscale Tweets
On Tuesday, Brad Parscale, who ran the 2016 Trump campaign’s digital operations and hired Cambridge Analytica as a consultant, tweeted that unnamed people were taking credit for Trump’s victory.
"So incredibly false and ridiculous," he wrote. "Let them say that under oath. Just an overblown sales pitch." Parscale has since been named the manager of Trump’s 2020 re-election campaign.
Scrutiny of the issue is coming from the Federal Trade Commission and the attorney generals of New York, Massachusetts and Connecticut. The FTC is investigating whether Facebook violated terms of a 2011 consent decree with its handling of the data that was transferred to Cambridge Analytica, according to two people familiar with the matter.
Facebook is also planning a conference call with state attorneys general Thursday, according to a company spokesman in Washington, as it further tries to contain the fallout.
FTC Settlement
The FTC, which has a consumer protection mandate, reached that agreement in response to a complaint by EPIC’s Rotenberg. If the trade commission finds Facebook violated terms of the consent decree, it has the power to fine the company more than $40,000 a day per violation, which could open the door to millions of dollars in fines.
An FTC spokeswoman wouldn’t comment on whether the agency was investigating but said that it takes "any allegations of violations of our consent decrees very seriously." The people who described the FTC’s moves asked not to be identified because the details aren’t public.
Facebook has said it rejects "any suggestion of violation of the consent decree."
Without a national privacy law, it falls to attorneys general to enforce state data privacy statutes. New York State Attorney General Eric Schneiderman announced on Tuesday that he and Massachusetts Attorney General Maura Healey had sent a demand letter to Facebook as part of a joint probe stemming from the fallout. Connecticut Attorney General George Jepsen announced his own inquiry on Monday.
European Regulators
Facebook’s mounting troubles don’t end in the U.S. European regulators, concerned with how they can "allow the data on European consumers to flow to this company" could also take action, said Rotenberg.
The chairman of a U.K. parliamentary committee announced Tuesday he was requesting that Zuckerberg appear before the panel to supplement previous testimony by the company’s executives.
Stricter European privacy rules kick in on May 25 under the General Data Protection Regulation. European Union Justice Commissioner Vera Jourova said she plans to discuss the matter with Facebook during a visit in the U.S. this week. Italian telecommunications regulator Agcom also asked Facebook to provide information on its data use.
Australia has also opened an investigation into the matter, according to that country’s Information and Privacy commissioner, Timothy Pilgrim.
Congressional Briefings
In Washington, Facebook said it would conduct staff-level briefings of six congressional committees, including the House and Senate Judiciary committees, as well as the commerce and intelligence committees of both chambers. A key question will be their appetite for a public appearance by the company’s leadership, especially Zuckerberg. The Facebook officials set to handle the briefings include the company’s deputy general counsel and deputy chief privacy officer, said a congressional official.
Senator Mark Warner of Virginia, the top Democrat on the Senate Intelligence Committee, said he wants to hear testimony from Zuckerberg, while Senator Richard Burr, a North Carolina Republican and the chairman of the Intelligence Committee, said any decision about calling Zuckerberg to appear before the panel is further off.
Senators Amy Klobuchar, a Minnesota Democrat, and John Kennedy, a Louisiana Republican, repeated their bipartisan call Monday for testimony by the CEOs of Facebook, Twitter and Alphabet before the Judiciary Committee.
The growing issues surrounding big social media companies "aren’t going away," Kennedy told Bloomberg TV Tuesday. "Mr. Zuckerberg and the other CEOs need to come," he added. "Some of Facebook’s behavior has kind of gotten creepy."
Republican Senator Susan Collins of Maine, who also serves on the Senate Intelligence Committee, said Tuesday that she has "grown increasingly concerned as we’re learning more and more about the manipulation of data, the harvesting of data from Facebook, the ads that were placed to sow the seeds of discord in this country."
White House spokesman Raj Shah demurred on Tuesday when asked if Zuckerberg should testify, but he said Trump supports investigations by Congress or the FTC into the incident.
This article was provided by Bloomberg News.
