The stock market perhaps isn’t the best tool for holding corporations accountable, but this is some good news:
Facebook long had a knack for navigating privacy controversies related to its collection of user data. But the cost of its missteps finally caught up with Facebook this week, sending its stock down more than $100 billion Thursday in the largest drop in value in Wall Street history.
Long-simmering privacy concerns, dating to nearly the birth of the company in a Harvard dorm room in 2004, have in recent months taken more concrete form than ever. In May, European regulators imposed a strict new regulatory regime. U.S. officials, meanwhile, have begun scrutinizing Facebook in a multi-agency federal investigation related to its handling of a recent scandal that exposed the information of 87 million people.
Worries about the rising costs of privacy regulations, along with declining growth in users and revenue, played a key role in a major Wall Street selloff Wednesday night and Thursday. Facebook’s stock closed down 19 percent, at its lowest level in nearly three months. The steepness of the decline suggests investors are reevaluating the viability of Facebook’s core business — collecting extensive data on users so that they can better target them with advertising — in a world in which political pressure is mounting for stricter privacy protections.
This is important. Facebook is ubiquitous. Rather than living in secluded cabins in the woods, we should hold them accountable for their massive violations of users’ privacy rights. If Facebook is hit where it hurts (its pocketbook), perhaps it will start taking privacy a bit more seriously.