Facebook is caught in the middle of a rapidly unfolding scandal over Cambridge Analytica's improper gathering of data on millions of users, and what that exposed about the company's data collection. The fiasco has drawn the interest of lawmakers and regulators and rekindled the debate over its role in the 2016 presidential election.
Why it matters: The bad headlines continued to pile up; "A hurricane flattens Facebook" said Wired, "Silicon Valley insiders think that Facebook will never be the same" per Vanity Fair, "Facebook is facing its biggest test ever — and its lack of leadership could sink the company" from CNBC, and — as we've yet to hear from the company's top leaders — "Where is Mark Zuckerberg?" asks Recode.
- It's not that the reports reveal anything particularly new about how Facebook's back end works — developers have understood the vulnerabilities of Facebook's interface for years. But stakeholders crucial to the company's success — as well as the public — seem less willing to listen to its side of the story this time around.
- Calls for tighter regulation around user privacy and data transparency could completely upend the powerful business models around tech that have, for years, served as lucrative investment opportunities.
- Interest from lawmakers and government officials continues to grow as additional information is released on the details of Facebook's involvement with the Trump-linked data analytics firm. Two state AGs have said they are investigating Facebook's actions.
- Facebook's top two executives have remained silent throughout the ongoing reports while demands for answers from the public and employees alike. Facebook held a meeting Tuesday where employees could ask questions about the Cambridge Analytica issue, but neither Zuckerberg nor Sandberg were in attendance.
- Increased calls for new user privacy regulations could upend the entire social media business model, and create massive ripples for other businesses that rely on that model for their own marketing efforts. That's a big reason why the Dow fell 1.4% Monday, even though Facebook isn't actually part of the Dow.
