Facebook's Zuckerberg to break silence as global scrutiny grows

Facebook Inc. CEO Mark Zuckerberg is planning to break days of silence about his company’s mounting crisis as governments around the world question how the personal data of millions of his company’s users could be exploited by a consulting firm linked to President Donald Trump.

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. An open address would follow bipartisan calls for him to testify before Congress, scrutiny by the main U.S. privacy regulator and state attorneys general and the possibility of extensive probes in Europe. Details of Zuckerberg plan’s were still being finalized Wednesday afternoon.

The uproar over Cambridge Analytica, the data firm that consulted on Trump’s campaign, has sparked new questions about how Zuckerberg could allow his social network to be abused again for political ends. The stock reversed earlier losses Wednesday and was up about 2 percent in New York.

Global Concerns

Facebook’s mounting troubles don’t end in the U.S. Regulators in the European Union will launch investigations "in case they find out that privacy rules and the rights of people in their states have been or might have been breached," said EU Justice Commissioner Vera Jourova in an interview with Bloomberg TV Wednesday.

EU authorities on Wednesday vowed to collaborate as needed and a U.K. watchdog has opened an investigation. EU leaders will gather in Brussels tomorrow and Friday. Country-level regulators in the 28-member union could also opt to open their own probes.

"I am not happy at all about this case," said Jourova, who said she had discussed the Facebook incident with U.S. Commerce Secretary Wilbur Ross and was meeting with federal consumer protection officials during a visit to Washington Wednesday. She said she had hoped also to meet with Facebook representatives, but the meeting was canceled due to a snowstorm and she expects to meet with them soon in Brussels. "This is about a threat to democracy and individual freedoms," she said.

Italian telecommunications regulator Agcom also asked Facebook to provide information on its data use and Australia has opened an investigation into the matter.

Even before the latest revelations, U.S. senators had been calling for social media chief executive officers 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 had sent lower-level executives to brief several congressional panels on Wednesday, but the snowstorm 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.

Facebook’s rally on Wednesday snapped two days of losses that erased almost $50 billion in market value amid mounting doubts about the damage to the company. The shares rose 2.2 percent to $171.87 at 2:02 p.m. in New York.

Scrutiny of Facebook’s privacy practices is coming from the U.S. 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.
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. Meetings at the House Judiciary Committee and Senate Commerce Committee have been postponed because of the weather, and others might be moved, people familiar with the scheduling said. The House Energy and Commerce committee is still planning a briefing Wednesday, according to a person familiar with the matter.

The briefings will focus on what happened and changes that Facebook has made, including ending developers’ access to the data of friends of those who consent to share their information, according to another person familiar with the talks. Both of the people asked not to be named because the discussions are confidential.

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.