×

WRAPUP 3-U.S. FTC to question Facebook over consultancy's access to user data

(Recasts with Facebook saying it expects FTC letter, adds whistleblower invited to House Intelligence Committee interview, detail on stock trading)

SAN FRANCISCO/LONDON, March 20 (Reuters) - Facebook Inc said Tuesday it faced questions from the lead U.S. consumer regulator about how its users' personal data was mined by a political consultancy hired by Donald Trump's campaign.

U.S. and European lawmakers have demanded an explanation of how the consultancy, Cambridge Analytica, gained access to the data in 2014 and why Facebook failed to inform its users, raising broader industry questions about consumer privacy.

Facebook said on Tuesday it had been told by the Federal Trade Commission (FTC) that it would receive a letter this week with questions about the data acquired by Cambridge Analytica. It said it had no indication of a formal investigation.

"We remain strongly committed to protecting peoples information. We appreciate the opportunity to answer questions the FTC may have, Facebook Deputy Chief Privacy Officer Rob Sherman said.

The FTC, the regulatory agency in charge of consumer protection, is reviewing whether Facebook violated a 2011 consent decree it reached with the authority over its privacy practices, a person briefed on the matter told Reuters.

"We are aware of the issues that have been raised but cannot comment on whether we are investigating. We take any allegations of violations of our consent decrees very seriously as we did in 2012 in a privacy case involving Google, an FTC spokesman said.

Under the 2011 settlement, Facebook agreed to get user consent for certain changes to privacy settings as part of a settlement of federal charges that it deceived consumers and forced them to share more personal information than they intended, Bloomberg reported.

If the FTC finds Facebook violated terms of the consent decree, it has the power to fine the company thousands of dollars a day per violation. Facebook will brief U.S. Senate and House aides on Wednesday, congressional staff said. Facebook shares lost 5.7 percent in heavy trading to a six-month low, extending Monday's 7-percent fall, and was set for its worst two-day drop since July 2012. Its market capitalization was down by another $25 billion as investors fretted the world's largest social media network could face massive fines and that its dented reputation could scare off users and advertisers.

Shares of Snap Inc fell 4 percent and Twitter Inc was down 9.6 percent.

Facebook and its peers Alphabet Inc's Google and Twitter face a backlash over their role during the U.S. presidential election by allowing the spread of false information that might have swayed voters toward Trump.

A Congressional official said House Intelligence Committee Democrats plan to interview Cambridge Analytica whistleblower Christopher Wylie. The committee has already interviewed by video teleconference Cambridge Analytica chief Alexander Nix, according to the Congressional official, but a transcript of that interview has not yet been made public.

The White House said the President believes that Americans' privacy should be protected.

"If Congress wants to look into the matter or other agencies want to look into the matter, we welcome that," White House Deputy Press Secretary Raj Shah told Fox News Channel.

PERSONAL INFORMATION

In Britain, the Information Commissioner's Office, an independent authority set up to uphold information rights in the public interest, was seeking a warrant on Tuesday from a judge to search the offices of London-based Cambridge Analytica.

Created in 2013, Cambridge Analytica markets itself as a source of consumer research, targeted advertising and other data-related services to both political and corporate clients.

According to the New York Times, it was launched with $15 million in backing from billionaire Republican donor Robert Mercer and a name chosen by the-then future Trump White House adviser Steve Bannon.

Facebook says the data were harvested by a British academic, Aleksandr Kogan, who created an app on the platform that was downloaded by 270,000 people, providing access not only to their own personal data but also their friends'.

Facebook said Kogan then violated its policies by passing the data to Cambridge Analytica. Facebook has since suspended both the consulting firm and SCL (Strategic Communication Laboratories), a government and military contractor.

Facebook said it had been told that the data were destroyed.

Kogan says he changed the terms and conditions of his personality-test app on Facebook from academic to commercial part way through the project, according to an email to Cambridge University colleagues obtained and cited by CNN.

Kogan says Facebook made no objection, but Facebook says it was not informed of the change, CNN reported. Kogan was not immediately reachable for comment.

"If this data still exists, it would be a grave violation of Facebook's policies and an unacceptable violation of trust and the commitments these groups made," Facebook said.

Cambridge Analytica has denied all the media claims and said it deleted the data after learning the information did not adhere to data protection rules.

(Reporting by David Ingram in San Francisco, Kate Holton and Paul Sandle in London, David Shephardson and Susan Heavey in Washington Additional reporting by Munsif Vengattil Writing by Susan Thomas, Editing by Nick Zieminski)