Shares of Facebook cratered as much as 6 percent Monday after the Federal Trade Commission announced it is investigating the company's data practices in the wake of the Cambridge Analytica leak of 50 million users' information.
"The FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices," the agency said in a statement.
The FTC declined to confirm last week that it was investigating Facebook, including whether it violated a consent decree the tech company signed with the agency in 2011.
The decree required that Facebook notify users and receive explicit permission before sharing personal data beyond their specified privacy settings.
A violation of the consent decree could carry a penalty of $40,000 per violation.
"We remain strongly committed to protecting people's information. We appreciate the opportunity to answer questions the FTC may have," Rob Sherman, deputy chief privacy officer for Facebook, said in a statement to CNBC.
Facebook is facing questions over its data handling following reports that research firm Cambridge Analytica improperly gained access to the personal data of more than 50 million Facebook users.
Facebook's stock shed more than 13 percent in the five days of trading following the initial reports.
Monday morning the stock briefly fell into bear market territory, more than 20 percent off its 52-week high, before paring losses. By early afternoon it was down less than 2 percent.
The FTC is firmly and fully committed to using all of its tools to protect the privacy of consumers. Foremost among these tools is enforcement action against companies that fail to honor their privacy promises, including to comply with Privacy Shield, or that engage in unfair acts that cause substantial injury to consumers in violation of the FTC Act. Companies who have settled previous FTC actions must also comply with FTC order provisions imposing privacy and data security requirements. Accordingly, the FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook. Today, the FTC is confirming that it has an open non-public investigation into these practices.