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CCTV Script 20/03/18

— This is the script of CNBC's news report for China's CCTV on March 20, Tuesday.

U.S. stocks pulled back on Monday as a decline in Facebook pressured the technology sector.

Facebook fell after reports said political analytics firm Cambridge Analytica was able to collect data on 50 million people's profiles without their consent. the company worked on Facebook ads with President Donald Trump's campaign in 2016.

Shares of Facebook, the social media giant, plummeted as much as 8% during the trading day, eventually closed down by 6.77% but slided another 1.45% during the after-hour trading. Overall, data security concerns from investors weighted on tech stocks. Google's parent company Alphabet declined more than 3%, Twitter was down by 1.69% and Snap was down by 3.47%.

And the selloff was spread across the board. The Dow Jones Average Index went south by 1.35%, S&P was down by 1.42%, and tech-heavy Nasdaq index droppbed by 1.84%.

For Facebook, the overnight decline, which was the biggest one-day drop in 5 years, means a loss of 36.7 billion USD in the company's market cap. But why did the market react this way? Two reasons.

No.1, the size of data that got leaked. Data of over 50 million users of the social network was leaked to the third-party, Cambridge Analytica, without permission. That's one thirds of the total headcount of active Facebook users in the US, and about one fourth of the number of the entire group of American voters. The second reason is the way that data was misued.

Cambridge Analytica worked on Facebook ads for President Donald Trump during the 2016 election. It was initially funded by conservative billionaire Robert Mercer and led by former Trump advisor Steve Bannon. So it's believed that the data was used to study and target voters for political purposes.

[Bob Peck, Head of Global Internet Investment Banking - Credit Suisse] "THEY KNOW AT THE END OF THE DAY, HAVING THE TRUST OF THEIR CONSUMER, IS PARAMOUNT, IS KEY. IF THEY DON'T EARN THAT TRUST EVERY SINGLE DAY, YOU WILL SEE USERS GO OFF THE PLATFORM. SO I THINK LOOK FOR THEM TO TRY AND SELF-REGULATE AS MUCH AS POSSIBLE AS THEY GO FORWARD HERE."

The scandal has generated attention from policy makers, leading market investors worry that more regulation on data securities will be applied to the entire tech sector.

The Massachusetts attorney general said on Saturday her office was launching an investigation on this matter, and the EU will investigate whether the privacy rights of European citizens have been violated by social media companies that may have shared their data illegally, said President of the European Parliament Antonio Tajani on Monday.

In the UK, Cambridge Analytica is already the subject of two ongoing investigations by authorities -- one by the Information Commissioner's Office (ICO), the country's data regulator, and another by the Electoral Commissioner, which is concerned about the role the company may have played in the 2016 Brexit campaign.

It's said that Facebook became aware of the activity in 2015, and ordered the data destroyed by everyone Kogan had shared it with. According to Facebook, Cambridge Analytica claimed to have complied, but Facebook says it became aware this week that "not all data was deleted." Cambridge Analytica claims it did delete the data according to Facebook's request. Facebook has not commented on why it did not publicly disclose the initial abuse. According to the Guardian, a Facebook official testified in hearings before British Parliament last month that Cambridge Analytica did not have Facebook user data.

Till now, neither Mark Zuckerberg nor Sheryl Sandberg has come out to comment on this issue. Meanwhile, Facebook executives are not exactly sending a reassuring message to investors by unloading their shares at a rapid clip.

[Mark Mahaney, RBC Capital] "FACEBOOK GOT BLINDSIDED AND THEY WEREN'T QUICK ENOUGH TO ACKNOWLEDGE IT, THAT THEIR DATA WAS HACKED AND THEIR DATA WAS MISUSED. I THINK THEY NEED TO BE MORE UPFRONT ABOUT THAT. THERE'S NO QUESTION THESE ARE VERY DIFFICULT IT CHALLENGES FOR FACEBOOK.

Now. Facebook is facing these real problems. However, instead of giving answers to those problems, Facebook's top executives are selling, spinning and staying silent.

CNBC's Qian Chen, reporting from Singapore.

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