Facebook, Inc. (Nasdaq: FB) and CEO Mark Zuckerberg are facing more regulatory headwinds this week as Zuckerberg prepares to be grilled by the European Parliament on Tuesday. Analysts are expecting more tough questions for Zuckerberg about what measures the company is taking to protect its users, and one consumer advocacy group is even calling for the break-up of Facebook.
Zuckerberg already testified in from of the U.S. Congress last month, answering questions about how Cambridge Analytica gained unauthorized access to personal data of millions of Facebook users during the 2016 presidential campaign.
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Zuckerberg generally received glowing reviews for his Congressional testimony, but EU regulators have typically been much less forgiving when it comes to online privacy issues. On Friday, the General Data Protection Regulation goes into effect in Europe, which requires companies like Facebook, Alphabet ( GOOG, GOOGL) Amazon.com ( AMZN) and others to gain a much higher level of user consent before collecting, storing and using personal data.
Some groups are calling for regulators to step in and take even more aggressive action to keep users safe. Several consumer advocacy groups, including MoveOn, Demand Progress and Sum of Us, have been petitioning the U.S. Federal Trade Commission to force Facebook to spin off its ownership of Instagram, WhatsApp and Messenger. The “Freedom from Facebook” movement says Facebook “unilaterally decides the news” and “buys or bankrupts” its competitors to maintain its monopoly.
GBH Insights head of technology research Daniel Ives says despite the public backlash to its scandals, damage to Facebook’s business has been “very contained” up to this point. The company reported record revenue and a huge earnings beat in the first quarter. This week, Goldman Sachs reported that Facebook usage actually increased following the Cambridge Analytica headlines.
Still, Ives says Facebook is not out of the woods just yet.
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“This will be a long, winding road with a defining few weeks and months that lies ahead for Facebook and Zuckerberg, with [Tuesday’s] hearing in Brussels kicking off another important chapter to help navigate the treacherous regulatory landscape over the next 12 to 18 months,” Ives says.
GBH Insights has a “highly attractive” rating and $225 price target for FB stock.
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Facebook, Inc. (FB) CEO Mark Zuckerberg Faces His Biggest Challenge Yet originally appeared on usnews.com
