Alphabet Inc.’s (GOOGL - Free Report) Google division has identified a significant security breach, risking the personal information of thousands of Google+ users. Therefore, Google now plans to shut down the consumer version of its social network Google+. This reveals the bitter truth that the series of data breaches at major U.S. companies over the past few years has not seen its end yet.
Following the news, shares of Alphabet were down 1.02%. However, on a year-to-date basis, Alphabet’s shares have returned 9.8% against the industry’s decline of 13.4%.
The Back Story
Google’s data breach story was discovered in March. On Monday, the company said that personal information of at least 500,000 users has been exposed to hundreds of external developers.
Reportedly, Google deliberately did not disclose the issue at the time, in a bid to avoid regulatory scrutiny as well as damaging its reputation. However, there is the likelihood of government investigations and legal action related to the breach.
Therefore, Google plans to shut down the consumer version of its social network, Google+. It has taken certain preventive measures as well.
In this regard, Play Store apps will no longer be allowed to access text message and call logs unless they are the default calling or texting app on a user's device or have an exception from Google. In addition, Gmail add-ons available to consumers starting next year will be barred from selling user data.
However, it goes without saying that the lack of a tight data security system has made important information vulnerable to hackers.
Other Cyber Attacks
There have been instances of cyber attacks on several big companies.
Recently, Facebook’s (FB - Free Report) security was compromised, risking the personal information of more than 50 million users. Reportedly, the data breach may lead to a $1.63-billion fine by the European Union (EU) privacy watchdog, if the company is found to have violated Europe’s strict new privacy law, the General Data Protection Regulation (GDPR). Also, T-Mobile US, Inc. (TMUS - Free Report) announced that it has suffered a data breach that compromised some details of about 3% of its total 77 million users or about 2 million customers.
With cyber security becoming a matter of utmost importance, all companies should regard it as part of their safeguarding strategies and look for more stringent cyber security measures to plug the loopholes in the system.
Google already faces a number of antitrust probes by the U.S. government. Getting embroiled in a security breach again, in the wake of such a tense environment, does not come as a good sign for the company.
Zacks Rank and A Stock to Consider
Currently, Alphabet carries a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector iseXp World Holdings, Inc. (EXPI - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for eXp World Holdings is currently projected to be 10%.
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