In response to a New York Times article, Facebook (FB - Free Report) cleared in a blog post that it gave companies access to user information with their consent, and did not violate its 2012 Federal Trade Commission (FTC) settlement.
Notably, companies like Netflix (NFLX - Free Report) , Spotify, Amazon (AMZN - Free Report) , Apple and the Royal Bank of Canada had read, write and delete access to the users private messages only when they chose to login into Facebook through one of these apps/platforms.
The partnerships were aimed at allowing users to directly share information with their friends from the respective apps/platforms. Information such as what music they were listening to or what Netflix shows they want to recommend were allowed to be shared.
Therefore, in order to support users messaging capabilities these partners had read, write and delete access to users’ private messages, per Facebook.
Additionally, the company offered instant personalization feature to select partners from 2010 to 2014. When registered with other websites such as Rotten Tomatoes or Yelp instant personalization allowed Facebook users to access their friend’s public information.
However, even after the service was closed the respective application program interface (APIs) were not shut down. Although Facebook cited that it had no evidence of any user data misuse, the company’s negligence toward users’ data safety remains a concern.
A Look at Major Data Breaches
Facebook has been involved in many data privacy issues this year. It all started with the Cambridge Analytica scandal, which affected 87 million users in March 2018.
In September 2018, Facebook was embroiled in another security breach, where personal information of 30 million users was compromised. This data breach may have reportedly led to a $1.63 billion fine by the European Union (EU).
Recently, a software bug gave outside developers access to photos of 6.8 million users. These photos were either not posted or they have been posted in the Marketplace or Facebook Stories section instead of their timeline.
Although Facebook is making significant investments to strengthen security on the platform, its repeated failure to secure user data is expected to hurt growth in user base, thereby negatively impacting ad dollars. Notably, advertising revenues accounted for 92% of third-quarter 2018 revenues.
Also, Facebook’s popularity is on decline, while its competitor Snap (SNAP - Free Report) is gaining traction among younger users.
Facebook, Inc. Revenue (TTM)
Nevertheless, this Zacks Rank #3 (Hold) company’s effort to bring in new features that will keep the users further engaged with this platform is encouraging.
Facebook is boosting content for Watch, its video streaming service. Additionally, the company is reportedly testing “Watch Videos Together” — a co-viewing video feature — for its Messenger platform. Few other notable features include its introduction of Learn with Facebook and roll out of Facebook Dating in Colombia.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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