A federal appeals court in San Francisco, California has ruled that a lawsuit claiming that Facebook Inc (NASDAQ: FB) neglected its responsibility to protect user data, can proceed.
“From a policy standpoint, to hold that Facebook has no duty of care here ‘would create perverse incentives for businesses who profit off the use of consumers’ personal data to turn a blind eye and ignore known security risks,” ruled U.S. District Judge William Alsup on Friday, June 21.
Facebook had sought to have the lawsuit dropped, arguing that it was not liable for hackers gaining access to user names and contact information. The Silicon Valley giant had portrayed itself as the victim of a sophisticated cyber attack, arguing that users did not suffer any real harm since the hackers failed to gain access to more sensitive data, such as passwords and credit card numbers.
The data breach, which occurred in September last year, affected close to 30 million Facebook users. Unknown hackers exploited several software bugs to access personal data of 50 million users, which the company later adjusted to 30 million.
Facebook has already been fined $280,000 over data breach by Turkey’s Personal Data Protection Authority. The data breach affected approximately 300,000 people in Turkey. California-based Facebook is also facing a fine of between $3 billion to 5 billion from the U.S. Federal Trade Commission (FTC) over data privacy scandals.
Earlier this year, the company disclosed yet another security breach, admitting that hundreds of millions of Facebook and Instagram users’ passwords had been stored in plaintext.
Shares of Facebook, which ended Monday’s regular session with a gain of 0.76% to $192.60, were little changed in after-hours trading hours. The stock has rallied more than 46% since the beginning of the year.
Facebook Inc Profile
Facebook is the world’s largest online social network, with more than 2 billion monthly active users. Users engage with each other in different ways, exchanging messages and sharing news events, photos, and videos.
On the video side, the firm is in the process of building a library of premium content and monetizing it via ads or subscription revenue. Facebook refers to this as Facebook Watch.
The firm’s ecosystem consists mainly of the Facebook app, Instagram, Messenger, WhatsApp, and many features surrounding these products. Users can access Facebook on mobile devices and desktop.
Advertising revenue represents more than 90% of the firm’s total revenue, with 50% coming from the U.S. and Canada, and 25% from Europe. With gross margins above 80%, Facebook operates at a 40%-plus margin. – Warrior Trading News