Shares of Facebook Inc. (FB) fell nearly 3% in pre-market trading on Monday on news that the social media empire could face a fine of more than $1.6 billion from Ireland's Data Protection Commission.
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EU Data Protection Law Charges 4% of Company's Global Revenue
The recent news involves a data breach announced by the Palo Alto Calif.-based company on Friday, in which hackers compromised the accounts of more than 50 million users, reports The Wall Street Journal. Facebook indicated that it had learned about the data breach on Tuesday and had been investigating the incident since. The company first posted a blog on its website reporting the breach, indicating that it is still unclear what information was accessed and whether it was misused.
Under the EU's new General Data Protection Regulation (GDPR), which took effect on June 1, companies that operate in any EU member country must be compliant with new security regulations. Ireland's Data Protection Commission is the independent national authority responsible for upholding the EU fundamental right of individuals to data privacy through the enforcement and monitoring of compliance with data protection legislation for companies operating from there.
If regulators find that Facebook violated the bloc's new policy and that it failed to appropriately protect users, the breach could demonstrate just how costly data hacks will be for social media giants like Facebook moving forward. The new law also requires companies to notify a regulatory body with a detailed account of a data breach within 72-hours. The WSJ suggests that it is still unclear whether Facebook met these requirements, and that the investigation is ongoing.
In March, Facebook shares tanked, costing the company tens of billions of dollars in market capitalization on news that political data consulting firm Cambridge Analytica had stolen information on up to 87 billion users to aid the Trump campaign in the U.S. presidential campaign.
The EU's fine calls for $23 million, or 4% of a company's global revenue in 2017, whichever number is higher. In the case of Facebook, this means the charge could amount to $1.63 billion.
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