Tech shares plunge amid data scandal
Privacy problems raise concerns over third-party use of information
Share prices of Chinese technology firms plunged on Tuesday following reports that a UK-based political research organization had harvested information from 50 million Facebook profiles without user consent.
E-commerce giant Alibaba Group Holding Ltd saw its share prices drop by 2.87 percent on the New York Stock Exchange on Monday, while JD fell by 1.82 percent on the Nasdaq stock market. Shares of search major Baidu Inc also fell by 3.64 percent.
The losses in the US bourses filtered down to the Asian markets also, with prices of some internet companies listed on the A-share market witnessed declines. Share prices of 360 Security Technology Inc fell by 1.26 percent to 46.61 yuan ($7.36) on the Shanghai Stock Exchange on Tuesday.
Cambridge Analytica, a UK-based data analytics firm that allegedly helped US President Donald Trump get elected, accessed Facebook user data without users’ permission, according to a report from the New York Times.
“Facebook’s privacy scandal shows that some US technology companies sacrifice their users’ interests to meet the demands of political intervention and manipulation both at home and abroad,” said Shen Meng, director of boutique investment bank Chanson & Co.
“Chinese big data companies are continuously improving their users’ information protection systems,” Shen said, adding that tech companies should build firewalls internally to isolate direct links between user data collection departments and other operating departments.
Facebook’s latest privacy scandal also sent its stock into a downward spiral, with the company seeing its biggest single-day drop in four years. Its share prices fell 6.8 percent on Monday, which lopped nearly $40 billion off its market value.
In addition, shares of prominent tech companies including Amazon.com Inc, Apple Inc, Microsoft Corp and Alphabet Inc all saw declines.
“The scandal has raised concerns about how companies manage third-party access to users’ information, and has fueled fears of tightening regulatory control on the technology sector,” said Zhong Xinlong, a consultant at Chinese research company CCID Consulting.
“Big data security is one of the key research topics in the development of China’s big data industry.”
“A growing number of companies are expanding their businesses related to big data, which contains huge amounts of personal identifiable information. Adequate access control mechanisms are required to protect the data,” Zhong added.