For Facebook chief executive Mark Zuckerberg, the timing could hardly have been worse. Just as he announced on Wednesday that he would testify to a US Congressional committee regarding the company’s use and protection of data than Facebook had to admit that the total number of users whose data may have been improperly shared was not the 50 million originally estimated but up to 87 million.
Earlier today, Australian regulators launched their own probe into the allegations, and the British Parliament is conducting its own hearings, which Mr Zuckerberg has declined to attend.
The issue of Facebook data protection is the most visible of the troubles crowding in on the tech sector, in particular the so-called FANG companies – the giants Facebook, Amazon, Netflix and Google– for whom the legislative and regulatory climate is becoming distinctly cooler.
Each has specific issues to deal with. Google has been heavily criticised, not least by some of its own employees, for agreeing to work for the Pentagon on an artificial intelligence (AI) project to analyse images collected by unmanned aerial vehicles, or “drones”.
Amazon has just had four advertisements for electronic devices banned by UK regulators, allegedly for misleading consumers as to the scale of the savings on offer.
Netflix has come under fire from anti-Israel campaigners after distributing a political thriller made in that country.
Specific to both Facebook shareholders and those who invest in Google’s parent company Alphabet is the growing danger that the law on both sides of the Atlantic will be changed to treat them as publishers, making them legally liable for the material posted by users on their sites. At present, their position is more akin to a postal or telephone service, not usually deemed responsible for what is carried.
This threat is less relevant to Amazon and Netflix, as both are already classed as distributors of content, but from the investor viewpoint, all four FANG companies face two major political hazards.
One is the allegation that they do not pay their fair share of tax. The European Commission, for example, is proposing a three per cent “tech tax” on digital revenues.
The other is the suggestion that they are, in effect, monopolies, and ought to be broken up. Comparisons are increasingly heard on both sides of the Atlantic with the giant “trusts” of late 19th Century America, the best-known of which was Standard Oil, founded by industrialist John D. Rockefeller. It was broken up in 1911 on the orders of the Supreme Court, and many are suggesting the FANG companies ought to face the same fate.