Facebook Chief Executive Mark Zuckerberg's apology for mishandling user data and some limited proposals for change at the social network drew mixed responses on Thursday, while Wall Street analysts worried about costs and a loss of trust.
Another pair of major brokerages cut price targets for a stock that has shed around $50 billion (roughly Rs. 3.25 lakh crores) in value since Monday. Shares in the company fell as much as 2.5 percent in heavy trading.
In Washington, Zuckerberg's media rounds did little to satisfy lawmakers in either political party who demanded this week the billionaire testify before Congress.
Facebook was expected to brief two additional congressional committees on Thursday. Executives met with staff for the House Energy and Commerce Committee on Wednesday for nearly two hours to discuss the allegations of improper use of data on 50 million users by political consultancy Cambridge Analytica.
Facebook Deputy Chief Privacy Officer Rob Sherman and other executives were unable to answer many questions at Wednesday's meeting, according to two aides who were present.
The Facebook executives said they had written down a list of 60 questions they pledged to answer, the aides said.
Zuckerberg on Wednesday promised tougher steps to restrict developers' access to user information, his first response to allegations that London-based Cambridge Analytica improperly accessed data to build profiles on American voters that were later used to help elect US President Donald Trump in 2016.
Wall Street analysts expressed relief that there were no signs in the chief executive's status update or in subsequent interviews of a more fundamental shift in the company's advertising-driven revenue model.
Some analysts, however, said it was clear the company would have to carry extra costs to shore up its reputation in the months ahead.
Stifel analyst Scott Devitt cut his price target on Facebook by $27 to $168, while BofA Merrill Lynch slashed its target by $35 to $230. The stock fell 2 percent to $166.05.
"Facebook's current plight reminds us of eBay in 2004 - an unstructured content business built on trust that lost that trust prior to implementing policies to add structure and process," Devitt said.
"We would buy all of our Buy-rated stocks and many of our Hold-rated stocks before we would buy Facebook shares."
Trump's use of social media
Amid the storm, Trump took to Twitter to boast about his successful use of social media in the 2016 campaign.
"Remember when they were saying, during the campaign, that Donald Trump is giving great speeches and drawing big crowds, but he is spending much less money and not using social media as well as Crooked Hillary's large and highly sophisticated staff. Well, not saying that anymore!," he tweeted.
Steve Bannon, who ran Trump's campaign before falling out with the president last year, speaks at a Financial Times event on the "Future of News: Trust, Technology and Transformation in an Age of Upheaval" later on Thursday.
Zuckerberg said the social network would disable access to their Facebook data more easily.
Analysts said that Zuckerberg's promises to investigate thousands of apps, and to give members a tool that lets them turn off access, would not substantially reduce advertisers' ability to use Facebook data - the company's lifeblood.
Open-source browser and app developer Mozilla said late on Wednesday it was suspending advertising on Facebook.
"We found that its current default settings leave access open to a lot of data - particularly with respect to settings for third-party apps," Mozilla said in a blog post. It would consider returning if Facebook strengthens its default privacy settings for third-party apps.
The Times newspaper reported that British advertising group ISBA, which represents thousands of well-known brands, had threatened to withdraw ads if probes show user data was misused.
Asked about the Trump administration's concern over the data use and getting answers from Facebook, White House legislative director Marc Short said it was up to the company and Congress to work together in the wake of the revelations.
"Of course we're concerned about that ... but at end of day Congress is the one that will make the request," Short told MSNBC in an interview, adding that lawmakers could subpoena the company if it does not comply.
"If it comes to a point that there's not cooperation, then I'm sure you'll see the White House weigh in," he said, adding that he has not spoken to Trump about the issue.
© Thomson Reuters 2018
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