Facebook says it is ending a troubled partnership with Chinese devicemaker Huawei, the latest in an ongoing privacy uproar over agreements that granted dozens of major electronics companies access to (FB) - Get Report user data.
The social media giant admitted to the data-sharing partnerships on Tuesday. The partnerships, which Facebook had maintained with at least 60 device-makers over the past decade, granted a breadth of personal data to companies including Chinese device-makers Huawei, Lenovo, OPPO and TCL. The Huawei partnership sparked particular alarm because Huawei has been labeled a threat by the U.S. intelligence community for its ties to the Chinese government. The data-sharing agreements were revealed in a New York Times report.
Facebook initially brushed off the report, with VP of product partnerships Ime Archibong writing in a blog post that its data-sharing agreements had been necessary to integrating Facebook on older phones, such as Blackberry (BB) - Get Report , by helping them build custom Facebook experiences for their devices. Archibong added that "we are not aware of any abuse by these companies."
Nonetheless, Facebook officials subsequently said they're ending the data-sharing agreement with Huawei by the end of the week. They have provided no specifics on what the end of that agreement would entail, nor any potential timelines for winding down other existing partnerships with device-makers, Chinese or otherwise.
For its part, Huawei said in a statement that they never collected or stored any Facebook user data.
An termination of the Huawei partnership is unlikely to appease many U.S. lawmakers, however. In April, Facebook CEO Mark Zuckerberg was subjected to a two-day grilling on the company's data practices, and some lawmakers suggested this week that Zuckerberg may have misrepresented Facebook's data-sharing practices in the testimony and that the company could have violated a 2011 decree with the Federal Trade Commission.
"These reports further add to Facebook's track record of opacity around privacy practices and call into question whether Facebook violated its 2011 consent decree with the Federal Trade Commission," wrote Sens. Ed Markey of Massachusetts and Richard Blumenthal of Connecticut in a letter.
The specter of increased government regulation has loomed over Facebook for months, and the latest data-sharing flap won't help, writes Daniel Ives of GBH Insights. "The sensitivity of data partnerships with Huawei will add fuel to the fire of those in the Beltway looking to dig deeper into Facebook's data situation."
However, despite an initial dip in Facebook's shares Wednesday, there's no reason to suspect yet that the revelations will significantly damage Facebook's bottom line - its user base and ability to sell ads - in the long term.
"That said, shares have shown a snap back recovery since the Cambridge issue broke as the damage to the company's $50 billion advertising kingdom and 2 billion+ users has been very contained thus far in our opinion," Ives added.
Facebook shares dropped 0.83% on Wednesday to close at $191.34.