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Facebook, Inc. (NASDAQ:FB) In Trouble For Sharing Data With Chinese Company

The social media giant has data partnerships with four electronic manufacturers from China including Huawei which has been flagged as a security threat by U.S Intelligence officials. Huawei is believed to have a close relationship with the Chinese government which is why it is seen as a national security threat by U.S officials who have been worried about Huawei devices being used to spy on American secrets.

Facebook entered into the data sharing partnerships as early as 2010 and the other Chinese companies involved are TCL, Oppo and Lenovo. The partnerships are still ongoing despite the concerns expressed by security officials in the U.S but Facebook reported in a recent interview that it will terminate its deal with Huawei.

Facebook also provides data access to other companies including Samsung Electronics, Amazon.com, Inc. (NASDAQ:AMZN), BlackBerry Ltd (NYSE:BB), and Apple Inc. (NASDAQ:AAPL) among others. Most of the companies are smartphone manufacturers while others such as Amazon collect data to improve their digital and online services.

Such deals allowed Facebook to secure an early lead in the mobile market as early as 2007 even before mobile phone apps became popular. However, things really took off well when the onset of smartphones Facebook officials revealed that the deals with Chinese manufacturers granted provided it with access that is similar to what Blackberry had been offering. This means the company could collect detailed information on user devices and also on all their friends. The information collected includes relationship status, education history, work and interests.

The social media giant also told U.S intelligent officials that the data it provided to Huawei was stored on phones and not on its servers. According to Virginia’s Senator Mark Warner, this is not the first time that there has been concerns about Huawei. He stated that there was a previous report by the House Intelligence Committee in 2012 regarding the close relationship between electronic manufacturers such as Huawei and China’s Communist Party.

Huawei reportedly received millions of dollars in funding from China’s policy banks in order for it to expand its business across Africa, Europe, and South America. Huawei’s founder Ren Zhengfei also happens to be a former engineer for the People’s Liberation Army.

Warner stated that he was eager to know more about how Facebook made sure that user information was not sent to Chinese servers. Facebook vice president Francisco Varela defended the company stating that all of the integrations between Facebook and the four Chinese companies were controlled from the beginning and that the company made sure that it approved everything that was constructed.

The recent concerns about how Facebook has been handling data come just a few weeks after its CEO, Mark Zuckerberg was questioned by government officials about the firm’s involvement with Russians who are believed to have meddled with the U.S Presidential elections. However, the company managed to get out of that situation although Zuckerberg had to answer a lot of questions.

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Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider.