Facebook shares sank last night as concerns about its ability to safeguard user data sparked a government lawsuit, criticism in the US Congress and a New York Times report on how it had shared data with other companies.
The stock of the world's largest social media company fell 7.25%, its biggest intraday drop since July, taking losses for the year to about 24%.
Investors are concerned about snowballing legal and regulatory efforts over data use polices that have upset many customers and could carry significant penalties and costs.
In particular, Facebook has drawn global scrutiny since disclosing earlier this year that a third-party personality quiz distributed on Facebook gathered profile information on 87 million users worldwide.
The third party then sold that data to UK political consulting firm Cambridge Analytica.
Washington DC Attorney General Karl Racine said the US capital city was suing Facebook, accusing it of misleading users because it had known about the incident for two years before disclosing it.
It further alleges Facebook misled users by allowing several app makers it called partners "to override Facebook consumers' privacy settings and access their information without their knowledge or consent."
Facebook said in a statement, "We're reviewing the complaint and look forward to continuing our discussions with attorneys general in DC and elsewhere."
The New York Times reported new details on Tuesday about the user data that remained available to such partners years after they had shut down features that required them.
Facebook acknowledged the lapse in a blog post but said it had not found evidence of wrongdoing by those partners.
In response, both Democrat and Republican lawmakers criticised the company and queried whether chief executive Mark Zuckerberg had lied to Congress in hearings earlier this year.
Last night's stock slide was the worst since the owner of Facebook, WhatsApp and Instagram warned in July that profit margins would erode in coming years because of consumer and government pressure to better guard data and suppress objectionable content.
Facebook offered separate privacy settings around 2013 to control what friends on the network could see and what data could be accessed by apps, enabling the quiz and other services to collect details about users' Facebook friends without many of them realizing it, according to the lawsuit.
The UK data protection authority in July fined Facebook £500,000 for breaches of data in the Cambridge Analytica incident.
Since then, Facebook has disclosed a pair of security breaches involving profile data and posts of up to 29 million users and 6.8 million users, respectively.
At least six US states have ongoing investigations into Facebook, according to state officials.
