The social media giant faces scrutiny over its handling of personal information of users, and alleged Russian meddling on its platform in the US elections.
British privacy regulators are seeking a warrant to search the offices of the political consultancy Cambridge Analytica late on Monday, following reports that the company may have improperly gained access to data on 50 million Facebook users.
The move came as US and European lawmakers demanded an explanation of how the consulting firm, which worked on President Donald Trump's election campaign, gained access to the data.
In the US, members of Congress called on Facebook CEO Mark Zuckerberg to testify about Facebook's actions.
Facebook said on Monday it had hired forensic auditors from the firm Stroz Friedberg to investigate and determine whether Cambridge Analytica still had the data.
"Auditors from Stroz Friedberg were on site at Cambridge Analytica's London office this evening," the company said in a statement.
"At the request of the UK Information Commissioner’s Office, which has announced it is pursuing a warrant to conduct its own on-site investigation, the Stroz Friedberg auditors stood down."
Facebook shares closed down nearly seven percent on Monday, wiping around $40 billion off its market value as investors worried that new legislation could damage the company's advertising business.
Also on Monday, it emerged that Facebook head of security, Alex Stamos, planned to leave the company over disagreements about the company's policies on misinformation.
He had been a strong advocate for an aggressive approach to alleged Russian activity on the platform aimed at manipulating elections.
Despite the rumors, I'm still fully engaged with my work at Facebook. It's true that my role did change. I'm currently spending more time exploring emerging security risks and working on election security.— Alex Stamos (@alexstamos) March 19, 2018
Inquiry to start
The criticism of Cambridge Analytica presents a new threat to Facebook's reputation, which is already under attack over Russia's alleged use of Facebook tools to sway US voters with divisive and false news posts before and after the 2016 election.
London-based Cambridge Analytica said it strongly denied the media claims, and that it deleted all Facebook data it obtained from a third-party application in 2014 after learning the information did not adhere to data protection rules.
However, further allegations about the firm's tactics were reported late on Monday by British broadcaster Channel 4 which said it secretly taped interviews with senior Cambridge Analytica executives in which they boasted of their ability to sway elections in countries around the world with digital manipulation and traditional political trickery.
Cambridge Analytica rejected the allegations.
Late on Monday, the Connecticut Attorney General said the office would initiate an inquiry into Facebook data policies.
Facebook said on Friday it had learned in 2015 that a Cambridge University psychology professor lied to the company and violated its policies by passing data to Cambridge Analytica from a psychology testing application he had built.
Facebook said it suspended the firms and researchers involved and said the data had been misused but not stolen, because users gave permission.