The Australian Privacy Commissioner is considering regulatory action against Facebook following revelations that the personal data of 50 million users had been harvested and used to influence the result of the 2016 US election.

An investigative report by The Observer over the weekend revealed the personal data of millions of Facebook users had been passed on to British data analytics firm Cambridge Analytica and then used during its work with Donald Trump’s election campaign.

The data was gathered through a personality quiz on Facebook. The quiz was only used by 270,000, but using the app allowed its owner to also harvest data from each of the users’ friends network, meaning about 50 million Facebook users were impacted.

This data was then handed over to Cambridge Analytica in a violation of Facebook’s rules. The report claims that the personal data was then used to target voters’ “unconscious psychological biases” to influence the 2016 election as part of a “grossly unethical experiment”.

“We exploited Facebook to harvest millions of people’s profiles,” former Cambridge Analytica employee Christopher Wylie said.

“[We] built models to exploit what we knew about them and target their inner demons. That was the basis the entire company was built on.”

Facebook CEO Mark Zuckerberg released a statement on Thursday morning, admitting the tech giant had “made mistakes” with its handling of personal data, and that a “breach of trust” had occurred between the company and its users.

“We have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you,” Zuckerberg said.

“The good news is that the most important actions to prevent this from happening again today we have already taken years ago. But we also made mistakes, there’s more to do and we need to step up and do it.”

More than $77 billion has been wiped off Facebook’s market value in the days following the news reports.

The Australian Privacy Commissioner has launched an investigation into the data harvesting and if it involved any Australians, and is considering regulatory action against Facebook.

“I aware of the reports that users’ Facebook profile information was acquired and used without authorisation,” Privacy Commissioner Timothy Pilgrim said in a statement.

“My office is making inquiries with Facebook to ascertain whether any personal information of Australians was involved. I will consider Facebook’s responses and whether any further regulatory action is required.”

Facebook said it was made aware of the data harvesting in 2015, and had sought assurances from the firm that the personal data had been deleted. But the new reports claim that the data was never scrapped, and was used by Cambridge Analytica during its recent work for the Trump campaign and Brexit vote.

Cambridge Analytica has denied the claims that it did not delete the personal data, and indefinitely suspended its CEO Alexander Nix after a secretly recorded video featuring him bragging about how the firm had influenced elections.

Facebook has denied that the incident is a “data breach” and launched an independent investigation into whether the data still existed, which was put on hold after the UK Information Commissioner’s launched its own inquiry.

“If this data still exists, it would be a grave violation of Facebook’s policies and an unacceptable violation of trust and the commitments these groups made,” the company said in a statement.

“We remain committed to vigorously enforcing our policies to protect people’s information.”

The revelations have led to huge backlash against Facebook’s and its data gathering regulations and security protections, with more than $45 billion wiped from its market value in the day after the story broke.

Politicians from around the world have called for inquiries into Facebook’s data practices, and for CEO Mark Zuckerberg to appear before committees to explain the issues.

The firm at the centre of the controversy, Cambridge Analytica, had plans of “moving into” Australia recently, but the Federal Government and Opposition have both denied that they have worked with the company.

Digital rights groups in Australia have called on all political parties to be more transparent about their interactions with Cambridge Analytica and use of personal data.

“Australian governments are pushing to collect more and more data on Australians, and to link it with larger and larger datasets,” Digital Rights Watch, Electronic Frontiers Australia, the Australian Privacy Foundation and other groups said in a joint statement.

“Australians must be confident that the custodians of our data will look after our best interests, proactively, and with due care and skill.

“We must know that our data is not being collected merely for narrow, self-interested reasons. We must be sure that this data is not being shared without our informed consent.”