Facebook stock has dropped as much as 3.5%, dragging the Nasdaq lower as it faces "more systemic problems" according to Pivotal research, following reports over the weekend associated with a data leak that exposed about 50 million user accounts, raising risks of regulatory controls for the social media platform and hampering advertising growth.

According to Pivotal analyst Brian Wieser, Facebook reports raise risk to the enhanced use of data in advertising, as well as opens up third-party measurement partners to increased restrictions, which may frustrate advertisers. Still, Pivotal remains bullish as it sees no near-term tangible impact on the business, as advertisers aren’t likely to “suddenly change” their spending growth trajectory.

It may have to reconsider however, following the latest report from research company eMarketer, which in its latest report predicts the combined U.S. digital ad market share of Google and Facebook will fall for the first time this year, shrinking to 56.8% from 58.5% last year, the WSJ reported. This however should be offset by overall digital ad spending in the US, which is likely to grow nearly 19% to $107 billion in 2018.

Google and Facebook have long dominated the U.S. digital advertising market for years, earning them the title of “the digital duopoly” and leaving competitors scrambling for crumbs. But now there are signs that platforms like Amazon and Snapchat are chipping away at their market share. And while the dupoloy is still increasing its total ad revenue significantly, and no other competitor even cracks 5% market share, the smaller rivals are growing more quickly than expected and are seeking a larger share of the pie.

Putting the numbers in context, Google’s U.S. revenue from digital advertising is expected to increase about 15% this year to $39.92 billion, while Facebook’s would jump 17% to $21 billion, according to eMarketer’s forecast. That would give Google command of 37.2% of the market, down from 38.6%. Facebook’s market share will likely be 19.6%, down from 19.9%, the first time eMarketer has projected such a decline for the social-media company. Google’s market share contracted for the first time in 2016.

Of course, in a recession, where ad spending is whacked first, all bets are off.

Finally, in the latest red flag that Facebook may have even more problems going forward, Reuters reported moments ago that according to the European Commission, if confirmed the misuse of Facebook personal data for political purposes would be unacceptable. And since quietly selling discrete and highly targetable user data to advertisers is Facebook's biggest draw, any material changes to its advertising model could have a drastic impact on its revenue growth, and thus "prices to perfection" stock price, which as we reported yesterday is trading off 2018P non-GAAP EPS of $8.388 resulting in a generous forward P/E of 25.6x.