In mid-March, The New York Times (U.S.) and The Guardian (U.K.) sent shockwaves across the Internet, saying voter-profiling company Cambridge Analytica harvested private information from Facebook profiles of 50 million users, causing the largest social network to lose tens of billions of US dollars in stocks, suffer unprecedented public pressure in the Western countries and possibly other business damages in the future.
Kogan’s Trap
In 2014, Aleksandr Kogan, an academic at Cambridge University, created an app called thisisyourdigitallife through his company Global Science Research. The app builds psychological profiles of social media users based on their behavior. Once installed, thisisyourdigitallife, just like any other app, collected user details, including location, friend list, and “likes” to posts. In addition, users were paid to take a personality test and agreed to have their Facebook data collected for academic use.
However, Kogan’s app collected information not only from 270,000 users who installed it, but all their friends as well, thus harvesting data of a total of 50 million Facebook users.
Political Profiling
This incident brings up the issue of Facebook’s user data security policy. The world’s largest 2.2 billion user social network has always claimed to be careful about collecting data used to create targeted ads. But Cambridge Analytica, headed at the time by Trump’s key adviser Steve Bannon, used the data for political ends, Western journalists say. The personal information taken without authorization helped build a system that could profile individual U.S. voters, in order to target them with personalized political advertisements and thus push them towards a particular choice.
Most notably, Cambridge Analytica’s data received from Kogan could have allegedly been used by Donald Trump’s team during the 2016 presidential election. Moreover, the company reportedly performed illegal work on the “Brexit” campaign for U.K. conservative opposition.
Facebook’s View
Facebook allows for collecting user data for academic use, but prohibits its disclosure to third parties. Aleksandr Kogan broke this rule by transferring personal data to Cambridge Analytica.
“Protecting people’s information is at the heart of everything we do, and we require the same from people who operate apps on Facebook,” the social media’s representatives said in their blog.
Once the violation was revealed in 2015, Facebook immediately removed Kogan’s app and demanded certifications from Kogan, his colleague Christopher Wylie, and Cambridge Analytica that the information had been destroyed. However, in March 2018, Facebook learnt that not all illegally obtained data was deleted, and then suspended Cambridge Analytica and Kogan from Facebook platform, pending further information. Moreover, Facebook management is considering a legal action against violators.
Mark Zuckerberg did not comment on the incident until March 21, when he finally talked to journalists and apologized to Facebook users for the security negligence. In addition, he admitted that Facebook might need government regulation. After that, nine Sunday papers in U.S. and U.K. published Mark Zuckerberg’s official statement, in which he apologized for the ‘breach of trust’ caused by compromising personal information of millions of users.
Cambridge Analytica’s Response
Cambridge Analytica issued a press release claiming that it neither uses nor holds data from Facebook profiles. At the same time, the company admitted to obtaining data from Kogan, saying that when it became clear that the data had not been gathered in line with Facebook’s terms of service, Cambridge Analytica immediately deleted all data received from Kogan’s company. Moreover, Cambridge Analytica claimed that a year ago, it had completed an internal audit and filed required documents to the Information Commissioner’s Office, a U.K. regulatory body.
On March 20, 2018, Cambridge Analytica suspended its CEO Alexander Nix after his interview secretly recorded by Channel 4, in which he shared that Cambridge Analytica had intervened in elections around the world and took credit for the election of Donald Trump.
Recently, Cambridge Analytica’s acting CEO Alexander Tayler has launched further investigation to make sure that all the data received from Kogan was deleted.
Leak Consequences
In just a week, from March 19 to March 23, Facebook stock price at the New York Stock Exchange dropped from $177.01 to $159.39, with the company’s market capitalization slashed by $58+ billion. Investors fear more pressure on Facebook from regulators and hence customer churn, analysts say. As a result of the leak scandal, a group of shareholders have already brought a class action against Facebook, claiming that the company was lying about its policy and allowed a third party to gain access to personal data of millions of users without their permission.
In addition, over the last few days, Facebook lost several major advertisers, including Commerzbank and Mozilla.
The U.S. Federal Trade Commission (FTC) has also started investigating the leak, Bloomberg says. The FTC can fine Facebook into the millions of dollars if it finds the company violated the user privacy practices. On top of that, several U.S. State Attorneys announced their own probe into the incident.
As a result of the Cambridge Analytica incident, Mark Zuckerberg is now facing an outpouring of criticism on both sides of the Atlantic and is required to appear before both the U.K. Parliament and the U.S. Senate.
In the meanwhile, Internet users have initiated #DeleteFacebook movement, urging people to delete their accounts in the social network that could not ensure their data security, already joined by Brian Acton, the co-founder of WhatsApp, and business magnate Elon Musk who deleted not only his personal Facebook account, but also SpaceX and Tesla pages.
