The Observer and The New York Times reported that UK-based data firm Cambridge Analytica have acquired millions of Facebook users' personal information to build a software that could target potential swing voters in political campaigns, including the 2016 U.S. President Donald Trump's election.
The story broke when the newspapers collaborated with Christopher Wylie, Cambridge Analytica's co-founder and later, a whistle-blower (picture below).
"We exploited Facebook to harvest millions of people's profiles and built models to exploit what we knew about them and target their inner demons. That was the basis the entire company was built on," he said.
The data was gathered since early 2014 using an app called 'thisisyourdigitallife', which was built by a Russian-American researcher at Cambridge University called Aleksandr Kogan. When it was discovered, about 270,000 users agreed to have their data collected and used for academic research in exchange for a small payment.
However, it was later discovered that the app not only collected personal information of those who have downloaded it, but also gathered data from unknowing friends. As a result, more than 50 million Facebook users' data were collected and sent to Cambridge Analytica.
This huge amount of information was then used by the company to create 30 million "psychographic" profiles that could then be used to design targeted political ads.
Two weeks later on March 17th, Cambridge Analytica said that it deleted all data received from Kogan's company, Global Science Research (GSR), when it realized that the data obtained was not in line with Facebook's policies.
Investigations by the U.S. and the FCC raided Cambridge Analytica's London offices, and found no data. And on Kogan's side, he felt scapegoated by Facebook and Cambridge Analytica. "Honestly we thought we were acting perfectly appropriately. We thought we were doing something that was really normal," said Kogan.
But the damage has been done, and Facebook is the one that is hit the worse.
Facebook has lost about $60 billion in stock market value, and governments on both sides of the Atlantic have opened investigations. A social media movement is also calling users to #DeleteFacebook.
The Congress asked Facebook CEO Mark Zuckerberg to testify on the matter. While Facebook rejected the claims that a data breach had happened, it was said that when the harvesting took place, Facebook's policies were still allowing the collection of friends' data through apps, though selling this data to third parties or using it for advertising was not prohibited.
When Facebook found Kogan's company in allegedly violating its policies when it passed users' personal information to Cambridge Analytica in 2015, the app was removed from Facebook. The social giant had been assured that Cambridge Analytica, Kogan, and Wylie had deleted the data.
But still, according to the Observer: "At the time [Facebook] failed to alert users and took only limited steps to recover and secure the private information of more than 50 million individuals".
On behalf of Facebook, Zuckerberg has apologized for what he called a "breach of trust" in full-page newspaper ads in several UK and U.S. newspapers.
In early May 2018. the company announced that it is shutting down, saying that it is losing clients and facing increasing legal fees in the Facebook investigation. Both SCL Group and SCL Elections, which are affiliated with Cambridge Analytica, also are shutting down in the U.S. and the UK.
It's speculated that Cambridge Analytics changes its name to Emerdata, since Emerdata is headquartered at the same offices as SCL Elections with the same management and investors as Cambridge Analytica. It even describes itself as a "data processing, hosting and related activities" organization.
What's more, its director appointed on March 28th is Alexander Taylor, a former acting CEO or Cambridge Analytica. It has also appointed Julian Wheatland who is also a director at SCL.
In October 2018, Facebook was fined £500,000 by the UK Information Commissioner‘s Office. That is roughly 0.001 percent of the company's revenue in 2017, a pocket change to the company that could earn that much in just a matter of minutes. Facebook was only fined that much because the scandal happened before the GDPR took place. Otherwise, Facebook should pay €20 million.
Then in 2019, the Federal Trade Commission (FTC) slammed Facebook with a record $5 billion penalty over the company's involvement in this Cambridge Analytica breach. The FTC settlement also requires Facebook to make changes to its privacy practices and submit itself to more independent scrutiny than ever before.