Editor: Philip Ragner | Tactical Investor

Cambridge Analytica and Facebook: The scandal so far

Whistle-blower Christopher Wylie told a UK parliamentary committee there could have been a different Brexit referendum outcome had it not been for “cheating” by proponents wanting to leave the European Union.

Here’s a breakdown of the fast-developing story so far:

On March 17, the London Observer and The New York Times reported that UK-based data firm Cambridge Analytica acquired millions of Facebook users’ personal information to build software that could target potential swing voters in political campaigns, including US President Donald Trump‘s 2016 election bid.

The newspapers broke the story with the help of Cambridge Analytica’s co-founder and now whistle-blower Christopher Wylie.

“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 told the Observer.

The data his firm used was reportedly gathered in early 2014 through an app called “this is your digital life”, which was built by a Russian-American researcher at Cambridge University called Aleksandr Kogan.

About 270,000 users agreed to have their data collected and used for academic research in exchange for a small payment. The Times reported Cambridge Analytica covered the costs of the app, more than $800,000.

However, the app not only collected personal information from the people who downloaded it, but also of unknowing friends.

Kogan provided information from more than 50 million Facebook users to Cambridge Analytica, which was used by the company to create 30 million “psychographic” profiles that could then be used to design targeted political ads. Full Story

The Facebook–Cambridge Analytica data scandal

Involves the collection of personally identifiable information of 87 million Facebook users^[1] and reportedly a much greater number more^[2] that Cambridge Analytica began collecting in 2014. The data was allegedly used to attempt to influence voter opinion on behalf of politicians who hired them. Following the discovery, Facebook apologized amid public outcry and risen stock prices. The way that Cambridge Analytica collected the data was called “inappropriate”.^[3]

In December 2015, The Guardian reported that the United States Senator Ted Cruz

Was using data from this scandal and that the subjects of the data were unaware that companies were selling and politicians were buying their personal information.^[4] In March 2018, The New York Times, The Guardian and Channel 4 News made more detailed reports on the data scandal with new information from former Cambridge Analytica employee Christopher Wylie, who provided clearer information about the size of the data collection, the nature of the personal information stolen, and communication among Facebook, Cambridge Analytica, and political representatives who hired Cambridge Analytica to use the data to influence voter opinion.^[5]^[6]

The scandal was significant for inciting public discussion on ethical standards for social media companies, political consulting organizations, and politicians. Consumer advocates called for greater consumer protection in online media and the right to privacy as well as curbs on misinformation and propaganda.

Cambridge Analytica stated that the data obtained from Kogan was not used in the 2016 presidential campaigns of Donald Trump, and Ted Cruz. Full Story

The Cambridge Analytica files story so far

The data analytics firm used personal information harvested from more than 50 million Facebook profiles without permission to build a system that could target US voters with personalised political advertisements based on their psychological profile, according to Christopher Wylie, a former Cambridge Analytica contractor who helped build the algorithm. Employees of Cambridge Analytica, including the suspended CEO Alexander Nix, were also filmed boasting of using manufactured sex scandals, fake news and dirty tricks to swing elections around the world.

The social media company has received a number of warnings about its data security policies

In recent years and had known about the Cambridge Analytica data breach since 2015, but only suspended the firm and the Cambridge University researcher who harvested user data from Facebook earlier this month.

A former Facebook manager has warned that hundreds of millions of users are likely to have had their private information used by private companies in the same way. On Sunday, Facebook ran adverts in several major UK and US newspapers apologising for the data breach and said it was investigating other applications that had access to large amounts of user data.

What has been the reaction to the scandal?

Investigators from Britain’s data watchdog raided Cambridge Analytica’s London offices over Friday night, and the main consumer protection body in the US is reported to have opened an investigation into whether Facebook has violated privacy agreements. Billions of dollars have been wiped off Facebook’s stock market valuation this week as a growing #DeleteFacebookmovement and regulatory fears have spooked investor. Full Story

What else do we know about Cambridge Analytica?

The company’s ownership has come under the spotlight. In the US, it is backed by the Mercer family, who threw their weight behind Donald Trump in his run for president. In the UK, the company is linked with SCL Group. The government says it no longer has any contracts with SCL, but that it has worked with it in the past, while both Labour and the Conservatives were in power.

It has emerged that SCL was given access to confidential documents when working for the Ministry of Defence. It was paid almost £200,000 for carrying out two separate projects.

SCL Group has a number of Conservative donors among its shareholders and directors – one told the Guardian he had refused a request to introduce the firm to the party.

How have politicians and regulators responded?

Politicians around the world have expressed their concerns about the revelations and declared their intention to scrutinise the companies involved.

In the UK, MPs on the digital, culture, media and sport committee have accused Facebook of misleading it in a previous evidence session and called for Mark Zuckerberg to appear before them to answer questions. They have also recalled Nix.

The information commissioner applied for a warrant to access information from Cambridge Analytica, although the application was adjourned until Friday.

In the US, the Federal Trade Commission consumer body is reported to have opened an investigation into whether Facebook violated a privacy agreement it had. The attorney general of New York and his counterparts in Massachusetts and New Jersey have also announced privacy inquiries.

In Australia, the country’s Information and Privacy Commission has demanded that Facebook provide information on whether any Australians were affected by the unauthorised use of profile data. Full Story