Facebook Lost $37bn Overnight Due To Cambridge Analytica Data Scandal




Over the weekend, extended reporting by several global and national papers including The Guardian’s Observer and The New York Times made it clear that Facebook did not do enough to recover data of about 50 million of its users that was then used to influence the 2016 US election.

The articles also made it apparent that Facebook did not disclose the leak to its investors.

As a result, analysts, including Pivotal’s senior research analyst for advertising, Brian Wieser, rated the social media platform’s stock as a “sell”.

“We think this episode is another indication of systemic problems at Facebook, although the company’s business won’t likely be meaningfully impacted for now,” Wieser added.

However, he continued, it is expected that Facebook’s regulatory risks will intensify, the use of data in advertising is at risk and third-party measurement partners may face even more restrictions from Facebook, frustrating advertisers.

Following this weekend’s report (but not, it should be noted, before The Guardian’s initial report in 2015), Facebook’s vice-president and deputy general counsel, Paul Grewal, suspended Strategic Communication Laboratories, including their political data analytics firm, Cambridge Analytica, from Facebook.

The reason given was that Facebook had discovered the organisation had not destroyed the data in 2015 as it had claimed.

Grewal updated his post on 17 March to assert that Facebook data had not been “breached”.

“Aleksandr Kogan requested and gained access to information from users who chose to sign up to his app, and everyone involved gave their consent. People knowingly provided their information, no systems were infiltrated, and no passwords or sensitive pieces of information were stolen or hacked,” Grewal wrote.

The Information Commissioner, Elizabeth Denham, is obtaining a warrant to search Cambridge Analytica’s servers to investigate its involvement in worldwide elections, Sky News reported.

The incident has raised questions about how far political advertising should be allowed to go. An investigative report by Channel 4 News aired last night, showed executives from Cambridge Analytica telling undercover reporters that the methods they use include “entrapping rival candidates in fake bribery stings and hiring prostitutes to seduce them”.

The company’s chief executive, Alexander Nix, was also recorded telling reporters that “these are things that don’t necessarily need to be true as long as they’re believed.”


Credit: Campaignlive

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