Facebook data scandal far from over

CAMBRIDGE ANALYTICA GOES OUT OF BUSINESS, BUT RAISES SPECTRE OF BLACKWATER-STYLE COMEBACK WITH NEW COMPANY EMERDATA

The embattled political consulting firm Cambridge Analytica has announced it would cease most operations and file for bankruptcy amid growing legal and political scrutiny of its business practices and work for President Donald Trump.

The decision was made less than two months after the firm and Facebook became embroiled in a data-harvesting scandal that compromised the personal information of up to 87 million people. Revelations about the misuse of data, published in March by The New York Times and

The Observer of London, plunged the social media giant into crisis and prompted regulators and lawmakers to open investigations into Cambridge Analytica.

In a statement posted to its website, Cambridge Analytica said the controversy had driven away virtually all of the company’s customers, forcing it to file for bankruptcy in both the US and Britain. The elections division of Cambridge’s British affiliate, SCL Group, will likewise shut down, the company said.

But the company’s announcement left several questions unanswered, including who would retain the company’s intellectual property — the so-called psychometric voter profiles built in part with Facebook data — and whether Cambridge Analytica’s election business would return under new auspices.

“Over the past several months, Cambridge Analytica has been the subject of numerous unfounded accusations and, despite the company’s efforts to correct the record, has been vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising in both the political and commercial arenas,” the company’s statement said.

Independent investigation

Cambridge Analytica also said the results of an independent investigation it had commissioned, which it released on Wednesday, contradicted assertions made by former employees and contractors about its acquisition of Facebook data.

The news was earlier reported by The Wall Street Journal and Gizmodo. Cambridge Analytica did not reply to requests for comment.

The company, bankrolled by Robert Mercer, a wealthy Republican donor who invested at least $15 million, offered tools that it claimed could identify the personalities of American voters and influence their behaviour. Those modelling techniques underpinned Cambridge Analytica’s work for the Trump campaign and for other candidates in 2014 and 2016.

In 2014, Cambridge Analytica gained access to the Facebook data of tens of millions of people using a technique widely used during that era to collect information on Facebook users. Among its leading clients then was a super PAC controlled by Republican John Bolton, now Trump’s national security adviser.

But Cambridge Analytica came under scrutiny over the past year, first for its purported methods of profiling voters and then over allegations that it improperly harvested private data from Facebook users. Last year, the company was drawn into the special counsel investigation of Russian interference in the 2016 election. The company was also forced to suspend its chief executive, Alexander Nix, after a British television channel released an undercover video. In it, Nix suggested that the company had used seduction and bribery to entrap politicians and influence foreign elections.

Facebook has since announced changes to its policies for collecting and handling user data. Its chief executive, Mark Zuckerberg, testified last month before Congress, where he faced criticism for failing to protect users’ data. The controversy dealt a major blow to Analytica’s ambitions of expanding its commercial business in the United States, while also bringing unwanted attention to the US government contracts sought by SCL Group, an intelligence contractor.

In recent months, executives at Cambridge Analytica and SCL Group, along with the Mercer family, have moved to create a new firm, Emerdata, based in Britain, according to British records. The new company’s directors include Johnson Ko Chun Shun, a Hong Kong financier and business partner of Erik Prince. Prince founded the private security firm Blackwater, which was renamed Xe Services after Blackwater contractors were convicted of killing Iraqi civilians.

Cambridge and SCL officials privately raised the possibility that Emerdata could be used for a Blackwater-style rebranding of Cambridge Analytica and the SCL Group, according to two people with knowledge of the companies, who asked for anonymity to describe confidential conversations. One plan under consideration was to sell off the combined company’s data and intellectual property.

All-hands meeting

An executive and a part owner of SCL Group, Nigel Oakes, has publicly described Emerdata as a way of rolling up the two companies under one new banner. Efforts to reach him by phone were unsuccessful. A former Cambridge Analytica employee said that staff members were originally told there would be an all-hands meeting on Tuesday, but that it was pushed back a day. Then, after assembling at 9:30am on Wednesday, they were kept waiting through the morning and much of the afternoon before Julian Wheatland, the company’s chief executive, delivered the news.

The damage to the company’s reputation was simply too severe, and it was “futile” and “pointless” to try to rebuild amid investigations in both the US and Britain, Wheatland said, according to the former Cambridge Analytica employee. The former employee, who was informed by those in attendance, asked not to be identified because the person did not wish to be publicly associated with the firm.

“Cambridge Analytica has been the subject of numerous unfounded accusations and... has been vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising in both the political and commercial arenas.”

Statement by Cambridge Analytica

“This doesn’t change our commitment and determination to understand exactly what happened and make sure it doesn’t happen again. We are continuing with our investigation in cooperation with the relevant authorities.”

Statement by Facebook

Cambridge Analytica and SCL group cannot be allowed to delete their data history by closing down … They are party to very serious investigations and those investigations cannot be impeded by the closure of these companies.”

Damian Collins | Chairman of UK parliament’s digital committee