Facebook–Cambridge Analytica Data Scandal

Case Code: BECG160
Case Length: 13 Pages
Period: 2010-2018
Pub Date: 2018
Teaching Note: Available

Price: Rs.400
Organization: Facebook
Industry: Social Media
Countries: US
Themes: Business Ethics,

Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

CAMBRIDGE ANALYTICA

There were many data analytics companies which used social networking sites for academic research purposes. One such firm was a London-based elections consultancy, Cambridge Analytica (CA), founded by a politically active person, Robert Mercer, co-CEO of a hedge fund, Renaissance Technologies. CA was known to be one of the most prominent companies in the data analytics industry and had handled high-profile clients like Republican candidates Ted Cruz (Cruz) and Ben Carson. Explaining the methodology of CA in 2016, its CEO Alexander Nix (Nix), said, “We’ve rolled out a long-form quantitative instrument to probe the underlying traits that inform personality. If you know the personality of the people you’re targeting, you can nuance your messaging to resonate more effectively with those key groups.”..

THE DATA SCANDAL

In 2010, Facebook launched a platform called Open Graph for third-party apps. Through this update, external developers could reach out to Facebook users and request permission to access their personal data and that of their Facebook friends. Once the users agreed, the apps gained access to their information like their name, gender, location, birthday, education, political preferences, relationship status, religious views, online chat status, and even their private messages. However, this caused concern among many users who were worried about how their personal information would be managed. Within five weeks of the launch of Open Graph, Facebook came up with the Open Graph API version..

FACEBOOK UNDER FIRE

While CA was blamed for having harvested the data of millions of other people for political and financial gain without their consent, amid the data-privacy scandal, Facebook also had to face the heat in many countries. Initially, the number of people affected was reported to be 50 million. Facebook later revised this to 87 million. Of the affected people, about 70.5 million were in the US, while the remaining were in several other countries, including the UK, Canada, Australia, and India..

CHALLENGES

According to analysts, one of the biggest challenges facing Facebook post the scandal was how to regain the trust of its users. Analysts believed that though the company had been offering apologies to fix its reputation among users, advertisers, lawmakers, and investors, there was certainly an erosion of trust. According to a poll conducted online across the US, fewer Americans trusted Facebook than other tech companies. Of the responses received from 2,237 people who were asked which company they believed would obey laws that protected their personal information, only 41% said they trusted Facebook compared with 66% who trusted Amazon, and 62%, 60%, and 47% who trusted Google, Microsoft, and Yahoo respectively. Zuckerberg also said that the company would take a few years to fix the problems caused by the leakage of users’ private data..

THE ROAD AHEAD

Zuckerberg publicly apologized for the company’s mistake and announced that Facebook would change how it shared data with third-party apps. Further, he promised to investigate all third-party apps having access to data before 2014 and said the company would ban app developers that were not complying with a full audit..

Exhibits

Exhibit I: How Facebook Records were Hijacked?
Exhibit II: Key Links in the Facebook–Cambridge Analytica Data Scandal
Exhibit III: Number of Facebook Users affected by Data Leak to Cambridge Analytica
Exhibit IV: Facebook Stock Closing Prices, March 2018
Exhibit V: Facebook - Condensed Consolidated Statements of Income
Exhibit VI: Initiatives Taken by Facebook Post the Data Crisis

Buy this case study (Please select any one of the payment options)

Price: Rs.400

PayPal (9 USD)

Custom Search