Facebook - Cambridge Analytica Data Scandal

Corporate Strategy takes a portfolio approach to strategic decision making by looking across all of a firm’s businesses to determine how to create the most value. Facebook, Inc. is an American online social media and social networking service company based in Menlo Park, California. It was founded by Mark Zuckerberg, along with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes. It is considered one of the Big Four technology companies along with Amazon, Apple, and Google (Croft,2017)

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Facebook offers other products and services. It acquired Instagram, WhatsApp, Oculus, and GrokStyle and independently developed Facebook Messenger, Facebook Watch, and Facebook Portal. In 2004 there were three other companies offering internet-based social networking services, when Zuckerberg arrived at Facebook’s rented Palo Alto house, namely Friendster, myspace and Orkut. (Stanford Graduate School of Business)

A customer has a tremendous effect on the success of business operations, perhaps even more so for online services. By managing the value propositions of its users and customers to ensure they had positive online experiences, Facebook was able to begin from humble origins and run competitor MySpace into the ground, replacing it as today’s most relevant social networking alternative. MySpace failed to manage the quality of user experiences on their network, and began losing customers to Facebook. Its unique focus on relationship management also enticed users to visit more often, and stay longer when they did visit It quickly caught MySpace and dominated it by providing quality online services that resulted in positive user experiences.

Despite all the focus today’s business world puts on information, and how to search for, use, and manage it, Facebook became a $100 billion enterprise in just 8 years because its leader defined a strategy that connects with people and maintain relationships. (Croft, 2017)

People rather spend their time building networks of relationships, rather than networks of information. As a result, Facebook fundamentally changed how people use the web and find and get access to information.

Facebook claimed that had more than 2.3 billion monthly active users as of December 2018 However, it faces a big problem of fake accounts. It also got prominent media coverage, including many controversies. These often involve user privacy (as with the Cambridge Analytica data scandal), political manipulation (as with the 2016 U.S. elections). If we talk further about Facebook’s Cambridge Analytical data Scandal. Cambridge Analytical is a company that offers services to businesses and political parties who want to “change audience behaviour” (Bennett,2018). With its headquarters in London.

It claims to be able to analyse huge amounts of consumer data and combine that with behavioural science to identify people who organisations can target with marketing material. It collects data from a wide range of sources, including social media platforms such as Facebook. Cambridge Analytica had purchased Facebook data on tens of millions of Americans without their knowledge to build a “psychological warfare tool,” which it unleashed on US voters to help elect Donald Trump as president. (Davis.H., 2015)

Immediately, Facebook’s stock price fell and Zuckerberg was called to testify before Congress, and a year of contentious international debates about the privacy rights of consumers online commenced. On Friday, Kogan filed a defamation lawsuit against Facebook.

The Facebook–Cambridge Analytica data scandal was a major political scandal in early 2018 when it was revealed that Cambridge Analytica had harvested the personal data of millions of people’s Facebook profiles without their consent and used it for political advertising purposes. The illicit harvesting of personal data by Cambridge Analytica was first reported in December 2015 by Harry Davies, a journalist for The Guardian. He reported that Cambridge Analytica was working for United States Senator Ted Cruz using data harvested from millions of people’s Facebook accounts without their consent. Facebook refused to comment on the story other than to say it was investigating. Further reports followed in the Swiss publication Das Magazin by Hannes Grasseger and Mikael Krogerus (December 2016. Facebook refused to comment on the claims in any of the articles.

The scandal finally opened in March 2018 with the emergence of a whistle-blower, an ex-Cambridge Analytica employee Christopher Wylie. He had been an anonymous source for an article in 2017 in The Observer by Cadwalladr, headlined ‘The Great British Brexit Robbery’. This article went viral but was disbelieved in some quarters, prompting skeptical responses in The New York Times among others. The three news organisations published simultaneously on March 17, 2018, and caused a huge public objection. Consumer advocates called for greater consumer protection in online media and the right to privacy as well as curbs on misinformation and propaganda.

Facebook director Mark Zuckerberg first apologized for the situation with Cambridge Analytica on CNN, calling it an ‘issue’, a ‘mistake’ and a ‘breach of trust’; in effect, he reminded them of their Right of access to personal data. Other Facebook officials argued against calling it a ‘data breach’, arguing those who took the personality quiz originally consented to give away their information. (Glum J. 2018). On March 25, 2018, Zuckerberg published a personal letter in various newspapers apologizing on behalf of Facebook. (McKenzie, CNN, 2018)

In early July 2018, the United Kingdom’s Information Commissioner’s Office announced it intended to fine Facebook £500,000 ($663,000) over the data scandal, this being the maximum fine allowed at the time of the breach, saying Facebook ‘contravened the law by failing to safeguard people’s information’. (Romm and Dwoskin 2018). In July 2019, the Federal Trade Commission voted to approve fining Facebook around $5 billion to finally settle the investigation to the scandal, with a 3-2 vote. (Wong 2019)  

29 April 2022

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