Following the Facebook data crisis, the company has folded. But will the scandal now end?
New York: Cambridge Analytica, the company at the heart of the data scandal which has engulfed Facebook, announced it was shutting down on Wednesday evening. In a statement the company said recent media coverage of its use of Facebook data had “driven away virtually all of the company’s customers and suppliers”, leaving it unable to continue trading and forcing the directors to put the company in administration.
Cambridge Analytica was founded in 2013 as a tech-focused subsidiary of the consultancy SCL Group, a long-established business which worked on political campaigns around the world. Following Donald Trump’s victory in the US presidential election it claimed responsibility for his success. The parent company, established in 1990, has also announced that it is closing down as a result of the scandal.
Why have the companies been forced to close?
Cambridge Analytica’s attempts to use data obtained through a Facebook personality quiz for the purposes of targeted political advertising spiralled into an international crisis for Facebook following months of reporting by the Guardian and Observer, which culminated in whistleblower Christopher Wylie breaking his silence in March. Soon afterwards Channel 4 News released undercover footage of Cambridge Analytica boss Alexander Nix boasting he could entrap politicians in compromising situations with bribes and Ukrainian sex workers, prompting his resignation. The story attracted attention from politicians around the world, causing reputational damage to Facebook and resulting in chief executive Mark Zuckerberg facing questions from US senators. The scandal has left the social network facing the prospect of extra regulation – although this has yet to hit the company’s profits.
Have Cambridge Analytica and SCL Group admitted any wrongdoing?
Cambridge Analytica continues to say that it did no wrong, and that the company has been the victim of “unfairly negative media coverage” which left it “vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising”.
Alongside the announcement that the business has been placed in administration, Cambridge Analytica also released a report it commissioned from Julian Malins QC which concluded that the allegations of wrongdoing were not “borne out by the facts”. “My findings entirely reflect the amazement of the staff, on watching the television programmes and reading the sensationalistic reporting, that any of these media outlets could have been talking about the company for which they worked,” the lawyer said.
What will happen to Cambridge Analytica now it has been placed in administration?
The company has said it will meet its obligations to its employees, respecting their notice periods and severance terms, and ensuring that they receive redundancy payments. However, questions remain over what happens to the company’s intellectual property and whether there will be any interest in purchasing what remains of the businesses.
Will this stop the scandal?
Politicians around the world continue to demand answers about the activities of Cambridge Analytica and the broader issue of using Facebook data for targeted advertising. Damian Collins, the chair of the House of Commons committee which has been looking into the company’s activities, has said the investigations into their work remain vital and warned that “Cambridge Analytica and SCL group cannot be allowed to delete their data history by closing”. Meanwhile, several of the individuals involved in Cambridge Analytica, including Alexander Nix, have registered a new company named Emerdata – although it is unclear what plans they have for the business.