Federal Trade Commission investigates Facebook after Cambridge Analytica scandal

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  1. FTC cites reports that bring up "substantial concerns about the privacy practices of Facebook"
  2. Facebook CEO vows to protect data in wake of exposé
  3. Cambridge University distances itself from data row
  4. Cambridge Analytica says it's the victim of media anger at Trump

Update: UK news programme Channel 4 News revealed Cambridge Analytica (CA) pitched social media data in multiple U.S. election campaigns, which CA boasted it used to identify voters for then North Carolina Republican candidate Thom Tillis, during the 2014 mid terms, who is now on the Senate committee investigating Facebook.

Update: Facebook CEO Mark Zuckerberg has agreed to testify before the U.S. House Commerce Committee on Wednesday, April 11. See the key takeaways here.

Facebook is being investigated by the Federal Trade Commission over allegations that the social media giant inadequately protects user data. The U.S. agency charged with consumer protection said that it is committed to “enforcement action” against companies that “fail to honor their privacy promises.” 

“The FTC takes very seriously recent press reports raising substantial concerns about the privacy practices of Facebook,” said the official statement from Tom Pahl, Acting Director of the FTC. “Today, the FTC is confirming that it has an open non-public investigation into these practices.”

News of the investigation triggered a sharp decline in the value of Facebook stock. This drop is on top of the 13 percent dip that came after initial reports that the political strategy firm Cambridge Analytica had harvesting data of roughly 50 million users in order to help the presidential campaign of Donald J. Trump. (CNBC).

(Help us report on how the U.S. government is investigating and questioning Facebook). 

Facebook faces up to new responsibilities

Facebook founder Mark Zuckerberg apologized on March 21, five days after the Cambridge Analytica story surfaced. He said his company was in a constant arms race against those who would exploit its huge reach for the wrong reasons. He promised to take action to give users greater control over their data and to audit past use.

In a statement on his own Facebook page, and a later interview with CNN, Zuckerberg pushed responsibility for a crisis which has hit Facebook’s reputation and stock price on to Cambridge University psychometrics researcher Aleksandr Kogan and Cambridge Analytica, accusing both of a breach of trust and rules. Kogan has said he is an innocent scapegoat — which his colleagues challenge.

‘I’m really sorry that this happened’ – Zuckerberg

“We will learn from this experience to secure our platform further and make our community safer for everyone going forward,” Zuckerberg said in his Facebook post which appeared to cover the same ground as earlier statements and did not offer an apology to the 50 million Facebook users whose data was apparently absorbed into Cambridge Analytica’s tools to identify and predict political behavior.

In the CNN interview, Zuckerberg said: “This was a major breach of trust, and I’m really sorry that this happened. We have a basic responsibility to protect peoples’ data.”

Facing calls from politicians in the United States, the United Kingdom and Europe to appear before them to answer allegations Facebook had allowed its data to be misused and also that the company had misled earlier investigations, Zuckerberg said he would do so if it was the right thing to do and if he didn’t think there was someone more qualified to speak at Facebook. Under question he recognized some would now want the two billion user organization to be regulated. He promised tougher internal policing of applications built on its platform.

The 33-year-old founder of Facebook said he could not have imagined when he created the network that he would be dealing with questions of its role in democracy after allegations that it was manipulated by Russian groups — and apparently by Cambridge Analytica — on behalf of the campaign of Donald J. Trump in the 2016 elections. He said Facebook was trying to get ahead of the same challenges ahead of the 2018 mid-term elections for both houses of Congress.

“If you told me in 2004, when I was getting started with Facebook, that a big part of my responsibility today would be to help protect the integrity of elections against interference by other governments, you know, I wouldn’t have really believed that,” Zuckerberg said.

FILE PHOTO: Facebook Founder and CEO Mark Zuckerberg speaks on stage during the annual Facebook F8 developers conference in San Jose, California, U.S., April 18, 2017. REUTERS/Stephen Lam
FILE PHOTO: Facebook Founder and CEO Mark Zuckerberg speaks on stage during the annual Facebook F8 developers conference in San Jose, California, U.S., April 18, 2017. REUTERS/Stephen Lam

Alexander Nix, the now-suspended chief executive of Cambridge Analytica, has been secretly recorded — with other company staff — as saying the company was responsible for the surprise Trump victory and had played a key role in everything from data analysis to the spread of viral advertising and methods to get around U.S. rules on election spending and coordination between candidates and supporters.

Cambridge Analytica and the road from Cambridge University

Facebook is at the center of a crisis triggered by a series of damaging disclosures about the methods, conduct, and claims of Cambridge Analytica, whose political research was at the heart of the highly targeted social media strategy used by the Trump campaign. The firm is controlled by Trump ally Robert Mercer. Former Trump strategy director Steve Bannon was a vice president and secretary of Cambridge Analytica (CNN).

In 2014, Facebook allowed Kogan, a Cambridge University psychologist, to conduct an online quiz that accessed data of 20-to-50 million users, ostensibly for academic purposes. At the heart of the allegations is that Kogan shared the data – through his own commercial firm separate from the university – with Cambridge Analytica or associated companies. That allegedly helped Cambridge Analytica build the data models which allowed it to target specific groups and even individual voters as part of its work for the Trump campaign.

Cambridge University is itself in the frame about what it knew and when. A faculty member who worked with Kogan told WikiTribune that staff raised concerns about Kogan’s use of data several years before the scandal emerged: “He started this whole fiasco through his unethical behavior toward fellow academics and his participating in the plan to harvest data on millions of users.”

In its own statement the university said it’s seeking answers from Facebook as to what its faculty member, Kogan, may or may not have done with data from the social platform (statement below in Sources & References). The Financial Times reported on Thursday that the university had employed a legal arbitrator four years ago to intervene in disputes between Kogan and colleagues in the Psychometrics Center.

Facebook and its terms and conditions

Facebook has been careful to say the exposure of data to Cambridge Analytica was not a hack, instead characterizing events as an example of an organization selling user data – which the platform says it expressly prohibits.  In 2014, when Kogan’s online quiz scraped user data, Facebook allowed companies to mine such data, as well as their friends’ data, a practice that’s since been banned (New York Times).

In a BBC interview, Kogan said he was being made the “scapegoat” for a scandal that belongs to Facebook and Cambridge Analytica. He said Cambridge Analytica assured him their operations were “perfectly legal and within the terms of service.”

A former Facebook product manager, however, gave video evidence to a British parliamentary inquiry on Wednesday in which he said the company had acted “two-and-a-half-years late” on Cambridge Analytica and had been weak on allowing partners to take user data.

“The real challenge here is Facebook was allowing developers to access data of people who hadn’t explicitly granted that,” Sandy Parakilas told the Digital, Culture, Media, and Sport committee, which has the power to call witnesses and acts as a check-and-balance on those policy areas. Paralikas said the “move fast and break things” motto of Facebook permeated its culture. He suggested while it had “very, very” strong security to protect its own systems, it was less focused on user data that went outside the system.

On Tuesday, Britain’s data protection agency said it was pursuing a warrant to investigate Cambridge Analytica over the alleged misuse of data from 50 million Facebook users and the offer of dirty tricks – including honey traps and scams – by executives of the data company.

The controversy moved a step closer to Trump himself, with The Guardian and Channel 4 News carrying footage of and quotes from Cambridge Analytica executives saying they had engineered the Trump digital campaign and met the candidate. The latest parts of the exposé reported the deployment of untraceable attack advertising on rivals, self-destructing emails to protect the confidentiality of what Cambridge Analytica was doing for its clients, and the use of so-called political action committees, apparently to get around U.S. electoral law on spending and coordination

 

Earlier reporting – Zuckerberg, whistleblower

Facebook suspended Cambridge Analytica, a controversial name in politics because of its connections with the Trump campaign and long-standing questions about its use of data, from its platform just prior to the investigation published by The Observer, The New York Times, and Britain’s Channel 4 News. It also suspended Kogan, whose study was the origin of the data.

Alexander Nix, the now-suspended chief executive officer of Cambridge Analytica, accused the media of a “coordinated attack” because of the company’s work in helping the Trump campaign. In the secret recordings he is heard bragging about its sophisticated data analysis tools that allowed the precise targeting of messages to votes in key electorates. He went further to suggest on secret recordings that his firm and associates could work with others to embarrass politicians with sex traps, fake stories, and other dirty tricks. He said the firm had worked in Kenya, the United States, and many other elections.

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Alexander Nix, CEO of Cambridge Analytica arrives at the offices of Cambridge Analytica in central London, Britain, March 20, 2018. REUTERS/Henry Nicholls
Alexander Nix (2nd from left), CEO of Cambridge Analytica arrives at the offices of Cambridge Analytica, pursued by a Channel 4 News reporter in central London, March 20, 2018. REUTERS/Henry Nicholls

Nix was speaking shortly before Channel 4 News aired footage recorded secretly, appearing to show Nix and an associate from Cambridge Analytica telling someone they believed was a potential customer from Sri Lanka they could provide far more than targeted political data.

In the video, Nix appears to say that his company could arrange to send “someone posing as a wealthy [land] developer … they will offer a large amount of money to the candidate, to finance his campaign in exchange for land, for instance.” He also said that Ukrainian women had proven to be effective in seducing targeted politicians. Cambridge Analytica issued a statement denying offering such services.

Meanwhile, Britain’s Information Commissioner Elizabeth Denham said she had sought a warrant to investigate Cambridge Analytica and that Facebook had agreed to stand down its own investigation to allow her staff “access to systems and evidence related to her investigation.” Denham’s office is an independent regulator with the power to investigate and safeguard data protection laws. She said her agency would also investigate Facebook’s handling of the data obtained by Cambridge Analytica.

The Guardian and The Observer newspapers have been at the forefront of journalistic investigations into Cambridge Analytica for several years, starting from the origin of some of the contested data in psychometric research by academics at Cambridge University. It is that data, collected from Facebook users, which is at the center of allegations of the misuse of data from 50 million Facebook users.

Political data firm defends its work

Before the Channel 4 video was released, Nix defended Cambridge Analytica in a press release denying it engaged in “entrapment, bribes, or so-called ‘honeytraps.'” He explained the comments in the video as attempts “to spare our ‘client’ from embarrassment.”

The exposé was based in part on information from what The Observer described as a whistleblower, former Cambridge Analytica employee, Christopher Wylie. Cadwalladr said in a video interview it took a year until they could put his claims on the record (CBS News).

“This was a scam – and a fraud,” The New York Times quoted Paul Grewal, a vice president and deputy general counsel at Facebook as saying last week of Cambridge Analytica’s original use of the data obtained from Facebook originally under the guise of a Cambridge University academic study.

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Cambridge Analytica, whose motto is “Data drives all we do” and whose political division says: “We find your voters and move them to action” was quoted in the New York Times version of the report as attacking Wylie’s motives, saying he had left to found a rival company and was involved in “what is clearly a malicious attempt to hurt the company.”

Wylie was quoted in The Observer as saying: “We exploited Facebook to harvest millions of people’s profiles. And built models to exploit what we knew about them and target their inner demons. That was the basis that the entire company was built on.”

Cambridge Analytica and some of its founding figures have been controversial (Motherboard, Vice). The involvement of Mercer (The Guardian) and Bannon and the firm’s apparent skill in identifying the political leanings of and therefore potentially influential messaging to American voters in 2016, was seen as key to Trump’s success. It has also worked in many other countries.

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