Facebook leak hits 87 million

Facebook stated that personal information of up to 87 million users may have been leaked by political consultancy Cambridge Analytica, up from a previous estimate of affecting more than 50 million.

Background

Facebook is a social media site launched in 2004 by Mark Zuckerberg. According to data from June 2017, Facebook has two billion monthly users.

In the past year, Facebook and other social media firms have come under pressure, for hate and terrorist propaganda, the presence of bots, and the proliferation of “fake news” ahead of elections. Late last year, Facebook was reported to be a key influencer in the results of the 2016 US Presidential election and the Brexit vote. Additionally, in September, Facebook admitted to finding approximately US$100,000 worth of ads connected to Russia. Russia purportedly played a role in flooding social media platforms like Facebook and Twitter with fake news stories depicting Hillary Clinton negatively.

Cambridge Analytica

Cambridge Analytica is a private political consulting company founded in 2013. It uses data mining and data analysis “to change audience behavior”. The company obtains personal data from various sources, including Facebook, to create micro-targeting advertisements designed to influence opinions. In an exposé by UK’s Channel News 4, CEO Alexander Nix was caught on tape claiming that the company does “a lot more” than just investigation, hinting at entrapment and bribery. The company is known to have been involved in numerous political campaigns across the world.

Last month, Cambridge Analytica was accused of a Facebook data breach. Cambridge University professor Aleksandr Kogan allegedly sold the company’s personal user information of approximately 50 million Facebook users, which may have been used to influence political campaigns. One of the executives of the company told undercover reporters that the organization had been responsible for popularizing the “Crooked Hillary” phrase.

Since the beginning of 2018, Facebook has been making significant changes to its platform. In a statement, Mark Zuckerberg said the website was making too many errors enforcing policies and preventing misuse of its tools.

Analysis

In the latest update of the Facebook-Cambridge Analytica incident, Mark Zuckerberg said that the data of up to 87 million people is believed to have been improperly shared with the political consultancy.  Approximately 1.1 million of them are UK-based users. The overall figure of impacted users had been previously quoted as 50 million by the whistleblower Christopher Wylie.

Facebook chief Mark Zuckerberg said “clearly we should have done more, and we will going forward”. He added that if Facebook gave people tools, it was their responsibility to decide how to use them. He exclaimed that Facebook had not seen “any meaningful impact” on usage or ad sales since the scandal, although he added, “it’s not good” if people are unhappy with the company. After he released the statement, shares of Facebook rose more than 3%.

Zuckerberg reiterated that said Facebook should have taken better measures in terms of audit and overseeing the third-party app developers like those hired by Cambridge Analytica in 2014. He said he accepts blame for the data breach, leading to disgruntled users, advertisers and lawmakers. He added that he was not aware of any discussions about him stepping down from his role. It is widely anticipated that board members and directors would face a challenge in ousting Zuckerberg as he is the controlling shareholder.

Last month, Facebook first acknowledged the fact that personal information about millions of users was wrongly leaked to Cambridge Analytica. Zuckerberg will testify about the incident to US congressional hearings on April 10. On the other hand, Cambridge Analytica disagreed with Facebook’s estimate of affected users. The company said it received only 30 million records of Facebook users.

According to Facebook Chief Technology Officer Mike Schroepfer, of the 87 million people whose data was shared with Cambridge Analytica, 97% were in the United States. Facebook arrived at the estimated 87 million by calculating the number of people who had downloaded a personality quiz app created by Cambridge University academic Aleksandr Kogan, or about 270,000 people, and then adding in the number of friends they had. Cambridge Analytica justified that Kogan was appointed “in good faith” to collect Facebook data in a manner similar to how other third-party app developers have collate personal information.

The scandal has initiated investigations by Britain’s Information Commissioner’s Office, Australia’s Privacy Commissioner, and the US Federal Trade Commission and by around 37 US state attorneys general. Additionally, the Nigerian government will investigate allegations of improper involvement by Cambridge Analytica in its 2007 and 2015 elections.

Assessment

Our assessment is that this incident may have led many of Facebook’s users to lose trust in the company. Reputational damage can cause advertisers to pull out, which is a key to revenue generation. We have previously stated the importance of governments implementing data protection legislation. Zuckerberg has admitted that it may be necessary to regulate social media. We believe that this incident will compel Facebook to take steps to restrict the availability of personal data to third-party app developers. However, it could take more than two years to resolve Facebook's existing problems. Zuckerberg has already agreed “in spirit” to adhere to strict privacy rules enforced by the European Union. It remains to be seen if he will allow such oversight from countries around the world.

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