Facebook–Cambridge Analytica Data Scandal|Business Ethics|Case Study|Case Studies
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Case Details

Case Code: BECG160
Case Length: 13 Pages 
Period: 2010-2018   
Pub Date: 2018
Teaching Note: Available
Organization : Facebook
Industry : Social Media
Countries : US
Themes: Business Ethics  
Case Studies  
Business Strategy
Human Resource Management
IT and Systems
Leadership & Entrepreneurship

Facebook–Cambridge Analytica Data Scandal

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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.”..

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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..


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.


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...


Though Nestlé was applauded for its admission of forced labor within its seafood supply chain and its move toward transparency, some analysts felt that this was just an attempt by the company to cover up bigger allegations of child labor in its profitable chocolate making business. They felt that in order to escape the charges of being an unethical company, Nestlé had admitted to slavery in seafood suppliers, a low-profit area of the company’s business, in Thailand. Some critics saw Nestlé’s actions as a public relations stunt to alleviate the criticism it had received for abetting child slavery in Ivory Coast..


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. .


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