Research paper on the 2018 scandal between

Facebook and Cambridge Analytica.

PR-205 Public Relations (Fall 2022)

Professor: Tara Nagel
Student: Juan de Julio Escura
jdejulioescura22@coe.edu
Index:

1. Introduction 2

2. Background 3

3. Crisis Analysis 5
3.1. The Cambridge Analytica scandal 5
3.2. The Russian interference scandal 6
3.3. The privacy scandal 7

4. Company's response 8

5. Public reaction 9

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 1. Introduction

Facebook is a social network created on February 4, 2004, by Mark Zuckerberg, along

with other Harvard University students and roommates. This social network was one of the most
mediatic in the Internet's popularity boom, hosting a disproportionate number of users. Different
types of content can be found on this social network, as it combines the possibility of posting
written messages and multimedia content, both publicly and privately.

Over the years, and after the incessant growth of the platform, Facebook became a
business conglomerate that absorbed more of the main social networks, as was Instagram in 2012
(a social network dedicated to the publication of multimedia content), or WhatsApp in 2014
(private instant messaging application and leader at the international level.

Later, in 2018, Facebook suffered one of the biggest blows in the world of social
networks, as none had undergone a similar crisis in its short period of existence. In March, an
anonymous whistleblower reported to several media organizations that Facebook had sold access
to the private information of more than 87 million users to a British company called Cambridge
Analytica.

This news was an international scandal, which was aggravated by the fact that the
company that bought the data, used them to benefit the candidate Donald Trump in the 2016
elections, of which he emerged victorious. This was carried out through the development of voter
profiles, which were subsequently sold to those responsible for the election campaign of the
then-presidential candidate and U.S. tycoon.

In this research paper, therefore, I will analyze the impact of this fact on the company and
especially the way in which Mark Zuckerberg, on behalf of Facebook, managed this fact towards
its platforms' users.

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 2. Background

Cambridge Analytica was started in 2013 by Alexander Nix. He is a British businessman

and the former CEO. The company is headquartered in London, with offices in the United States,
the United Kingdom, and Brazil.

The company combines data mining, data analysis, and data brokerage with strategic
consulting to provide political campaigns with targeted advertising and messaging. It claims to
have worked on more than 230 elections in over 65 countries, including the United Kingdom, the
United States, Brazil, Canada, India, and Kenya.

In 2014, the company was accused of involvement in the United States federal
government's investigation into Russian interference in the 2016 United States elections. In
March 2018, the company suspended its CEO, Alexander Nix, pending an investigation by the
British government into his conduct. On 18 March 2018, it was reported that the company had
been "winding down" since early 2018.

On 21 March 2018, The Guardian and The Observer newspapers published reports based
on interviews with a former employee of Cambridge Analytica, Christopher Wylie, and
documents he had obtained, that alleged the company had harvested the personal data of millions
of Facebook users without their consent and used it for political purposes. Facebook
subsequently suspended Cambridge Analytica's access to its platform.

The reports prompted investigations by the United States Federal Trade Commission, the
United States Department of Justice, the United Kingdom Information Commissioner's Office,
and the UK Parliament. On 2 May 2018, it was reported that British MPs had seized internal
Facebook documents from the US offices of Cambridge Analytica's parent company, Strategic
Communication Laboratories (SCL), as part of their investigation.

On 17 May 2018, it was reported that Cambridge Analytica had filed for bankruptcy in
the United States. The UK Information Commissioner's Office stated that it would continue its

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civil investigation despite the bankruptcy. A personality quiz app called myPersonality had
harvested the private data of over six million Facebook users, some of which were subsequently
acquired by Cambridge Analytica. The US Federal Trade Commission had opened an
investigation into whether Facebook violated US privacy laws concerning the Cambridge
Analytica scandal. The UK Information Commissioner's Office fined Facebook £500,000 for
failing to protect the personal data of its users from being harvested by Cambridge Analytica.

In May 2019, the UK Parliament's Digital, Culture, Media and Sport Committee
published a report which accused Cambridge Analytica of "unethical practices" and "deceitful
and dishonest" behavior and criticized Facebook for failing to protect the personal data of its
users. The committee also recommended that the UK government introduce a statutory code of
conduct for the use of personal data by political campaigns and that the UK Information
Commissioner's Office is given the power to issue fines of up to £1 million for breaches of data
protection law.

In November 2019, it was reported that the US Department of Justice had filed criminal
charges against Alexander Nix, the former CEO of Cambridge Analytica, for making false
statements to Congress about the company's activities during the 2016 US presidential election.

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 3. Crisis Analysis

3.1. The Cambridge Analytica scandal

The Cambridge Analytica scandal began in early 2018 when it was revealed that the data
analytics firm had used Facebook data to help elect Donald Trump in the 2016 US presidential
election.

The scandal began when The Guardian and The Observer published articles based on the
testimony of a former Cambridge Analytica employee, Christopher Wylie. Wylie claimed that
the firm had used data from millions of Facebook users to create “psychographic” profiles of US
voters. These profiles were then used to target voters with political ads and messages during the
2016 campaign.

The scandal quickly escalated, leading to investigations by government regulators and

calls for CEO Mark Zuckerberg to testify before Congress. In the UK, the Information
Commissioner’s Office (ICO) launched an investigation into the matter. In the US, the Federal
Trade Commission (FTC) also launched an investigation, and Zuckerberg was called to testify
before the Senate Judiciary Committee and the House Energy and Commerce Committee.

The scandal also led to a massive decline in Facebook’s stock price. By the end of March
2018, the stock had fallen by more than 20%.

The Cambridge Analytica scandal was just the latest in a series of crises that have beset
Facebook over the past few years. In 2016, the company was criticized for its role in the spread
of fake news and misinformation. In 2017, it was revealed that Russian agents had used the
platform to interfere in the US presidential election. And in 2018, it was hit with a series of
privacy scandals, including the Cambridge Analytica scandal and the revelation that it had shared
user data with Chinese smartphone maker Huawei.

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 These crises have led to calls for government regulation of Facebook and other social
media companies. But so far, government action has been limited. In the US, Congress has held a
series of hearings on the issue but has not passed any laws. In Europe, the European Union has
fined Facebook for violating data privacy laws but has not imposed any other significant
regulations.

3.2. The Russian interference scandal

began in 2016 when it was revealed that Russian agents had used Facebook to interfere in
the US presidential election.

The interference took place through a Kremlin-linked organization called the Internet
Research Agency (IRA). The IRA used Facebook to buy political ads and create fake accounts
and groups. These fake accounts and groups then spread misinformation and divisive messages
in an attempt to influence the election.

The scandal came to light in 2017, when Facebook released a report on the matter. The
report found that the IRA had spent $100,000 on political ads on the platform.

The scandal led to investigations by the US Congress and Special Counsel Robert
Mueller. In 2018, Mueller indicted 13 Russian nationals and three Russian companies, including
the IRA, for their role in the interference.

The scandal also led to calls for government regulation of Facebook and other social
media companies. But so far, government action has been limited. In the US, Congress has held a
series of hearings on the issue but has not passed any laws. In Europe, the European Union has
fined Facebook for violating data privacy laws but has not imposed any other significant
regulations.

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 3.3. The privacy scandal

Everything began in early 2018 when it was revealed that Facebook had shared user data
with Chinese smartphone maker Huawei.

The scandal came to light when The New York Times and The Guardian published
articles based on the testimony of a former Facebook employee, Sandy Parakilas. Parakilas
claimed that Facebook had allowed Huawei and other companies to access the data of Facebook
users without their consent.

The scandal quickly escalated, leading to investigations by government regulators and

calls for CEO Mark Zuckerberg to testify before Congress. In the US, the Federal Trade
Commission (FTC) launched an investigation, and Zuckerberg was called to testify before the
Senate Judiciary Committee and the House Energy and Commerce Committee.

The scandal also led to a massive decline in Facebook’s stock price. By the end of March
2018, the stock had fallen by more than 20%.

The privacy scandal was just the latest in a series of crises that have beset Facebook over
the past few years. In 2016, the company was criticized for its role in the spread of fake news
and misinformation. In 2017, it was revealed that Russian agents had used the platform to
interfere in the US presidential election. And in 2018, it was hit with a series of privacy scandals,
including the Cambridge Analytica scandal and the revelation that it had shared user data with
Chinese smartphone maker Huawei.

These crises have led to calls for government regulation of Facebook and other social
media companies. But so far, government action has been limited. In the US, Congress has held a
series of hearings on the issue but has not passed any laws. In Europe, the European Union has
fined Facebook for violating data privacy laws but has not imposed any other significant
regulations.

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 4. Company's response

In response to the scandal, Facebook took some steps to improve its data privacy
practices. The company updated its terms of service and privacy policy to better explain how
user data is used and shared. Facebook also created a new tool that allows users to see what
information the company has about them. In addition, Facebook now requires all developers to
get approval from the company before they can access user data. Finally, Facebook is giving
users more control over the information they share with apps and other websites.

In addition, Facebook took steps to improve its data security practices. The company
implemented new measures to prevent third-party developers from accessing user data without
consent. Facebook also hired much new security personnel and implemented stricter internal
controls.

Despite these efforts, the scandal continues to haunt Facebook. The company faces
multiple lawsuits and is under investigation by the US government. In addition, many users have
lost trust in Facebook and are no longer using the platform as frequently as they did in the past.
These users have instead turned to other social media platforms, such as Instagram and Snapchat,
which offer a more user-friendly experience.

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 5. Public reaction

The scandal caused a public outcry, with many people demanding that Facebook do more
to protect their data. The long-term implications of the scandal are still being felt by Facebook,
as the company has been forced to make several changes to its policies and procedures. The
scandal has also damaged Facebook's reputation, as many people now view the company as
being careless with their data.

Moreover, the scandal has led to increased scrutiny of Facebook by regulators around the
world. In the United States, the Federal Trade Commission is currently investigating whether
Facebook violated its agreement with the agency by allowing Cambridge Analytica to access the
personal data of its users. The outcome of the investigation could have major implications for
Facebook, as the FTC has the authority to impose hefty fines on the company if it is found to
have violated the agreement.

Overall, the Facebook data scandal has had a major impact on the company, both in the
short and long term. The scandal has damaged Facebook's reputation and has led to increased
scrutiny from regulators. It remains to be seen how the company will recover from the scandal,
but the impact will be felt for some time to come.

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 6. Personal opinion

I think Facebook had the correct approach to facing its 2018 scandal from a Public
Relations point of view. First, they were quick to apologize and take responsibility for the data
breach. Second, they took measures to improve their privacy and security policies. Third, they
communicated openly and transparently with the public. Fourth, they cooperated with authorities
and conducted their investigations. Lastly, they took responsibility for their actions and made
changes to prevent future breaches.

What's more, I think Facebook's approach was not only correct from a PR standpoint, but
also a moral standpoint. The company did the right thing by owning up to its mistakes,
apologizing, and taking steps to make things right. This was especially important because
Facebook is such a big and influential company. If they had tried to cover up the scandal or
downplay its importance, it would have set a dangerous precedent for other companies and
institutions.

I would like to highlight the fact that, in my opinion, Facebook's approach was not
perfect. The company could have done more to prevent the data breach from happening in the
first place, and it could have been more transparent about its policies and procedures. However,
overall, I think they handled the situation well and set a good example for other companies to
follow.

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