Facebook Suspends Cambridge Analytica, Might Have A Privacy Problem On Its Hands

Facebook Inc FB investors woke up to a concerning development Monday related to the privacy of its users.

What Happened

Cambridge Analytica, a privately held company that specializes in data mining and data analytics, was able to mine data of more than 50 million Facebook users without their explicit permission, The New York Times reported.

Cambridge Analytica received a $15 million investment from wealthy Republican donor Robert Mercer and gained the support of Trump's former adviser Stephen Bannon. The firm offered the promise of being able to identify the personalities of American voters and even influence their voting behavior but it lacked the data at the time to make its products work.

The company was then able to harvest private data from the Facebook profile of tens of millions of users without their permission. A Cambridge academic named Aleksander Kogan created an app called "thisisyourdigitallife" which prompted users to answer questions to generate a psychological profile; the app also gave access to not only each user's Facebook profile, but those of their friends as well.

The data collected through the app was then shared with Cambridge Analytica, allegedly without Facebook's consent and the app was blocked by the social media platform in 2015.

Why It's Important

Reports suggest Facebook is dealing with a large data breach. On the one hand, Kogan may have lied to Facebook by passing along the data he collected to Cambridge Analytica, CNBC reported. On the other hand, Facebook's deputy general counsel Paul Grewal said this situation isn't a data breach.

"Kogan requested and gained access to information from users who chose to sign up to his app, and everyone involved gave their consent. People knowingly provided their information, no systems were infiltrated, and no passwords or sensitive pieces of information were stolen or hacked," Grewal was quoted by CNBC as saying.

What's Next

Grewal said the company is "moving aggressively to determine the accuracy" of claims if this does in fact represent a data breach. If an investigation finds it is a data breach, it will represent an "unacceptable violation of trust and the commitments."

Facebook's stock was trading lower by 3.5 percent at $178.50 at time of publication.

Facebook on Monday afternoon said in a blog post it hired digital forensics firm Stroz Friedberg to conduct a "comprehensive audit" of Cambridge Analytica.

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