Scandal-hit Cambridge Analytica to shut down

PTI
Thursday, 3 May 2018

The decision was made less than two months after Cambridge Analytica and Facebook became embroiled in the scandal. Revelations about the misuse of data, plunged Facebook into crisis and prompted regulators to open investigations.

LONDON: Cambridge Analytica, the UK-based political consulting firm embroiled in a massive data-harvesting scandal that compromised the personal information of up to 87 million Facebook users, has announced that it would immediately cease operations as the controversy had driven away virtually all of its customers.

The decision was made less than two months after Cambridge Analytica and Facebook became embroiled in the scandal. Revelations about the misuse of data, plunged Facebook into crisis and prompted regulators to open investigations.

Cambridge Analytica denies any wrongdoing, but says that the negative media coverage has left it with no clients and mounting legal fees which has forced it to resort to closure.

"Despite Cambridge Analytica's unwavering confidence that its employees have acted ethically and lawfully, the siege of media coverage has driven away virtually all of the company's customers and suppliers," the company said in a statement.

"As a result, it has been determined that it is no longer viable to continue operating the business, which left Cambridge Analytica with no realistic alternative to placing the company into administration," it added.

The firm's board has applied to appoint insolvency practitioners Crowe Clark Whitehill to act as the independent administrator for Cambridge Analytica.

Additionally, parallel bankruptcy proceedings will soon be commenced on behalf of Cambridge Analytica and certain of the Company's US affiliates in the United States Bankruptcy Court for the Southern District of New York.

Noting that over the past several months, Cambridge Analytica has been the subject of numerous unfounded accusations, the company said despite its efforts to correct the record, it has been vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising in both the political and commercial arenas.

Yesterday company's employees were asked to return their keycards immediately.

"SCL Elections, as well as certain of its and Cambridge Analytica LLC's UK affiliates filed applications to commence insolvency proceedings in the U.K.," the company said. This could impact its Indian operations as well.

During a conference by Julian Wheatland, SCL Group's chairman and the man who was supposed to become the next full-time CEO of Cambridge Analytica after former CEO Alexander Nix stepped down, said that the board determined that rebranding the company's offerings in the current environment is futile.

The report of an independent investigation released by Cambridge Analytica said that it was involved in several elections in India since 2010, but refuted allegations that it was involved in interference.

The firm was accused of improperly obtaining personal information on behalf of political clients.

According to Facebook, data on up to 87 million of its users was harvested by an app and then passed on to the political consultancy.

The social network said its own probe into the matter would continue.

"This doesn't change our commitment and determination to understand exactly what happened and make sure it doesn't happen again," a Cambridge Analytica (CA) spokesperson said.

The company said its parent company, SCL Elections, would also commence bankruptcy proceedings. This could impact its Indian operations as well.

The chair of a UK Parliament committee investigating the firm's activities also raised concerns about CA and SCL Elections' move to shut down.

"They are party to very serious investigations and those investigations cannot be impeded by the closure of these companies," said MP Damian Collins.

"I think it's absolutely vital that the closure of these companies is not used as an excuse to try and limit or restrict the ability of the authorities to investigate what they were doing," he said.

Cambridge Analytica has been linked to Donald Trump's 2016 presidential campaign. Trump's campaign denies having used CA's data.

It sought information on Facebook to build psychological profiles on a large portion of the US electorate.

The company was able to amass the database quickly with the help of an app that appeared to be a personality test. The app collected data on tens of millions of people and their Facebook friends, even those who did not download the app themselves.

Facebook has since tightened its privacy restrictions. 

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