Photo credit: https://www.campaignlive.com/article/facebook-lost-37bn-overnight-due-cambridge-analytica-data-scandal/1459876 (US Campaign)
A Brief Recap Of The Situation
Photo credit: https://www.vox.com/policy-and-politics/2017/10/16/15657512/cambridge-analytica-christopher-wylie-facebook-trump-russia (Vox)
Recently, political consulting firm Cambridge Analytica (CA) has been accused of aggregating 50 million Facebook users' data without consent – information that was utilized by the firm when working on the 2016 Trump campaign.
The data was collected by a Facebook quiz app titled "This Is Your Digital Life," which was created by Dr. Aleksandr Kogan of CA. According to Facebook, Kogan's app violated the network's policies.
CEO of CA, Alexander Nix, has been suspended from his role.
While Facebook continues to search for answers in this dense fog of controversy, companies are pulling their ads from the social media network, and Facebook is suffering major monetary losses
A Quick Backtrack – Kogan The Scapegoat
According to the The Express Newspaper, Kogan's created his quiz app because "he wanted the data so he could predict human behaviour through social media use," and that nothing illegal was done. Kogan further stated that:
“The events of the past week have been a total shell-shock, and my view is that I’m being basically used as a scapegoat by both Facebook and Cambridge Analytica. We were assured by Cambridge Analytica that everything was perfectly legal and within the terms of service.”
What CA-Gate Means For Facebook's Profits
Photo Credit: http://business.financialpost.com/technology/mark-zuckerberg-just-lost-3-8-billion-over-misused-data-affecting-50-million-facebook-users (Financial Post)
According to CNBC, Facebook's stock has plummeted by over 13% this week, closing below $160 – Facebook's worst drop since July 2012. In addition to Facebook's sinking stock, the company missed out on a whopping $75 billion in market capitalization this week. The aftermath of the CA-gate scandal isn't planning on settling anytime soon, and will potentially cost the tech giant an annual revenue loss of $5 billion.
Companies such as Mozilla and Commerzbank (Germany's second biggest bank), are suspending their ads in light of the controversy.
In an interview with CNBC, Facebook COO Sheryl Sandberg stated that the company doesn't take user privacy into account when it comes to the damage of stock price and revenue in the long run.
"That's not how we look at it. We don't look at these trade-offs like, oh it's going to hurt our business in the long run and in the immediate term. People's trust is the most important thing we have, and that is how we make those decisions."
Post-scandal Facebook
Will CA-gate spell the end of Facebook? The company has already been slapped with enormous monetary losses, and will continue to bear the burden of this catastrophe. A solution has yet to be presented by Facebook as to how it will compensate for the billions of dollars that were yanked from underneath its feet. At present moment, it's difficult to predict exactly what future will greet the tech giant. However, one thing is for certain: Facebook's business model is treading in dangerous waters, and as time passes, new information will surface on the matter, allowing for more in-depth analysis and an ultimate conclusion to this Facebook Fumble.