Why the Cambridge Analytica scandal could be life threatening for Facebook and big tech

The Cambridge Analytica affair may be the biggest threat to Facebook to date; far more so than Russian meddling in the last US Presidential Election (the Cambridge Analytica gang were much cleverer in the way they harvested data from, virtually, the whole of Facebook).

Here’s whistleblower Christoper Wylie explaining the origins of the company and what it did in a Guardian video. (Oddly reassuring that the Grauniad still can’t spell parliamentary.)

Facebook shares fell 6.8 per cent yesterday (Monday), wiping nearly $37bn off the company’s value. So far we haven’t heard from CEO Mark Zuckerberg or PR person-in-chief COO Sheryl Sandberg. Rabbits in the headlights come to mind.

The reason why Facebook and Google are so so stupendously rich is 1/ they offer a product people find useful and want (fair enough) and 2/they leave everything to their precious algorithms. They may employ thens of thousands of people but their job is to polish the algorithms and collect the money. Try to talk to anyone at either about anything apart from money – well you can’t. Customer service as most other companies know it is not recognised.

Their biggest threat now is legislation and, thanks a series of what it will doubtless call “mis-steps,” Facebook is certainly facing a circumscribed future. Just as the seemingly omnipotent Standard Oil was broken up into the “seven sisters” (which still dominate the oil world) over a hundred years ago, the tech giants or FAANGs as we now call them (Facebook, Apple, Amazon, Netflix, Google) face the possibility of a similar fate. The toxic relationship between Cambridge Analytica and Facebook may be the trigger.

Another threat is advertisers withdrawing their money. Unilever CMO Keith Weed seemed to threaten as much in an IAB speech recently but he backtracked somewhat. But that was before this scandal broke. Facebook couldn’t live without advertising although the others could (aside from Google they mostly do).

Cambridge Analytica and its posh boss Alexander Nix will probably be thrown to the wolves – which is probably where they belong as this Channel 4 investigation shows.

The issue of the FAANGs is much bigger, as it is for the data-driven denizens of adland who routinely ride roughshod over the ethical aspects of data mining, despite their feeble protestations to the contrary.

Time for a reset.

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About Stephen Foster

Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.

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