FB loses historic $36B in market cap following 50m-user data scandal
Facebook’s stock took a beating yesterday, falling nearly 7% following a whistleblower’s account that the voter analytics firm Cambridge Analytica illegally harvested data from more than 50m of their users.
Facebook quickly banned Cambridge Analytica from their platform and announced plans to hire a digital forensics firm to investigate, but the markets didn’t buy it.
In fact, the entire tech sector took a hit after the announcement, with Google shares down 4%, Amazon down 2.42%, and Apple dropping 2%.
In their own words, Cambridge Analytica “uses data to change audience behavior” — for either commercial or political clients.
Working for the Trump campaign, the company — partially owned by Republican investor Robert Mercer and formerly run by Steve Bannon — dispatched a psychology professor at Cambridge, Aleksandr Kogan, to harvest data.
Christopher Wylie, who worked with Kogan and his team, says they used clickbait personality tests to secretly collect data from Facebook users and their friends, transformed ‘likes’ and social data into 50m “psychographic” profiles — and used them to influence voting behavior.
For his part, Kogan says his actions were totally legal and that he had a “close working relationship” with Facebook.
‘Psyops’ — everybody’s doing it
Cambridge Analytica is part of a company called Strategic Communication Laboratories (SCL) that claims to have helped governments and militaries “conduct behavioral change programs in over 60 countries” for the past 25 years.
The defense wing of SCL specializes in psychological operations — or “psyops.” The goal of psyops is to establish “informational dominance” by starting rumor campaigns, spreading fake news, and, allegedly, entrapping politicians.
After taking months of jabs, Facebook gets a full-on sucker punch
Facebook maintains that Cambridge Analytica’s data harvesting was not a user privacy breach because “everyone involved gave their consent.” Only later, they insist, did Kogan violate Facebook policies.
As Facebook nurses its $36B wounds and works to repair investor confidence, lawmakers around the world are opening a fresh round of investigations into Zuckenstein’s monster.