DATA BREACH

Cambridge Analytica CEO claims influence on US election

Facebook questioned by US consumer regulator Federal Trade Commission

FILES-FRANCE-INTERNET-COMPANY-FACEBOOK-SOCIAL-NETWORK [File] Facebook said it is 'outraged' by misuse of data by Cambridge Analytica, the British firm at the centre of a major data scandal | AFP

The suspended chief executive of Cambridge Analytica said in a secretly recorded video broadcast on Tuesday that his UK-based political consultancy’s online campaign played a decisive role in US President Donald Trump’s 2016 election victory. 

His comments, which could not be verified, are potentially a further problem for Facebook as it faces lawmakers’ scrutiny in the United States and Europe over Cambridge Analytica’s improper use of 50 million Facebook users’ personal data to target voters.

The social media network’s shares fell for a second day, closing down 2.5 per cent, as investors worried that its dealings with Cambridge Analytica might damage its reputation, deter advertisers and invite restrictive regulation. The company has lost $60 billion of its stock market value over the last two days.

Cambridge Analytica’s board of directors suspended CEO Alexander Nix on Tuesday, shortly before the second part of British broadcaster Channel 4’s expose of the firm’s methods.

In the program Nix describes questionable practices used to influence foreign elections and said his firm did all the research, analytics and targeting of voters for Trump’s digital and TV campaigns. He also boasts he met Trump when he was the Republican presidential candidate “many times.”

Nix’s comments “do not represent the values or operations of the firm and his suspension reflects the seriousness with which we view this violation,” Cambridge Analytica said in a statement on Tuesday.

Brad Parscale, the 2016 Trump campaign’s main digital adviser who dealt regularly with Cambridge Analytica, did not immediately respond to a request for comment on Nix’s claims.

Jared Kushner, Trump’s son-in-law and now senior adviser, oversaw the Trump campaign’s digital operations. One former Trump adviser said Kushner brought Cambridge Analytica into the 2016 campaign effort. Kushner’s lawyer did not immediately respond to a request for comment.

US law bans foreigners from making contributions or spending money on behalf of a US election campaign but it was not illegal for the Trump campaign to retain Cambridge Analytica’s services, according to Bradley Smith, a former Republican member of the US Federal Election Commission.

“The fact that they are a British company doesn’t add anything to the analysis unless they were giving their services away for free or charging below-market rates,” said Smith, now a professor at the Capital University Law School in Columbus, Ohio.

US and European lawmakers have demanded an explanation of how Cambridge Analytica gained access to user data in 2014 and why Facebook failed to inform its users, raising broader industry questions about consumer privacy.

Facebook said it had been told by the Federal Trade Commission (FTC), the leading US consumer regulator, that it would receive a letter this week with questions about the data acquired by Cambridge Analytica. It said it had no indication of a formal investigation.

The FTC is reviewing whether Facebook violated a 2011 consent decree it reached with the authority over its privacy practices, a person briefed on the matter said.

If the FTC finds Facebook violated terms of the consent decree, it has the power to fine the company thousands of dollars a day per violation, which could add up to billions of dollars. 

Facebook was also hit on Tuesday in a San Francisco court by the first of what could be many lawsuits by shareholders claiming to suffer losses because the company misled them about its ability to protect user data. The company could also soon face lawsuits on behalf of users whose personal information was exposed.

Facebook and its peers Alphabet's Google and Twitter already face a backlash from users and lawmakers over their role during the U.S. presidential election by allowing the spread of false information that might have swayed voters toward Trump.

—Reuters