Facebook’s stock has dropped, as the world reacts to the huge “data breach” scandal that broke over the weekend. The drop of 7 percent means that around $25billion has been lost from the company’s market value.
Courtesy: Yahoo Finance
Cause of the Data Breach
Aleksandr Kogan, a University of Cambridge professor, accessed the data of more than 50 million Facebook users by creating a survey app filled out by 270,000 people. Facebook provided Kogan with the data of everyone who took the survey, as well as their friends’ data.
The app was a personality quiz that asked Facebook users for information about themselves. Kogan’s company Global Science Research had a deal to share info from the app with Cambridge Analytica. An estimated 270,000 Facebook users signed up and took the personality tests. But the app also collected the information of each user’s Facebook friends, who couldn’t possibly have provided consent.
Cambridge Analytica, a data analysis company, allegedly used the data sourced from Kogan to build a powerful software program to predict and influence choices at the ballot box and to help Trump get elected.
The firm harvested private information from the Facebook profiles of more than 50 million users without their permission. The company used the data to build psychological profiles of Facebook users, to create better political campaigns that could sway their views.
Facebook’s response to the Data Breach
Facebook revealed that Kogan gained access to this information in a legitimate manner and through the proper channels that governed all developers on Facebook at that time.
Facebook, however, acknowledged rules were violated by passing the users’ data to third parties, including Cambridge Analytica, the political data firm founded by former Trump aide Steve Bannon.
Facebook found out about the breach in 2015, shut down the professor’s access and asked Cambridge Analytica to certify that it had deleted the user data.
However, the social network on last week suspended Cambridge from its system, explaining that it had learned the information wasn’t erased.
Cambridge Analytica (CA) is a privately held company that combines data mining and data analysis with strategic communication for the electoral process. It was created in 2013 as an offshoot of its British parent company SCL Group to participate in American politics.
Facebook was launched on February 4, 2004, by Mark Zuckerberg and his fellow classmates Eduardo Saverin, Andrew Mccallum, Chris Hughes.
The company has since expanded into other areas buying Instagram for $1 billion in April 2012 and Whatsapp for $19 billion in February 2014. 2016 revenues were estimated at over $25 billion and the company has over 20,000 employees.