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This article was published on July 25, 2019

FTC sues now-bankrupt Cambridge Analytica over ‘deceptive practices’

FTC sues now-bankrupt Cambridge Analytica over ‘deceptive practices’

Facebook may have been slapped with a $5 billion fine for its handling of repeated data violations on the platform, but Cambridge Analytica isn’t getting off the hook either.

In an administrative complaint, the Federal Trade Commission (FTC) initiated a separate legal action against the controversial data analytics firm for deceptively harvesting the personal information of millions of users through a personality app for voter profiling and targeting. In the wake of the data scandal, the company had ceased operations and filed for bankruptcy.

The consumer protection agency also said it has settled with former Cambridge Analytica CEO Alexander Nix and former University of Cambridge professor Aleksandr Kogan.

Kogan, if you recall, had developed a personality quiz app called “thisisyourdigitallife” that was subsequently used to harvest Facebook users’ data by Cambridge Analytica.

“The information was used to train an algorithm that then generated personality scores for the app users and their Facebook friends. Cambridge Analytica, Kogan, and Nix then matched these personality scores with U.S. voter records. The company used these matched personality scores for its voter profiling and targeted advertising services,” the FTC said.

The complaint alleges that the app collected Facebook profile data from 250,000 to 270,000 users located in the United States, as well as 50 million to 65 million of their Facebook friends.

The FTC claims that the app makers employed deceptive tactics to get people to use their app. By falsely informing users that it would not “download your name or any other identifiable information,” the app went on to amass their Facebook User IDs — which uniquely identifies a Facebook profile — and other personal information such as gender, birthdate, location, and their Facebook friends list.

Facebook has since clamped down on apps with “minimal utility,” including personality quizzes, subjecting them to heightened scrutiny before permitting such apps on the platform.

As part of the proposed settlement, both Kogan and Nix have been ordered to delete any personal information they may have had. The administrative orders also restrict them from making such misleading claims in the future.

It’s interesting that the FTC investigation held the duo personally liable, but exempted all of Facebook’s high-level executives from any personal liability for the transgressions. Worse, Facebook didn’t even have to admit any guilt for its violations.

With the Facebook fines and this settlement, the sordid data scandal comes to its climax. The fallout significantly eroded people’s trust in Facebook, not to mention leading CEO Mark Zuckerberg to embark on a “privacy-focused vision” for the social network.

The torrent of privacy settlements, data scandals, and regulatory concerns over its handling of user information, however, has done nothing to hurt its financial prospects, at least yet. It’s business as usual for Facebook.

The company’s family of services continues to be home to over 2.7 billion monthly active users, with its revenues jumping 28 percent to $16.9 billion year over year.

But regulatory troubles are far from over for Facebook, what with the tech giant coming under fresh scrutiny from the FTC for possible violation of US antitrust law.

In addition, the Department of Justice said it’s launching an antitrust review of “market-leading online platforms” without taking any specific names. It doesn’t take a genius to figure out that Facebook will be on that list.


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