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Abu Dhabi, UAEWednesday 26 September 2018

Cambridge Analytica shuts down after Facebook data scandal

Firm sought information on Facebook to build psychological profiles on a large portion of the US electorate

Cambridge Analytica, the firm at the heart of the Facebook data scandal, announced it was "immediately ceasing all operations" and filing for insolvency in Britain and the United States. AFP/Daniel LEAL-OLIVAS
Cambridge Analytica, the firm at the heart of the Facebook data scandal, announced it was "immediately ceasing all operations" and filing for insolvency in Britain and the United States. AFP/Daniel LEAL-OLIVAS

Cambridge Analytica, the data-mining firm embroiled in a scandal over its work for president Donald Trump’s 2016 campaign, said it’s shutting down all operations effective immediately.

The firm said on Wednesday that it has begun insolvency proceedings in the UK and is also filing for bankruptcy in the US, according to a statement on its website.

The company said it lost "virtually all" customers and suppliers after the New York Times, The Observer and other publications reported Cambridge Analytica improperly obtained information from tens of millions of Facebook users. The breach helped the company develop political ads and other techniques that underpinned its work on Trump’s campaign, according to the New York Times.

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It’s unclear what effect, if any, the ads, which were targeted to individual users’ 'psychographics', had on actual voting, but the method that an academic working with Cambridge Analytica used to gather the Facebook data touched off a debate about how much information Facebook shares with third parties, and how it can be potentially used to manipulate views. Cambridge Analytica has denied any wrongdoing.

"Over the past several months, Cambridge Analytica has been the subject of numerous unfounded accusations and, despite the company’s efforts to correct the record, has been vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising in both the political and commercial arenas," the company said in the statement. "It has been determined that it is no longer viable to continue operating the business, which left Cambridge Analytica with no realistic alternative to placing the company into administration."

The company said that despite its "precarious financial condition," it plans to meet all its obligations to employees.

Days after the initial stories emerged, Cambridge Analytica suspended CEO Alexander Nix as the bad news piled up. Mr Nix was caught on camera, as part of a four-month undercover operation by Channel 4 News, boasting about the firm’s willingness to use bribes, entrapment with sex workers and other tactics to undermine political candidates.

Mr Nix had earlier told Bloomberg News that it was involved in as many as 10 campaigns for prime minister and president every year, including in Asia, Africa, Europe and South America. For one campaign in Latvia, according to documents given to prospective clients, the British affiliate of Cambridge Analytica, known as SCL Group, spread misinformation that was designed to stoke tensions between Latvians and ethnic Russians, blaming Russians for unemployment and helping a nationalist candidate to victory.

The scandal has caused significant problems for Facebook as well, which estimates that as many as 87 million users may have been affected. The company spent weeks explaining, apologising and adding more privacy features to the service and faced both a #deleteFacebook campaign and lengthy congressional hearings for Chief Executive Officer Mark Zuckerberg. However, Facebook is so large and powerful that the outcry has so far had little impact on its business. The company last week reported quarterly revenue that topped analyst estimates.

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