The Facebook scandal could change politics as well as the internet

“MY GOAL was never really to make Facebook cool. I am not a cool person,” said Mark Zuckerberg, the boss of the social-media giant, in 2014. That has never been more true. His company has spent the past year stumbling through controversies over the peddling of fake news and enabling Russian manipulation of American voters, with various degrees of ineptitude. Then, on March 17th, articles in the New York Times and Britain’s Observer newspaper suggested that a political consultancy, Cambridge Analytica, had obtained detailed data about some 50m Facebook users and shared this trove of information and analysis with third parties, including Donald Trump’s presidential campaign. The result is a corporate crisis—and a political reckoning.

Republicans and Democrats alike have called on Mr Zuckerberg and the heads of other tech firms to testify before the Senate. America’s consumer watchdog, the Federal Trade Commission (FTC), has also reportedly launched an investigation into Facebook’s privacy policies and whether it violated a consent decree of 2011 requiring the social network to notify users about how their data are shared. British MPs have called for Mr Zuckerberg to come before a select committee.

Even Facebook’s allies have unfriended it. On Twitter, Brian Acton, a co-founder of the popular messaging app WhatsApp (which Facebook bought for $22bn in 2014), encouraged people to “#DeleteFacebook”. News of his post pinged around the internet, including on Facebook itself. Investors, who have forgiven months of bad headlines in light of Facebook’s strong financial performance, are growing jittery. Between March 16th and March 21st the firm’s share price fell by 8.5%, erasing $45bn in market value. Facebook is still the world’s eighth-most-valuable publicly listed firm, but shareholders worry that politicians in Europe and America may impose onerous restrictions on data, suppressing growth.

Help yourself to our data

The Cambridge Analytica scandal reveals Facebook’s morphing, porous privacy policies and the company’s cavalier approach to oversight. The data on Facebook users were obtained by Aleksandr Kogan, a researcher at Cambridge University, who enticed some 270,000 people to take part in a survey in exchange for a small fee. When those users installed the survey app, they shared details about themselves and—unwittingly—their friends, around 50m Facebook users in all. Surprisingly, before 2015 Facebook’s rules allowed the mining of social connections without each user’s consent.

What happened next was never permitted by Facebook. Mr Kogan provided these data to Cambridge Analytica, which then allegedly shared them with customers, including Mr Trump’s campaign. Cambridge Analytica is backed by Robert Mercer, a Republican donor; Steve Bannon, formerly a top adviser to Mr Trump, used to serve as an executive. (The Economist used Cambridge Analytica for a market-research project in the past.)

Although news of Cambridge Analytica’s peddling of Facebook data was first reported in December 2015, the social network reportedly did not respond until eight months later, with a letter asking the firm to delete the data. It seems not to have checked that this was done. The lax response is evidence of wider “systemic operational problems”, says Brian Wieser of Pivotal Research, who follows the firm.

If reports are to be believed, Cambridge Analytica has a habit of pushing ethical and legal boundaries to gather data. On March 20th Alexander Nix, its chief executive, was suspended after recordings were aired on British television that seem to capture him describing manipulating people for information. Britain’s data-protection regulator, the Information Commissioner’s Office, is expected to search Cambridge Analytica’s offices.

The scandal reverberates through politics as well as the internet. Facebook has built a mammoth advertising business, with sales of around $40bn in 2017, by gathering detailed information about users’ identities and behaviour online and then selling access to them. Facebook tracks users not only on its services, including its eponymous social network and Instagram (which it owns), but across the web. Knowing that someone is a dog owner and interested in buying a new lead may not seem controversial. “Microtargeting” someone in order to influence their political views and voting behaviour appears more sinister.

Though political advertising is still a minuscule percentage of Facebook’s revenues, perhaps around 3%, it is a growing and lucrative line. Politicians have found that using Facebook can pay dividends. Even without using illegitimately obtained data to boost targeting, the social-media firm offers precise tools to political campaigns, including reaching users on Facebook whose names, phone numbers and e-mail addresses they already have. Facebook also enables campaigns to target voters who show an interest in the same issues or have similar profiles, packaging them into what it calls “lookalike audiences”. No other Western company apart from Google has such rich data.

Barack Obama’s campaigns were digitally sophisticated and used Facebook to reach prospective voters. Yet Mr Obama got proper permission to obtain data about people’s friends and did not microtarget users on an industrial scale, unlike Mr Trump’s campaign. Targeting based on Cambridge Analytica’s data may have helped Mr Trump win the presidency, although how much cannot be known.

A tepid response

Companies can overcome scandals. Rupert Murdoch, a media mogul, survived a maelstrom in 2011 when it was reported that a newspaper he owned had hacked the phone of a murdered girl, Milly Dowler. Mr Zuckerberg, like Mr Murdoch, has structured ownership of his firm so that he controls super-voting shares, and will probably maintain his power. But there is speculation that some of his lieutenants, including Sheryl Sandberg, could leave in the next year. The head of security, Alex Stamos, is expected to resign.

Mr Zuckerberg’s response to the scandal has been modest. He has apologised and promised thorough audits of third-party app developers and steps to make it easier for users to control their privacy settings. Such basic assurances may not be enough to reverse flagging corporate morale and win back the enthusiasm of users. Trust in social media is already low, and Americans have been spending less time on Facebook, in part because so much of what they see online is negative and dubious. Globally, users spent around 50m hours less per day on Facebook in the fourth quarter of 2017, which translates into a 15% drop in time spent year over year, according to Mr Wieser.

As some users turn away, politicians in America and Europe are likely to give Facebook more of their attention. They are scrutinising Facebook’s conduct and may propose new laws, especially in the domain of data privacy. In May regulations concerning data protection and user consent will come into effect in Europe. America has historically been weak on data protection, except for specific industries like health care. Overworked regulators have typically responded to reports of misconduct on a case-by-case basis, and the online advertising industry has been trusted to police itself.

Mr Obama was in favour of a consumer-privacy bill of rights, which would give users more control of their online data by requiring user consent. That made little headway because of opposition from the industry. Some politicians may want to revive talk of such a law, especially as Europe strengthens its safeguards. But political reformers seldom have an easy time in America. And, like many others, politicians have come to rely on Facebook.