Facebook in hot water over data harvesting

Allegations that analytics company Cambridge Analytica used shadily harvested Facebook profile data to influence the outcomes of the 2016 US presidential election and the Brexit referendum in the UK are having a substantial negative impact on both companies.

Cambridge Analytica's CEO Alexander Nix has been suspended after being filmed boasting to undercover journalists from the UK's Channel 4 about being responsible for Donald Trump winning the 2016 election.

The footage included boasts about conducting dirty tricks such as spreading hundreds of memes based on the Defeat Crooked Hillary slogan aimed at discrediting Democrat candidate Hillary Clinton and using a self-destructing email service to prevent leaving a paper trail.

Nix said the company's use of data analytics enabled Trump to win the election despite trailing on the popular vote, by influencing a mere 40,000 key votes in three states.

The journalists had been posing as potential clients seeking to hire Cambridge Analytica to influence the Sri Lankan election. The footage appears to show Nix suggesting that the company could engage in tricks such as entrapping a candidate by filming them accepting a bribe or by sending "some girls" around to the candidate's house.

A whistleblowing former Cambridge Analytica employee has asserted in a press interview that the company acquired personal data to learn about individuals and then used “informational dominance” to surround individuals with curated information to change their perception of current events. He said the company was seeking to explore peoples' "mental vulnerabilities" and exploit them.

The value of Facebook shares meanwhile fell 6.8% on Monday and a further 2.7% on Tuesday as a result of the revelations, wiping billions from the company's market value.

Investors are baulking at the prospect of regulatory action across multiple markets. Australia's own Office of the Information Commissioner has revealed it is investigating whether any Australians' personal data has been sold to Cambridge Analytica.

The European parliament meanwhile plans to investigate whether Facebook data was misused to influence the Brexit campaign, the UK's Information Commissioner's Office has already launched an investigation, and Facebook is under pressure from multiple US senators to testify before Congress.

Facebook was already under fire for allegedly allowing Russian organisations to buy ads to influence the election, serving as a platform for the spread of fake news and enabling advertisers to target their ads at specific demographics including white supremacists and vulnerable, insecure youths.

But despite having hired a forensic investigator to determine whether Cambridge Analytica still holds any data scraped from the social network, Facebook is continuing to deny that the use of private information on at least 50 million of its users does not constitute a data breach.

Facebook updated its policies in 2014 to prevent data scooping apps from accessing data such as names and likes from friends.

In more turmoil for the social network, the New York Times recently reported that Facebook's data security chief Alex Stamos has decided to leave the company as a result of a disagreement over how to handle the Cambridge Analytica incident and the associated public outcry.

Undercover image of Alexander Nix courtesy Channel 4.

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