Cambridge Analytica to File for Bankruptcy After Misuse of Facebook Data

Cambridge Analytica, the British-based firm accused of meddling in the Nigerian general election in 2015, announced on Wednesday that it would cease most operations and file for bankruptcy.

The embattled political consulting firm will be closing shop amid growing legal and political scrutiny of its business practices and work for Donald J. Trump’s presidential campaign in 2016 and its involvement in the Nigerian and Kenyan presidential campaigns in 2015 and 2017 respectively, among others.

The decision was made less than two months after Cambridge Analytica and Facebook became embroiled in a data-harvesting scandal that compromised the personal information of up to 87 million people, according to the New York Times.

Revelations about the misuse of data, published in March by The New York Times and The Observer of London, plunged Facebook into crisis and prompted regulators and British and United States lawmakers to open investigations into Cambridge Analytica activities.

In a statement posted to its website, Cambridge Analytica said the controversy had driven away virtually all of the company’s customers, forcing it to file for bankruptcy in both the U.S. and Britain. The elections division of Cambridge’s British affiliate, SCL Group, will also shut down, the company said.

But the company’s announcement left several questions unanswered, including who would retain the company’s intellectual property — the so-called psychographic voter profiles built in part with data from Facebook — and whether Cambridge Analytica’s data-mining business would return under new auspices.

“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’s statement said.

Cambridge Analytica also said the results of an independent investigation it had commissioned, which it released on Wednesday, contradicted assertions made by former employees and contractors about its acquisition of Facebook data. The report played down the role of a contractor turned whistle-blower, Christopher Wylie, who helped the company acquire Facebook data, calling it “very modest”.

The company, bankrolled by Robert Mercer, a wealthy Republican donor who invested at least $15 million, offered tools that it claimed could identify the personalities of American voters and influence their behaviour. Those modelling techniques underpinned Cambridge Analytica’s work for the Trump campaign and for other candidates in 2014 and 2016.

But Cambridge Analytica came under scrutiny over the past year, first for its purported methods of profiling voters and then over allegations that it improperly harvested private data from Facebook users. Last year, the company was drawn into the special counsel investigation of Russian interference in the 2016 U.S. election.
The company was also forced to suspend its chief executive, Alexander Nix, after a British television channel released an undercover video. In it, Mr. Nix suggested that the company had used seduction and bribery to entrap politicians and influence foreign elections.

Facebook has since announced changes to its policies for collecting and handling users’ data. Its chief executive, Mark Zuckerberg, testified last month before Congress, where he faced criticism for failing to protect users’ data.
The controversy dealt a major blow to Cambridge Analytica’s ambitions of expanding its commercial business in the U.S., while also bringing unwanted attention to the American government contracts sought by SCL Group, an intelligence contractor.