Cambridge Analytica, which is at the center of a huge Facebook data breach, has come under scrutiny for its role in interfering with our democratic processes on both sides of the Atlantic, meddling in Brexit Referendum and Donald Trump’s election.
The shattering revelations that have emerged in the latest days about the corporate misconducts carried out by Cambridge Analytica have forced us to have this moment of reflection. The gist of this article is not to offer a description of the facts that have already been given by media but to analyze some of the most relevant corporate social responsibility issues arising from this scandal.
The irresponsible behavior of social-media corporations
The Cambridge Analytica scandal has demonstrated for the umpteenth time that social-media companies have adopted an irresponsible business model. Companies like Facebook have become incredibly powerful because of the combination of their addictive-by-design nature and the capability of collecting data about the users’ behaviors.
For instance, using the simple expedient of introducing the “like” button, which enables users to easily interact with the content present on the platform, Facebook has gained from 2009 onwards the unrivaled capability of gathering information about personal preferences and recording every single endorsement of its users. It is not surprising that in 2016, Facebook rolled out its new “reactions buttons” across the world. The five new emotions – Love, Angry, Sad, Haha and Wow – give the company greater and more detailed access to users’ personal preferences or feelings. The issue is that the vast majority of users are unaware of the circumstance that this more accurate information may be used to manipulate their own behavior.
The irresponsible corporate conduct of social-media corporations lies in the fact that the access to this incredibly valuable information has not been accompanied by the adoption of adequate measures to avoid any possible misuse of the platform, and to raise the awareness of users about the risks connected with the use of social media. On the one hand, those risks are related to the possible exploitation of such platforms to spread fake news by disinformation operators, who are typically indistinguishable from any other user; on the other, there is the risk that third parties may obtain the personal data gathered by social-media companies and use them in improper ways as it occurred in the Cambridge Analytica case.
It is not surprising that in the last two years, Facebook, Google, and other social-media corporations have contended with several controversies, including charges that they helped spread false news, unwittingly facilitated Russian meddling in the US 2016 election and Brexit referendum, and fanned political polarisation.
In truth, this issue is not related only to social-media companies; other businesses such as cable TV and talk radio can be used to spread fake news. However, because of their very nature, social-media platforms wield extraordinary influence on our democratic societies. Suffice here to say that Americans touch their smartphones on average more than 2,600 times a day and that users in America click the “like” button on Facebook about 4m times a minute. As Tim O’Reilly wrote in his book WTF: What’s the Future and Why It’s Up To Us: “Another big difference between the web and traditional well-controlled collections is that there is virtually no control over what people can put on the web. Couple this flexibility to publish anything with the enormous influence of search engines to route traffic, and companies which deliberately manipulate search engines for profit become a serious problem.”
The political discontent that these issues have generated in our parliamentary democracies is clearly illustrated by the following statement that Sen. Dianne Feinstein made (from min. 13:30) during the hearings that were part of the U.S. Congress’s investigation into Russia’s actions in Trump’s election: “[…] I saw really for the first time how effectively Russia has harnessed the tremendous and, quite frankly to me, frightening power of social media. They showed us how millions of Americans are reached and how Russia successfully used fake accounts […] to shape and manipulate opinions […] What is really staggering and hard to fully comprehend is how easily and successfully they turned modern technology to their advantage.”
The situation is aggravated by the fact that, although the titans of Big Tech have seen how the power of their platforms could reshape the economy and are perfectly aware of those issues, they have not adopted any viable corporate social responsibility solution. It is then understandable that the sector is facing a period of profound crisis characterized by the fact that the population is starting to use social-media platforms less, their costs are soaring, and regulation looms. Earlier this year, the billionaire investor and philanthropist George Soros even defined Facebook and Google at the World Economic Forum as a “menace to society.”
Investigative journalists, whistleblowers, and leakers: the heroes of our time
The Cambridge Analytica scandal has underlined again and again the crucial role that investigative journalists, whistleblowers, and leakers play in unveiling corporate misconducts, as well as the shady deals and corrupt practices that constitute the unethical way in which corporate executives operate.
The scandal has been revealed thanks to the painstaking work carried out by the Observer and the Guardian, whose journalists have spent a year analyzing documents, gathering eyewitness reports, and investigating the matter.
Their success has also depended on the courage of two whistleblowers, Shahmir Sanni and Christopher Wylie, who were brave enough to speak about the misconducts perpetrated by Cambridge Analytica.
We also must not forget the importance of leakers, who on many occasions have exposed the true corrupt face of business. It has been only thanks to a series of documents unveiled during the Paradise Papers Scandal that it was revealed how two Russian state institutions with close ties to Vladimir Putin funded substantial investments in Twitter and Facebook to influence the US politics.
Over the course of the last decade, whistleblowers have become of vital importance for revealing the companies who commit serious misconducts and helping the authorities in prosecuting them. Their role has been essential even for fighting against corporate pollutant activities. For instance, it was only thanks to the revelations by a former engineer on a cruise ship that, in December 2016, Princess Cruise Lines paid U.S. federal enforcement authorities $40 million to settle charges the company dumped oily substances into the ocean.
As I mentioned in an article I wrote on the Conversation, as a tribute to the killing of the Maltese investigative journalist and blogger Daphne Caruana Galizia, over the last decade, the most significant steps forward in the fight against corporate misbehaviours have been made thanks to the courage of leakers, whistleblowers and investigative journalists, who help bring the most serious allegations of misconduct to light. They are the true heroes of our time, and the ineffectiveness of internal controls and external auditors means we must rely on them to identify corporate malpractices. So we should do our best to ensure they are supported and protected, and react strongly against any attempt to suppress their actions.
As mere examples, we should put more effort into changing the dominant corporate subculture by which whistleblowers are seen as traitors instead of positive actors; we should establish for all investigative journalists, whistleblowers and leakers, who unveil corrupt practices, protection programs similar to the ones used to protect those who help us in dismantling organized criminal groups; we should lobby for the introduction of programs not only for protecting but also rewarding corporate whistleblowers, as the one created for the U.S. Securities and Exchange Commission through Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act or, the one introduced more recently in the U.S. by the Motor Vehicle Safety Whistleblower Act of 2015, which aims at giving industry insiders a financial incentive to bring to light safety-related problems.
Corporate Misuse of Wealth and Power
Last but not least, the Cambridge Analytica scandal is illustrative of a corporate system based on pure greed, which not only ignores stakeholders’ needs but exploits the weaknesses in society for the sake of profit.
Alexander Nix, CEO of Cambridge Analytica, spoke to undercover reporters from Channel 4 News about the dark arts used by the company to help clients, which included entrapping rival candidates in fake bribery stings and hiring prostitutes to seduce them.
The following statements of Christopher Wylie, one of the Cambridge Analytica whistleblowers, show not only how deeply unethical the conducts perpetrated by the company were but also how the very corporate structure of the company facilitated those irresponsible behaviours: “Yes it was a grossly unethical experiment because you are playing with […] the psychology of an entire country without their consent or awareness […] in the context of the democratic process [Then, in response to the question of the Guardian journalist, who asked Wylie if he thought about the immorality of the business operations he was carrying out, the whistleblower answered] You know… the company… we didn’t do good job at due diligence, so no… we didn’t… […] we were solely focused on gathering those data and doing this experiment.”
The whistleblower also depicted in a clear way the CEO of the company: “[…] Alexander Nix […] he is ambitious he cared more about winning than what we actually did at the company, he is an upper-class Etonian who expects people to follow him wherever he goes.” From this statement, it emerges clearly that the CEO experienced what evolutionary biologists define as the “winner effect,” i.e., a self-destructive, irrational behavior, where risk-taking becomes increasingly foolish. Finally, the scandal is giving serious cause for concern about the education system presently in place. The risk is that, in the competitive environment generated by globalization, schools and universities that offer “elitist” education may in some way foster a conviction in personal success that may easily lead to a corrupt stubbornness that insists on success at any cost. To combat this phenomenon, our educational institutions should focus more on educating future international business leaders on the importance of business ethics and corporate social responsibility.
Great analysis Costa. I would add that Corporate Governance is added to the vital education that is provided to current and future business leaders in conjunction with business ethics and corporate social responsibility. These should be ongoing too; so that irrespective of socioeconomic backgrounds, business leaders are constantly helped to grow in their understanding of risks associated with new technologies. I’m afraid what we have witnessed and are witnessing, may be the beginning of more irresponsibility to come if not urgently and adequately addressed as I advocated in my #AI paper https://corporatesocialresponsibilityblog.com/2018/03/12/a-case-for-the-responsible-use-of-artificial-intelligence-in-global-financial-services/
Dear Lola,
Thank you very much for the positive comment.
I think there is a lot more to investigate on the correlation between elitist education and corporate immoral behavior. There is an entire culture of impunity of the elites that has been fostered for generations. Elitist institutions cannot act as a byproduct of the dominant society.
I think that correlation may be extended to add another dimension. Elitist education is often the schooling of those in high positions of government.
Morality and awareness not being instilled in these elitist centres causes a diabolical result where corporate immorality is certainly fostered, but beyond that, there exists a strong relationship between corporations and the state as these government actors are very susceptible to unethical influence by corporations. Corporations’ significant measure of control on the state naturally result in a weak regulatory apparatus emanating from the state facilitating the immoral behaviour we frequently witness from corporations.
I really enjoyed reading this post, Costa. It kept me engaged throughout and provided a detailed CSR analysis. I would also like to bring to your notice that The Cambridge Analytica scandal has recently also caused an uproar in India’s politics as well. There are numerous suspicious signs accessible that demonstrate that the Congress Party abused the administrations of the organisation.
The ruling party, BJP claim that Congress have utilized and abused Cambridge Analytica amid the Gujarat races. Also, when they (Congress) are found to be guilty, they are stating that they have no association with the organisation.
BJP claim that Congress’s whole online networking effort has been dealt with the assistance of Cambridge Analytica.
Congress meanwhile claim that it is the BJP that have association with Cambridge Analytica. They claimed that online profiles of CA uncover the organization assumed a key part in BJP’s crusade in four states, incorporating Bihar races in 2010. AICC conveyed duplicates of the web profile of CA and its India accomplice Ovelina Business Intelligence (OBI). Congress Party claim that BJP’s industrial facility of phoney news delivers phoney question and answer sessions, counterfeit plans, counterfeit twists and phoney proclamations and that they have turned into the regular character of BJP and its ‘rebellious’ clergyman of law.
This is currently a burning issue in the nation!
https://timesofindia.indiatimes.com/india/whistleblower-names-congress-as-client-of-cambridge-analytica/articleshow/63491689.cms
https://timesofindia.indiatimes.com/india/cambridge-analytica-tied-to-bjp-not-us-claims-congress/articleshow/63405964.cms
Dear Ankit,
Thank you very much for this comment and for the interesting links.
Today, a must read article has been published by the Financial Times. It is entitled “Why south-east Asia’s politics are proving a problem for Facebook,” and if focuses on many issues related to hate speech and political manipulation that the company is facing in that region.
https://www.ft.com/content/9b84a5a4-33ff-11e8-a3ae-fd3fd4564aa6
Hello Costa,
I think this is a very insightful post because we can basically see the approach taken by corporates, which are to record personal data and use them to manipulate social media user’s own behavior. As a result of this approach, it feels like we are being robbed. This is an important issue because we cannot see the individual’s consent and therefore, this attitude illustrates the corporate’s misbehavior.
Recently, I was reading breaking news about the Facebook-Cambridge Analytica scandal and it is stated that Cambridge Analytica used a personality quiz to collect user data for the US presidential election. From this point of view, we can say that corporates are monitoring and profiting from society and it is clearly not fair. I want to point out that this kind of unlawful actions are definitely against the public welfare.
Moreover, it is reported by the House of Commons Committee that Facebook ‘s application used to ‘spy’ on users. For this actions, we can hear some people who are telling that ‘They can spy all they like, I’ve got nothing to hide.’ but we are talking about an individual’s right to privacy, so we must not remain insensitive.
You can find the news in the following link:
https://www.bbc.co.uk/news/technology-47281906?intlink_from_url=https://www.bbc.co.uk/news/topics/c81zyn0888lt/facebook-cambridge-analytica-scandal&link_location=live-reporting-story
I totally agree with you to find a way to stop this irresponsible behavior of social-media corporations and I think, we need to focus on public debate and individual’s consent to solve this vital issue. I mean, if we raise the public awareness about the importance of personal data, I believe that we will be able to change the culture and therefore we can prevent the act of pushing hard against law by corporations.
Furthermore, you also pointed out that investigative journalists, whistleblowers, and leakers have a crucial role in unveiling corporate misconducts. As an example of Facebook-Cambridge Analytica scandal, Christopher Wylie mentioned in his statement that Cambridge Analytica took the Facebook data, identified target voter groups and designed targeted messaging to influence opinion. I think, in this scandal, he exposed the dark side of corporate misbehaviours and therefore I believe that we have to protect these people. In my view, if we want to protect these people, we need to change the culture by indicating the importance of data protection and privacy. In this way, we will be able to raise public awareness to engage with these issues.
Dear Pinar,
Thank you very much for your positive comment.
I agree with you. The Cambridge Analytica scandal has unveiled the dark aspect of corporate behavior. At the same time, it has demonstrated the fragility of our societies which rely on unreliable sources of information that can be easily manipulated to influence the public opinion.
Great analysis Costa. I would add that Corporate social responsibility- the notion that business should be mindful of their effects on public welfare has become a trend that companies are eager to ostensibly adopt.(Janet E. Keer). However, in the wake of globalization, the question we are faced with is whether corporations are willing to put on the ‘white hat’. Unfortunately, most times the answer is the negative as evidenced by the greed manifested by corporations whilst they neglect their CSR in order to maximise profits at whatever cost. Furthermore, I believe the problem is deep rooted; what kind of directors are there? are they people of integrity? For example; A linked investigation by undercover reporters at Channel 4 News revealed the head of Cambridge Analytica, Alexander Nix, boasting of using dirty tricks to swing elections. Speaking to someone who he believed wanted to use the firm for work in Sri Lanka, he talked about creating sex scandals and using fake news to swing votes. https://www.theguardian.com/uk-news/2018/mar/22/cambridge-analytica-scandal-the-biggest-revelations-so-far.
This clearly shows the attitude and moral standards of Nix. it goes without saying that we can not give what we do not have; similarly if we are of no morals, then we absolutely can not be expected to have CSR.
In light of the whistle-blowers, to call them heroes is an understatement, they are the blood line of any morality left In corporations, they are the future and our only hope to ‘clean’ out the corporations. I agree with you that they deserve more; from the corporation and society as a whole. we should lobby that these whistle-blowers be protected, rewarded and where need arise, they should be counselled.
Lastly but by no means least, the Cambridge Analytica scandal is a clear manifestation of the level of greed of corporations. While I appreciate it is a shell, with no feelings, the corporation is made up of people who should be sensitive, who should not merely be driven by numbers and targets. I recommend an over haul change of the system to wit right from school; CSR should be taught to all, hopefully that way we will groom business people that are mindful of the environment, other people inter alia. I also recommend harsher sentences for the corporations involved in irresponsible behaviour so as to deter others from being so irresponsible at the detriment of innocent parties.
Dear Samantha,
Thank you very much for your comment.
I agree with you, the morality of many CEOs can be questioned… This is a structural problem related to the fact that shareholders are looking for CEOs that are capable of planning and executing profitable risking activities more that corporate leaders capable of acting with integrity…
Article is well articulated and always love to go through adventurous one. Cambridge Analytica is just a hit on the head, a lot of other are daily scamming people. The key point for me is this kind of scandal would be the issue of fight against it beyond the point of punishing the culprits. How?
I find the very astounding problem to these kinds of problem to be lack of guardianship on top of them who actually monitors them in proper way or if they are is not sufficient one. As Jeremy Kuester in an article “Transnational influences on Financial Crime” explains that the responsibility of the original companies towards crown till 19th centuries and till then it was in one stage guided with proper manner. Crown at any kind of fraud or illegal involvement could fight against it or suspend it to the last stage but at present the situation is reversed. The houses are being fat but the position of capable higher command for monitor or punish is “vacant”. This is what US president Roosevelt in 1938 while addressing congress said, “the liberty of a democracy is not safe if the people tolerate the growth of a private power to a point where it becomes stronger than the democratic state itself….” . The articulation made by the author is quite good to have proper and extinguish education system but its been very formal mechanism of monitoring any institution like today’s corporate houses. One alternative to fulfill the vacancy could be “shareholder”, who are in a lot of circumstances given very less chance for any involvement in team. This would minimize the clases between the management and the shareholder and decreases the conflict of interest.
High time to fulfill the vacancy of higher authority for the proper governance of corporate houses. Why not having a extraordinary force within corporate house with especial power where they look for the misconducts(from shareholders). Let’s make them accountable to an agency of government or people’s parliament (depending on the economy of corporate house). If not the situation might go more chaotic.
A very insightful article which clearly illustrates the need for whistleblowers and leakers to have added protective powers and to change the perspective in which whistleblowers are viewed in society. It also highlights the urgency for social media companies to be more accountable and to take greater responsibility in ensuring the ethical use of their platforms. Especially considering that the consequences of not doing so have already been witnessed repeatedly – whether that be foreign state influence in elections or helping to encourage genocide (https://www.ohchr.org/Documents/HRBodies/HRCouncil/FFM-Myanmar/A_HRC_39_CRP.2.pdf).
I would add one of the benefits of whistleblowers being more well-protected would be a reluctance from corporations and their directors to engage in unethical behaviour for fears of putting their business ventures in ruin. The punishment suffered by Alexander Nix (https://www.theguardian.com/uk-news/2020/sep/24/cambridge-analytica-directorship-ban-alexander-nix) in being banned from working as a director for several years may be an example of this, and may possibly act as some form of deterrence. However, it seems clear that this kind of punishment is wholly insufficient and little more than a ‘slap on the wrist’ considering the severity of his company’s corruptive and unethical practices.
The article also intelligently mentions how apparently innocuous feature-updates by social media companies are used to create very specific categories, allowing advertisers to exploit certain demographics with greater ease. The United States Senate Intelligence Committee (https://www.intelligence.senate.gov/sites/default/files/documents/Report_Volume2.pdf) explored how Russia’s Internet Research Agency took advantage of Facebook’s advertising tools to influence certain demographics of American voters. An example of this is the finding that African-Americans were targeted with messaging encouraging them to become ‘cynical of the political process in general and boycott the elections entirely, bearing in mind that African-Americans traditionally vote democrat. Such crafty unethical attempts to influence foreign states would not have occurred if social media companies took greater social responsibility, and I believe that serious alterations must occur with regard to mass data-storage by companies and the use of that for advertisement.