Facebook data leak scandal: what does it mean for the average user?

The forecasts are striking: Facebook is one step away from bankruptcy. The company’s shares fell by 6 billion dollars in a single day, and the fines could reach trillions. Alarming headlines are spreading online, claiming that Facebook will go bankrupt in five minutes, its shares have dropped by 6 billion dollars, and so on. If we look into it, all of this is an echo of scandals involving Russia’s online interference in the internal affairs of Western countries and the United Kingdom’s exit from the European Union.

n recent days, all of this has taken on new colors. Leading Western media – The New York Times, The Guardian, CNN – have published investigations about how the company Cambridge Analytica obtained the personal data of 50 million Facebook users and used it during Donald Trump’s election campaign. We won’t judge what this violation will mean for Facebook, for Trump himself, or for the world as a whole, but it is worth understanding what users of the world’s most popular social network should expect in the near future.

What kind of scandal would it be without a Russian trace?..

So how did Cambridge Analytica gain access to data from around 50 million Facebook accounts, primarily from the American segment? Each of the publications offers its own version. According to CNN, two Facebook employees – Aleksandr Kogan and Joseph Chancellor – used a shell company to “leak” data to Cambridge Analytica. However, the New York Times presents a different version. According to their information, Russian-American scientist Aleksandr Kogan, an associate professor at St. Petersburg University, created an app called “thisisyourdigitallife,” supposedly for research purposes, to study the psychological profiles of Facebook users. Around 300,000 people used the app, but Kogan also received data from the friends list of these users. According to approximate estimates, the number reached… 50 million accounts. Reportedly, this was legal and approved by Facebook’s administration. But later, Kogan transferred all the materials – including data about users’ political preferences – to Cambridge Analytica. From that point, most agree that the results of Cambridge Analytica’s research were used during Donald Trump’s election campaign in 2016. When Facebook found out, they demanded that Cambridge Analytica delete the data or face legal action. The company assured them that the data had been deleted. Then, in March 2018, Facebook publicly shared its position regarding the conflict with Cambridge Analytica and Kogan in its blog, one day before Western media published their investigations. The message was: if you do not delete the “stolen” personal data – be prepared for lawsuits. But this did not calm the public. On the contrary, it triggered a new, powerful wave of scandal.

Who were these data stolen for? Primarily, for Donald Trump’s campaign team, which hired Cambridge Analytica during the election campaign. But not only for them. According to The Guardian, Kogan did not work solely for Cambridge Analytica. He also received grants from the Russian government to research Facebook users’ preferences. There you have it – the second, highly interested and even more compromised party: Russia…

An intrigue: will Zuckerberg avoid multi-billion-dollar fines?

There is no doubt about Facebook’s guilt – the company failed to ensure the protection of users’ personal data. Recently, information emerged that the U.S. Federal Trade Commission may fine Facebook if it is found that the company violated privacy regulations. The fine is enormous: up to $40,000 for each “stolen” user. If multiplied by 50 million, the total reaches 2 trillion dollars. Hence the talks about bankruptcy, since Facebook’s market capitalization is much lower.

Serhiy Rachynskyi

However, experts agree that the scenario in which Facebook has to pay such a huge fine is not realistic. Especially since bankruptcy is out of the question. In particular, an expert from the Pylyp Orlyk Institute for Democracy, Serhiy Rachynskyi, commented to Ukrinform that this scandal arose not in the market sphere, but in the political one, so the fines are likely to be avoided. “Politicians see Facebook as a powerful tool in political struggle. That’s exactly why they fear it. This fear triggered such a strong negative reaction in the U.S. political environment. Will they bring the company to bankruptcy? Most likely not. But pressure on the company and on Mark Zuckerberg personally will increase,” Rachynskyi believes.

Serhiy Bykov

Serhiy Bykov, an expert from the Institute of Public Policy and Consulting “Inpolit”, commenting to Ukrinform on the possible consequences of this scandal for Facebook, sees no reason for concern, although he believes that the social network’s management should learn a lesson from it. “The fall in Facebook’s stock value will create conditions for its sale and losses for shareholders. In the future, if Facebook does not revise its policy, it risks losing about 10% of users worldwide,” the expert believes.

Oleksandr Buyankin

Head of the digital direction at the communications agency Friends of Brands, Oleksandr Buyankin, also states that Facebook’s reputation will be shaken after the scandal. “Facebook is not the only social network in the world. Due to reputational damage, users may start migrating to other social networks or messengers. Telegram, for example, built its marketing campaign on the promise of guaranteed private data security. Even a single court decision confirming the illegality of data transfer from Facebook could not only bring down its market capitalization, but also deprive Zuckerberg’s company of real cash flow as advertisers move to other platforms. The biggest ones may not even wait for the audience to migrate — their marketing departments will cut ties with Facebook to avoid potential reputational damage themselves,” the expert suggests.

“However, there is a nuance in Facebook’s fault. For example, even if it is proven that the data collected by the company was used by Russians to influence Trump’s presidential campaign or the Brexit decision, it won’t necessarily cause irreparable damage to the company — it might even attract other advertisers. What’s important is to prove that the data was obtained illegally. In the U.S., there is an opt-out system, meaning all user data is available to the company by default. It can use it, for instance sell it, unless the user has explicitly prohibited that. So basically, anyone with money and interest in such data can access it. Under these conditions, it will be difficult to prove Facebook’s guilt,” Oleksandr Buyankin concludes.

The data leak can be prevented by users themselves

The scandal around the leak of personal data from Facebook is not over yet, so it is still too early to assess all the consequences. However, experts believe that in the near future, Facebook will gradually distance itself from politics. “Facebook will try to avoid direct conflict with the political situation in the United States, and therefore will continue to experiment with its news feed algorithms. The recent changes in favor of promoting ‘local news’ clearly show the network’s attempt to depoliticize itself,” says Serhiy Rachynskyi.

Alyona Dalska

So far, the Ukrainian segment of Facebook has not been affected by the conflict. But this does not mean there is nothing to worry about, as a similar technology could be used against us as well. “We should not forget that Ukraine is on the threshold of elections, and as active users of Ukrainian Facebook, we may also end up ‘on the radar’ — this time of local ‘hunters’ for public opinion. For example, there was recent information circulating on Facebook about a data breach at UIA (Ukraine International Airlines) — meaning our data is at risk. No one knows where the next explosion will occur, so we need to stay alert,” notes Alyona Dalska, an expert at the company “Same & Friends.”

Oleksandr Melnyk

“For Facebook users and other social networks, this story should be a lesson: no one will protect your data if you don’t take care of it yourself. It is likely that the leak occurred when users took a personality quiz. These quizzes are becoming increasingly popular online. Users eagerly take them to find out ‘who they were in a past life’ or ‘which celebrity they resemble,’ not realizing that their personal data is at that very moment being added to massive databases of great value for marketing and, as the Cambridge Analytica case has shown, even political purposes. That’s why you shouldn’t trust suspicious companies that develop various apps or programs, and you should actually read the privacy policy before clicking ‘I agree.’ And the absence of any data protection policy — when you’re not even asked for consent to collect your data — is a clear signal that you should avoid using such an app,” concludes Oleksandr Melnyk, a lawyer at Vasyl Kisil and Partners.

Ukrainian Facebook users need to pay special attention to the security of their personal data. Very soon, they may become easy targets not only for Ukrainian political strategists, but — even more dangerously — for Russian ones. Neglecting basic security rules can lead to serious consequences not only for you personally, but for the entire country.