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Could the Facebook data scandal change the way we regulate tech firms?

UntitledZucc
UntitledZucc

Are we witnessing a fundamental shift in power between the world’s tech giants and governments?

It may well be that when we look back at the evolution of companies such as Facebook, Google and Twitter, 2018 stands out as a turning point.

The tech sector, often characterized as the new ‘Wild West’, unburdened by regulation and largely left to police itself, finds itself under unprecedented scrutiny.

And the scandal surrounding Facebook and the Cambridge Analytica data breach could end up hastening moves to rein in the industry. 

Zuckerberg says sorry

After days of media pressure, Facebook founder Mark Zuckerberg has admitted that the social network "made mistakes" that led to millions of Facebook users having their data exploited by a political consultancy.

Mr Zuckerberg’s comments were in response to an investigation which accused Cambridge Analytica of using the data on behalf of political clients including Donald Trump’s election campaign.

Mr Zuckerberg said a "breach of trust" had occurred and promised to make it far harder for apps to "harvest" user information.

In later interviews he said he was "really sorry” and pledged to take action against "rogue apps".

What got us to this point?

In 2014, Facebook invited users to find out their personality type via a quiz.  This is Your Digital Life was developed by Cambridge University researcher Dr Aleksandr Kogan.

The app collected data from about 270,000 users. It also harvested some public data from users' friends. A whistleblower, Christopher Wylie, says the data of about 50 million people was collected.

Mr Wylie claims the data was sold to Cambridge Analytica (a company unconnected to the university) which then used it to psychologically profile people and deliver tailored political advertising to them.

Aleksandr Kogan says that this was never his intention and that he was “stunned” that his “perfectly legal” research on the happiness of Facebook users was used as a political tool.

Facebook says that while the data was obtained legitimately, it did tell Cambridge Analytica to delete it, but that the company ignored this request.

Meanwhile, Cambridge Analytica’s chief executive, Alexander Nix, has been suspended after being secretly recorded saying that the company ran Donald Trump's digital campaign during the 2016 US election.

Cambridge Analytica denies any wrongdoing and insists that Mr Nix’s comments were "grossly misrepresented”. The company also says it did delete the data when requested.

The regulatory reaction

The detail of who did or didn’t do what, when, may end up being much less important than the impact the affair has around the world.

Since the story broke, there has been a new willingness amongst lawmakers to get involved in the debate.

US senators have called on Mr Zuckerberg to testify before Congress to talk about how Facebook will protect its two billion users, while perhaps even more significantly, the US Federal Trade Commission has reportedly opened an investigation into the company.

The European Parliament says it will investigate to see if the data was misused and a UK parliamentary committee has called for Mr Zuckerberg to give evidence about Facebook’s use of personal data.

In Dublin, Ireland’s privacy watchdog said it was following up with Facebook to clarify its oversight. The Irish body is the lead regulator for Facebook in the European Union because the network’s European headquarters are in Dublin.

Data done differently?

Facebook, along with other major tech companies, has become used to self-regulation.

One of the reasons that the Cambridge Analytica story is so powerful is because it has highlighted that sometimes, self-regulation doesn’t work.

Facebook says that once it learned that Cambridge Analytica had used Dr Kogan’s data for unauthorized purposes, it insisted that the data be deleted.

When, according to press reports, Cambridge Analytica did not comply, Facebook appeared to do nothing to punish the company.

Its current policies are much stricter than they were in the early years of the platform. But that is unlikely to be enough for many regulators who may feel that self-regulation will always, by definition, be too weak.

Tax rise

The reaction to the data scandal comes at a time when tech firms are already experiencing heightened interest from regulators, especially in Europe.

Google is appealing a 2.4 billion euro fine imposed by EU regulators for abuse of its dominance of the search engine market. The fine was levied in relation to Google’s shopping comparison service.

And within the last few days the EU has been talking about ways to increase the tax collected from tech firms after long running criticism that many have historically paid far too little. 

High Noon?

Facebook has undoubtedly had a difficult week, with its share price dropping and the #deletefacebook campaign receiving a lot of attention. It will, of course, weather the storm and the immediate impact is likely to be limited.

But in the longer term things may well change significantly for all tech companies and the way regulators approach their behavior.

The Wild West’s days may be numbered - with a posse of sheriffs looking likely to take a much more confident stand.