DEFINITION of 'Cambridge Analytica'

Cambridge Analytica is a London, UK–based political, data analytics, advertising, and consulting firm, which is accused of illegally sourcing Facebook data and using it to influence a variety of political campaigns. These campaigns include those of American Senator Ted Cruz and also of Donald Trump, as well as the Leave-EU (Brexit) campaign, resulting in the United Kingdom’s withdrawal from the EU. Cambridge Analytica has offices in London, New York, and Washington DC. 

BREAKING DOWN 'Cambridge Analytica'

The company's motto is “Data drives all that we do.” Calling itself a data science company, Cambridge Analytica is an offshoot of a British company called SCL Group (formerly Strategic Communication Laboratories), and was set up as a U.S. subsidiary company of SCL. During its early days, it targeted Facebook and other social media platforms to run advertisements, including for political campaigns, based on user profiles.

The story of sourcing Facebook users began in the year 2014, when an external psychology lecturer at the Cambridge University created an app that successfully gathered the personal data of approximately 50 million Facebook users. Though it was a breach of terms of service of Facebook, the collected data was allegedly passed on to Cambridge Analytica.

Though the Cambridge University has no apparent links to Cambridge Analytica, initial research work regarding this project was allegedly performed at one of the University’s research centers.

The then-working model of Facebook allowed an approved app to collect personal user data, as well as that of friends who were connected to a user within the Facebook network. Thus, the information which was voluntarily taken from more than 270,000 Facebook users with their permission led to a cascade of sourcing information for up to 50 million Facebook users using the connected network. Though Facebook changed the rules later and it now disallows such network-based data procurement, the damage was already done as key data points were already collected comprising a huge population.

Using the data points collected, Cambridge Analytica was able to build models that allowed psychological profiling of the variety of users, including political affinities of the user, whether he/she is extrovert or introvert, and how he/she would react to a particular campaign. Using these profile-based models, the company managed to run different campaigns suitable for different kinds of users, which allegedly influenced decision making and election choices.

For instance, if an introvert user was found to react positively to tightening visa regimes, he/she was shown ads that supported his/her beliefs, and vice versa. If a group of users residing near a particular border region preferred building a wall, suitably selected ad campaigns were shown to him/her.

This is where the Facebook platform was again used effectively by Cambridge Analytica. As the social media platform allows very specific profile-based targeting of users, ad campaigns were run on Facebook, as well as other social media platforms, to target users to influence their choices. (For more, see Facebook Accused of Censorship Against Donald Trump.)

Many firms operating in the U.S. already manage political and other campaigns and are involved in the serious business of lobbying. Cambridge Analytica was trying to break into the highly competitive market of analytics-based advertisement, and found success through the alleged unethical practices of user profiling.

In a recent sting operation, a channel reporter managed to film the company executive, Alexander Nix, proudly claiming that his firm did all the data research, mining, and analytics work for Donald Trump’s presidential campaign. He allegedly also bragged about the unethical practices the company would use to expose the corrupt politicians in foreign elections, thereby influencing the outcomes.

Following the revelations in March 2018, Nix was suspended from his post, and Facebook suspended all the accounts of SCL for failing to delete the key data points the company collected from the social media platform. (See also, Top 10 Donors to the Trump Campaign (FB, WWE))

  1. Social Data

    Social data is information shared publicly by social media users, ...
  2. Facebook Credits

    Facebook credits were a virtual currency which could be used ...
  3. Judge Business School

    Judge Business School is the business school at Cambridge University, ...
  4. Richard Stone

    Richard Stone was a British economist who won the 1984 Nobel ...
  5. Revenue Per User - RPU

    Revenue per user is a ratio used to express revenue generated ...
  6. Marketing Plan

    A marketing plan is a business's operational document outlining ...
Related Articles
  1. Investing

    More Data Breaches Likely, Facebook Warns

    Facebook warns of more possible data breaches in the future, and their affect on the company's reputation and brand image
  2. Investing

    Italy's UniCredit Severs Facebook Ties Over Breach

    Italy’s biggest bank stops advertising on Facebook after Cambridge Analytica revelations.
  3. Investing

    Facebook Faces $663K Fine for Cambridge Analytica Data Breach

    Facebook's stock was down in pre-market trading after Britain's data watchdog revealed the company is facing a fine of $662,900.
  4. Investing

    More Time Spent on Google Sites Than Facebook: Study

    Nielsen data shows that Facebook is losing out to YouTube and Waze in tallying time spent online.
  5. Investing

    Facebook Users Remain Devoted: Deutsche Bank

    Despite privacy concerns, Deutsche expects FB shares to rally 30% over 12 months.
  6. Investing

    Apple Bans Facebook App—Cites Illicit Data Sharing

    Apple has banned Onavo Protect from its App Store, saying it reports back on users.
  7. Investing

    Facebook Wants to Become Your Banker Like Amazon

    Facebook is following Amazon in expanding into financial services.
  8. Investing

    Facebook Sinks To Bear Market Territory on FTC Probe

    Shares of the tech giant are down over 20% from their peak last month after the FTC confirmed an investigation into the social network's privacy practices.
  9. Investing

    BlackRock Added To Facebook Position In March

    Despite the sell-off in Facebook's stock in March, BlackRock's largest stock fund added to its position.
  10. Investing

    Facebook Valuation Plunges to Lowest Since IPO

    The Street is divided on whether to buy Facebook on the dip, sell on regulatory risk, or wait out the uncertainty caused by a major crisis.
  1. How does Facebook make money?

    Facebook has gone from losses to a money spinner in a short span of time. Where do its profits come from? Read Answer >>
  2. How do Internet companies profit if they give away their services for free?

    Learn how companies in the Internet sector make a profit when service, content and user applications are offered at no cost ... Read Answer >>
  3. How does Twitter make money?

    Learn how Twitter earns revenue, including how the social media company uses three targeted advertising streams, data farming ... Read Answer >>
  4. How do returns on private equity investments compare to returns on other types of ...

    Learn how private equity performance compares with other alternative investment asset classes and traditional types of investment ... Read Answer >>
Trading Center