Executive Pay: The Curious Case of Carlos Ghosn’s Arrest
February 12, 2025
Introduction: What is IT Business Alignment and Why it is Important The saying about the Blind Men and the Elephant in which three blind men touch the Elephant and state different things without knowing that it is an Elephant, firms and organizations must ensure that their IT and business strategies are complementary and supplementary to […]
The Vexatious Issue of Reservations in the Indian Private Sector Every now and then, the vexatious issue of Reservations in the Private Sector crops up in India and more so, in the run up to the elections that are held every five years or less. This issue that polarizes Indian society and policymakers apart from […]
In recent years, the BPO phenomenon has accompanied the increasing globalization of the world economy and has spawned a shift in the way the United States and Europe view the developing countries of the East. For instance, the increasing movement of companies wishing to outsource their back office work to India and Philippines has meant […]
Ever since the internet has been invented, the world has become a global village. This means that at the present moment, data can flow freely all over the world. However, many countries are not happy with this arrangement. Countries like Russia and China are already trying to enforce data localization laws which would inhibit the […]
In the year 2019 the concept of “The Green New Deal” was introduced in American politics. The idea was floated by Alexandria Ocasia-Cortez and it became very popular amongst all Democrats. Almost all the Democrats who plan to run for President have come out in support of the Green New Deal. The idea has also […]
Facebook is one of the most important firms in the American economy. The tech giant is a major employer in the United States. Its actions have a profound economic impact across the globe. This is the reason behind the hefty valuation that Facebook commands. However, this valuation and the entire business model came under siege on March 19, 2018. Facebook was found to be engaged in a political scandal. As a result, the valuation of Facebook suddenly crashed. The company lost more than $36 billion in market capitalization in a single day. This negative sentiment also impacted the Dow Jones Industrial Average which was down by close to 7% in a single day.
In this article, we will have a closer look at the political scandal that Facebook has been involved in. We will also consider some of the economic impacts of this scandal.
Cambridge Analytica is a public relations firm based in the United Kingdom. This firm specializes in psychological profiling and even psychological warfare. This means that they collect data from social networking websites. This data is then used by Cambridge Analytica to draw psychological profiles of the respondents. Once these profiles are drawn the reaction of this audience to various messages are tested. Based on this testing, Cambridge Analytica enables political candidates to form a message which resonates with the population. The underlying belief behind these activities is that people do not vote based on rational thought. Instead, they vote based on emotions. If a company is somehow able to harvest data and understand the emotions, they reach a position wherein they can influence the outcome of the elections.
Facebook was involved in this scandal because the data collected by Cambridge Analytica, in this case, was collected on Facebook. Also, Facebook allowed them to harvest the data from the friends' list of the users who had agreed to take the quiz. This means that people who had not even directly given permission for their data to be used were also affected by the scandal. It is said that Cambridge Analytica used Facebook on a massive scale. They harvested as many as 50 million profiles from Facebook during the period. These profiles were used by the Trump campaign during their election campaign. Also, the involvement of former White House staff and white supremacist Steve Bannon with Cambridge Analytica is making Facebook’s role look even more suspicious.
This scandal is more related to Facebook than to Cambridge Analytica. The reason behind this is that Facebook had full knowledge of the fact that the third party i.e. Cambridge Analytica was developing a tool specifically to harvest the user’s information. It is also known that Facebook had full knowledge of the fact that the data of many users will be taken without their direct consent. However, they still allowed the political consulting firm to harvest data. This is being seen by many as a violation of the privacy policy.
To sum it up, Facebook is in the midst of a major crisis. The reputation of the firm has taken a major beating. Earlier, Facebook was involved in the net neutrality scandal. Now, Facebook is involved in the misuse of customer data. Any more scandals will have a negative impact on the already fragile financial statements of Facebook.
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