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May 3, 2018

Cambridge Analytica closes as former executives create another data company

by John_A

After finding itself in the middle of Facebook’s privacy scandal, Cambridge Analytica announced it will shut down. Cambridge Analytica’s affiliate, U.K.-based SCL Elections announced that it, too, will cease operations and that both companies will begin the insolvency process.

“Over the past several months, Cambridge Analytica has been the subject of numerous unfounded accusations and, despite the company’s efforts to correct the record, has been vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising in both the political and commercial arenas,” the company said in a  statement announcing the closure of its offices. As a result of media coverage surrounding its data collection practices, the company said it lost virtually all of its customers and suppliers.

Cambridge Analytica had $15 million in business for its work in the 2016 election, The Wall Street Journal reported. However, it was not able to attract new business from a single federal political client since and has lost several clients in recent months.

The company was responsible for working on the digital strategy for Donald Trump’s presidential campaign, and it gained infamy after reports surfaced that it had collected data on more than 87 million Facebook users. News of the data breach resulted in Facebook CEO Mark Zuckerberg addressing the U.S. Congress on issues of user privacy, and the U.K. parliament is also requesting testimony.

Coincidentally, news of Cambridge Analytica’s closure was announced on the second day of Facebook’s F8 developer conference, which is currently taking place in Silicon Valley. The company had shut down offices in London, New York City, and Washington, D.C., according to The Wall Street Journal report. Another reason for the closure, aside from the loss of clients, is that the company was “facing mounting legal fees in the Facebook investigation,” the Journal said, citing a person familiar with the matter.

As a result of the scandal, Facebook has changed its data sharing policies and limited sharing user data with third-party developers, a move that may have negatively impacted Cambridge Analytica’s business model.

Although Cambridge Analytica became a household name after its connection to Facebook was revealed, the company’s reputation was further damaged after reports that CEO — who has since resigned — Alexander Nix had discussed using bribes and sex as strategies to entrap political opponents.

Although Cambridge Analytica may be going away, its practices and business model may still live on. According to public filings in Britain, Nix and SCL chairman Julian Whitman are listed as directors in new data analytic firm Emerdata. “It isn’t clear what Emerdata does, though the company is listed under “data processing, hosting, and related activities.” It shares an address in Canary Wharf with Cambridge Analytica’s parent, SCL Group,” Business Insider reported.

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