Facebook Cambridge Analytica Scandal: An Ethical and Legal Analysis

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Legal Environment of Business
Facebook Cambridge Analytica Scandal

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The impact of corporations on the public has increased substantially with the
popularity and implementation of advanced technologies in the business. Organizations use
these technological advancements in order to improve their products and services along with
their operations. However, it has become difficult for them to comply with relevant legal and
ethical principles while conducting their business which adversely affects the interest of
customers. The importance of customer protection policies has increased significantly in the
past few decades as it became easier for companies to exploit their rights (Wu, Huang, Yen
& Popova, 2012). The corporations avoid compliance with corporate governance principle
while conducting their business operations which leads to violation of the interest of their
stakeholders. In this essay, the case of Facebook will be evaluated since it has been in the
news recently due to violation of consumer protection policies. The key ethical dilemma
which arises in this case will be evaluated along with an analysis of the case by using two
ethical frameworks which will be used to evaluate the decision of the management. The legal
concept of consumer protection and how it has violated by Facebook will be assessed in this
essay. Additionally, three legal topics will be applied to this case in order to evaluate the
decision taken by the management. Lastly, a conclusion will be drawn based on the above
observations.
Ethical Dilemma
Recently, Facebook was in the news due to a recent controversy titled Cambridge
Analytica scandal. This was a major scandal in which the private data of more than 87
million Facebook users were breached by the company called Cambridge Analytica (Waters,
2018). The users of Facebook are considered as its customers since they use its services
and in return, the company uses their data to show them advertisements as per their
interest. This data was collected by the corporation in order to find potential voters for
supporting the Presidential Campaign of Donald Trump in 2016. A major ethical dilemma
which arises, in this case, was that this breach was occurred due to immoral actions of the
management of Facebook. The corporation launched a platform in 2010 called Open Graph;
this platform was launched to attract more developers in the company. This platform enables
developers to collect private data of users and people added in their friend list by only getting
the acceptance of single users. In 2013, an application was launched on Facebook called
‘thisisyourdigitallife’ which allowed users to create a psychological profile by answering
specific questions. This application was used by 300,000, and it collected their private data
(Meredith, 2018). However, due to the availability of Open Graph platform, this application
was also able to collect the private data of users who were added as friends in the list of
users who give their permission to this application to use their data.

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Later, the management of Facebook changed the privacy policies of the company,
and they discontinued the Open Graph platform. After a year later, it was reported by the
Guardian that Cambridge Analytica had collected the private data from Facebook users in
order to help and support the Presidential Campaign of Ted Cruz. Later in 2017, it was
reported that the data of Facebook users were used in order to find potential voters for
Donald Trump which assisted in the defeat of Hillary Clinton (Martin, 2018). In the beginning,
it was reported that data of 50 million users are violated; however, this number later
increased to 87 million. The CEO of Facebook, Mark Zuckerberg, apologizes from its users
and promised them to improve the security policies of Facebook. However, the corporation
only changed its policies for asking permission from its users and gave them information
about which applications are collecting their data. The corporation continued collecting the
private data from its users. The Information Commissioner’s Office (ICO) imposed a penalty
on the company for its failure to protect customer rights. A fine of £500,000 was imposed on
the company; however, this did not stop the company from continuing its operations
(Hodgon & Kuchler, 2018).
The Congress established a committee to entertain this matter in which Mark
Zuckerberg appeared to give his testimony. He provided that it was his fault that the privacy
of Facebook users is breached by third parties, and he will ensure that appropriate steps are
taken in the company to protect the privacy of its users in the future (Wong, 2018). However,
no such action was taken by the company, and it continued to exploit the private data of its
users without their permission. Most Facebook users are unaware regarding the fact that the
company collect their private data and use it for different purposes. It raised an ethical
dilemma in the company regarding whether it should continue its operations to maintain its
profitability or should it completely avoid collecting the data of its users to ensure their
privacy. This ethical issue is directly related to the violation of customer rights. It has also
shown that current customer protection regulations are not suitable to ensure that the
privacy of online users are maintained or their customer rights are not violated.
Ethical Framework
The Cambridge Analytica scandal will be evaluated by using two ethical frameworks
which include Utilitarianism and Deontology ethical theory. The Utilitarianism ethical
framework is also called Consequential theory which focuses on the consequences of a
situation while judging its morality. If the consequences of the actions taken by parties are
positive, then those actions are considered as ethical (Drolet & Hudon, 2015). As per this
theory, ethical actions focus on achieving ‘greater good for a greater number of people’. The