Business Law Assignment: Cambridge Analytica Scandal and Legal Issues

This business law assignment examines the Cambridge Analytica scandal, focusing on the misuse of Facebook user data for political purposes. The report details how Cambridge Analytica obtained and utilized data without user consent, leading to a breach of trust and violations of Facebook's terms of service. It explores the legal ramifications, including copyright infringement and potential breaches of trust, and references relevant laws such as the Gramm-Leach-Bliley Act and the European Union's privacy regulations. The assignment also analyzes the role of the Australian Law Reform Commission in addressing such issues, discussing remedies for misappropriation and breach of trust. The report concludes with recommendations for addressing the scandal, including potential data privacy regulations and the consideration of premium services. It highlights the importance of transparency and the impact of social media on business and marketing.

Running head: BUSINESS LAW ASSIGNMENT
Business Law Assignment
Name of the Student
Name of the University
Author note

1BUSINESS LAW ASSIGNMENT
Recommendation and Overview
The overview of the scandal stated that Cambridge Analytica has been criticized for a
long period and have assumed to use huge amounts of data on approximately 50 million
Facebook users. The purpose of this was to formulate political advertising on behalf of the
Trump campaign after obtaining the data from the researcher of the Cambridge University.
Facebook had thus referred this to be a violation of the terms used as it was authorized to use
to information for the research purpose (Ruths and Pfeffer 2014). Thus, there were no such
illegal issues about the companies as Cambridge Analytica using collected data for the
political campaigns. The liability of them was linked to the fact that had received the data and
had put that to use without taking any kind of permission from Facebook. The campaign set
up by Obama had used the information from social media and thereafter this information was
harvested from Facebook to target the voters. This was the objective because they did it in
compliance with the standards of Facebook during that time. The primary sin of Cambridge
Analytica is not to make use of the data but it is related to how the data was incurred.
Facebook has been negligent on how the data was misused and for not being able
respond on time when the problem came to their knowledge. Their actions can also violate
the agreement that needed Facebook to protect the data of the users and be more transparent
while using the data. It is significant to notice that initially Facebook users were not referred
to as customers. The aim and objective of Facebook is that it collects all the data and makes
an analysis before utilizing it for profitable targeted advertising. The major problem or issue
was that individuals did not realize that they agreed to have their data used for the
commercial purposes (Perrin 2015). The privacy policies of the social media are difficult to
find and is usually inconvenient for plenty of individuals who were never concerned about
the privacy of the data. However, these data could be used for effective advertising of the
political campaigns. The likes of Facebook have been analyzed for coming up with models

2BUSINESS LAW ASSIGNMENT
that could be used for political or commercial advertising. The principle for such campaigns
was to target the personalities for manipulating the opinion. The researchers and the
University of Cambridge had made use of the Facebook likes for forming a model to score
the openness of a person (Fuchs 2017). As it has been observed, there has been a lack of
protection of the public who had collected the data and used it in plenty of ways. There are a
few existing laws such as the Gramm-Leach-Biley Act that are riddled with the exceptions,
which makes all these laws ineffective and needs more than just window dressing. The
European Union’s privacy regulation will take effect in May and provide a road map for the
purpose of securing and protecting the personal information. However, the initial step was for
Congress to hold the public hearings on which the founder of Facebook and others need to
testify (Sunstein 2018). They have to keep a check on how social media operates so that the
American public can be made aware of how their data is used and the privacy of the link is
being threatened.
The Cambridge Analytica was a political data firm, which was established five years
back as an offshoot of another British Company. The company majorly scrapes data from
plenty of sources including public records, consumer spending data and social media
(Lipschultz 2014). Therefore, this firm is associated with the campaigns and other
organizations for helping them to target the demographics based on the data. The Cambridge
Analytica was chiefly associated with the Trump campaign during the election process. Soon
after, an announcement was made stating that Cambridge Analytica was suspended from
running Facebook pages and buying ads on Facebook. The scandal revolved around the facts
that Cambridge Analytica had obtained data pertaining to more than 50 million Facebook
users without informing or making them aware of it. It used such information for forming its
touted psychographic profiles (Jungblut 2015). When Facebook found out and had
knowledge about the incident, it was too late. The Cambridge Analytica was asked to destroy

3BUSINESS LAW ASSIGNMENT
the data. It was still noticed that they had few of the data of Facebook in their storage. This
scandal was a case of copyright as per the legislation. This is because an authorized company
had infringed and kept secrets and data of another company. This is considered to be a crime
according to the law reforms. The law reforms state that any legal individual or an institution
executing such acts is treated as crimes. When such incident occurred, the revelations had
sparked a renewed backlash against Facebook that had already come under the role during the
time of elections (Vadera and Aguilera 2015). Secretly recording discussion of a company’s
practices is treated to be as crimes. This was the exact reason while the legislation can impose
on the criminals on copyright and breach of trust. There was contract of trust that had formed
between Facebook and Cambridge Analytica. Due to this scandal, Facebook was answerable
to the authority and other individuals. The lawmakers of United Kingdom were scrutinizing
this case. Cambridge Analytica was being investigated because it was associated with the role
of Brexit.
Therefore, it was observed that the researcher gathered the information of the data.
The data was thereafter passed on to Cambridge Analytica by causing violation of the
Facebook’s terms of service. It was noticed that Cambridge Analytica had used the profiles
from Facebook for developing techniques for influencing voters. Such a situation will lead to
a breach of trust (Sheptycki 2017). Over the years, Facebook has improved and is considered
to be exceptional for its ability to target more than half of all the people in the developed
markets. Lack of transparency has led to such a crime. Mark Zuckerberg had produced a brief
timeline of the activities in the Cambridge Analytica data breach scandal. By a brief of the
entire scenario regarding breach of trust it can be stated that the Australian Law Reform
Commission will be applied. Law reforms handled in Australia levies certain remedies
consisting of misappropriation and other defaults (Muralidharan 2018). According to the
legislation, where a fiduciary has misappropriated property of a beneficiary then the

4BUSINESS LAW ASSIGNMENT
beneficiary can obtain a declaration from the Court saying that the relevant property is held
by the fraudulent based on constructive trust. On the other hand, the beneficiary can make the
fiduciary surrender the property that was obtained. A beneficiary can seek to recover the
property where the fiduciary has misappropriated by asserting a constructive trust. When a
constructive trust is formed or created, it should determine two significant essentials. Firstly,
the beneficiary has an equitable interest in the property misappropriated and when the interest
can be followed into the hands of the defendant beneficiary. For determining the required
equitable interest, the beneficiary should have a pre-existing interest in the property (McLean
2018). Thereafter, it will entitle the beneficiary to ask for the property that was returned of
account for its value. Arguments can be based on this where certain essentials must be
proved. Firstly, the benefit must be gained at the expense of the beneficiary. Secondly, the
receipt of the benefit must have enriched the defendant fiduciary. Lastly, it is unfair that the
defendant fiduciary preserve that benefit. Apart from these valid essentials, a party cannot
always receive property misappropriated from beneficiaries but will still be liable to account
on the basis that it is an accessory to breach of trust. To determine the situation, it was be
assisted in the breach and sufficient knowledge must aware them. This scandal could have
been handled with the help of these law reforms (Pesce 2017).
Breach of trust usually includes an act by the trustee in contravention of the duties
that were imposed upon him by the trust or in excess of the powers. Breaches of Trust can
generally be divided into active and passive. Active breaches of trust include the intentional,
dishonest and negligent acts committed by the Trustees (Robison 2018). On the other hand, a
passive breach of trust includes some failure to act on the part of the Trustee. When the
Trustee has committed a breach of trust, a co-trustee, a successor trustee, a beneficiary or the
estate of the beneficiary, can sue him. Therefore, these law reforms that is capable of
handling such scandals (Bachl 2018). However, in the theory of breach of trust, there is a

5BUSINESS LAW ASSIGNMENT
willful misappropriation by a trustee of a thing that had been delivered lawfully to the person
in confidence. There has been a distinction between the breach of trust and larceny. It is to be
found majorly in the terms in which the party had the possession of the property. The rule or
law that can be applicable in this situation is based on what was gathered in the contract. The
CEO of Facebook Mark Zuckerberg took the responsibility when there was a breach of trust
between the people who had shared the data and Facebook. This scandal had grown by
providing the Facebook users an inside look what happens to the data that were given to the
outside parties (Wilson 2017). The lawmakers had testified the on Zuckerberg before
Congress. It was argued on the facts that the data were obtained legally. It can therefore be
stated that after over viewing the controversies of the scandal of the social media, the law
reforms can be handled in Australia. The recommendation that can be provided and applied
in this scenario is that when an individual has committed breach of trust, the defendant has
the authority to file a case of breach of trust. Mark Zuckerberg has stated numerous times that
Facebook would not be opposed to regulation if it means a safer, more secure environment
and a more positive experience for its users. Congress probably won’t prohibit Facebook
from selling advertising because that would take away a business opportunity that Facebook
has worked hard to generate and that has value to consumers and businesses alike. However,
Congress might step attempt some limited data privacy rules (Završnik 2017).
There have been consequences in Australia while handling these things and the law
reforms that can suggest the changes include the right to protect privacy. With the help of the
right to privacy, it can be said that the consequences of Cambridge Analytica. Facebook
could offer a premium service. Users could pay a certain monthly fee to enjoy the complete
Facebook experience without any ads. It would be akin to paying for premium streaming
services such as Hulu or Spotify, with ads removed. However, Social media forever changed
the manner in which people interact with the world and communicate with one another. It

6BUSINESS LAW ASSIGNMENT
also sparked a colossal shift in the ways that businesses market and advertise themselves.
Facebook stands out as the clear leader in this space, with its massive global user base,
expansive advertising network, and array of business features.

7BUSINESS LAW ASSIGNMENT
References:
Bachl, M., 2018. An evaluation of retrospective Facebook content collection.
Fuchs, C., 2017. Social media: A critical introduction. Sage.
Jungblut, J., 2015. Bringing political parties into the picture: A two-dimensional analytical
framework for higher education policy. Higher Education, 69(5), pp.867-882.
Lipschultz, J.H., 2014. Social media communication: Concepts, practices, data, law and
ethics. Routledge.
McLean, J.S., 2018. Remaking the news: Essays on the future of journalism scholarship in
the digital age. Journal of Communication.
Muralidharan, S., 2018. The intent plot.
Perrin, A., 2015. Social media usage. Pew research center.
Pesce, M., 2017. The last days of reality. Meanjin, 76(4), p.66.
Robison, W.L., 2018. Digitizing Privacy. In Core Concepts and Contemporary Issues in
Privacy (pp. 189-204). Springer, Cham.
Ruths, D. and Pfeffer, J., 2014. Social media for large studies of
behavior. Science, 346(6213), pp.1063-1064.
Sheptycki, J., 2017. Uneasy Truths; Criminal-Informants, Witness Protection, Trust and
Legitimacy in the Policing of Organized Crime. In Contemporary Organized Crime (pp. 213-
230). Springer, Cham.
Sunstein, C.R., 2018. # Republic: Divided democracy in the age of social media. Princeton
University Press.

8BUSINESS LAW ASSIGNMENT
Vadera, A.K. and Aguilera, R.V., 2015. The evolution of vocabularies and its relation to
investigation of white-collar crimes: An institutional work perspective. Journal of Business
Ethics, 128(1), pp.21-38.
Wilson, D.G., 2017. The Ethics of Automated Behavioral Microtargeting.
Završnik, A., 2017. Big data: What is it and why does it matter for crime and social control?.
In Big Data, Crime and Social Control (pp. 3-28). Routledge.