Business Ethics: Facebook's Data Breach - A Detailed Case Study

This case study delves into the ethical issues surrounding Facebook's data breach involving Cambridge Analytica, which led to Facebook's removal from the Australian Ethical ETF. The analysis covers the legal and sanction implications, ethical decision-making processes, and relevant ethical moral philosophies. It highlights the breach of user data, the erosion of trust, and the subsequent financial impact on Facebook. The study emphasizes the importance of corporate social responsibility, particularly in data protection and privacy, and suggests that Facebook should prioritize ethical practices and transparent communication to regain user trust and ensure long-term sustainability. The application of ethical decision-making processes and consideration of ethical philosophies are crucial for organizations to navigate similar crises effectively.

BUSINESS ETHICS
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Table of Contents
Introduction......................................................................................................................................3
The outline and summary................................................................................................................3
Demonstrate own decision making/ judgment processes in relation to the ethical issue................4
Provide an outline of relevant ethical moral philosophies...............................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7
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Introduction
It is very necessary for each and every business organisations to conduct activities of the
business in an ethical manner so as to have a good place in the market as well as good amount of
customer base. In this assignment of business ethics, the recent case of the ‘Facebook’ has been
selected. As per the case, Facebook was dropped from the Australian Ethical ETF after there was
a breach of data. Due to this case, there is a negative impact on other consumers regarding the
image of the company. In this assignment legal and sanction implication of the case will be
discussed along with ethical issues and ethical decision-making process.
The outline and summary
There was a removal of the Facebook from Australian based BetaShares Global Sustainability
Leaders Exchange Traded Fund (ETHI) because of the recent issues. This statement was given
by the Responsible Investment Committee of the group. The company recently was the subject
of various reputational issues and controversies in regards to the safety and security of the
customer's data. Facebook is one the largest network of Social Media with around 2 billion of
active users in a month, is facing various allegations that political consultancy of British
Cambridge Analytica has improperly used data and information of the users and supported in
influencing the presidential election of U.S. in 2016. In brief, Cambridge Analytica is the
consulting firm that makes utilisation of the data of online users to make the construction of the
subject’s profile which is used for behavioural microtargeting (Reuters, 2018). This made a
creation of the issues of trust in the big data ethics. Chief Executive of the Facebook has made
an apology and has promised users to restrict access of developers regarding such information.
Due to this case of the ethical issue, company lost around $50 billion or more in the market
because of the allegations. There was also a loss in the overall market share of the Facebook.
3.9% of the ETHI portfolio and $170 million of the Australian ethical fund in management was
comprised by Facebook.
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(Source: Reuters, 2018)
With the high amount of personal information which is being available on the pages of
Facebook, consideration regarding the privacy issue is becoming very important. On the daily
basis, users post personal information which increases the chance of ineffective security and
safety. As per the recent case of data breaching, there will be various legal implications on the
company like fine will be charged on them by the committee, information must also be provided
to customers when the high risk of loss is there. Law firms must follow regulations of the
industry in the case of a data breach which includes informing bank, insurer, and police
regarding the issue. Data controllers are responsible for the loss of information and fine must be
imposed on them. Processors of the data must notify customers regarding data breach
immediately and record of the data breach must be kept by data controllers. There must be a
creation of the disaster plan with the company in data breach case. These kinds of a document
will support in convincing regulatory bodies that company has taken required steps before and
during the incident (Pearson, 2017). There is a lack of legal ethics, in this case, that is being
utilised to make the description of a code of conduct that governs proper professional behaviour
that makes the establishment of the nature of obligations owed to societies and individuals.
Demonstrate own decision making/judgement processes in relation to the ethical issue
The ethical code in the profession serves many types of purpose. At the professional level,
standards are being documented by the codes through which profession is accountable for the
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conduct of members. There are millions of users connected with the Facebook and hence it is
very necessary for them to make conduction of ethical practices (Crane and Matten, 2016). The
ethical issue is being defined as a situation or a problem that needs an organisation or a person to
make choice among alternatives that are evaluated as right or wrong. The controversy in the case
involves concern of Facebook how 87 million profiles were acquired by Cambridge Analytica
without the consent of users (Sandra Tierney, 2016). As per the policy of the company, data of
the users can be given to third parties for academic use. Cambridge Analytica acquires such data
with the help of Alexander Kogan who is a psychologist in the Cambridge University and his app
‘thisismydigitallife’ allowed him to access user’s profile.
(Source: Sandra Tierney, 2016)
As per this case, there is an ethical issue of ‘Corporate Social Responsibility’. The major social
responsibility of the Facebook must include privacy and data protection. CEO of the company
must understand the importance of the privacy and security of the users of the Facebook and
therefore privacy protection is the part of the corporate social responsibility. After the case,
Zuckerberg (CEO) has made a statement that organisation will apply data protection regulations
for the users in the world. According to the case of Cambridge Analytica, there is a breach of
data and this hampers the trust and loyalty of millions of users. It is not just enough for the
organisation to have a connection with more people but there should be a provision of various
factors that will support in protecting and securing data in a proper manner (Michaelson et. al.,
2014). This will also support in gaining trust and loyalty of the Facebook users.
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Provide an outline of relevant ethical moral philosophies
Ethical philosophy is being considered as the branch of philosophy that makes the involvement
of recommending, defending and systematizing concepts of the wrong or right conduct. Ethics
solves the question of human morality by describing concepts like right and wrong, justice and
crime, good and evil etc. Facebook must take into consideration ethical moral philosophies so as
to provide ethical services and facilities to the users. The main areas of the study in ethics are
‘Meta-Ethics', ‘Normative ethics' and ‘Applied ethics'. Meta-ethics is being concerned with the
reference and theoretical meaning of the moral propositions and how the determination of truth
values is done. It covers issues from moral epistemology and moral semantics. Normative ethics
consider practical means to determine moral action course and applied ethics is concerned with
what a person should do in a particular action or a situation. As per the data breach case of
Facebook, applied ethics must be used which describes what should be done by the company and
the CEO in the inappropriate situation and what actions should be used (Weiss, 2014).
Ethical decision-making process must also be utilised by the organisations so as to make
alignment of opinions and decisions by making identification of the suitable philosophy. In the
process of ethical decision making, firstly various facts must be collected by the managers of
Facebook regarding the problems of data breaching. There may be some difficulty in collecting
facts due to the uncertainty of ethical issues. After that ethical issues must be defined that may be
in the consideration of protection of data and information. Identification of the affected parties as
well as identification of the consequences must be done. It is very necessary to analyse affected
parties so as to know about their problems and issues. There must also be identification regarding
relevant rights, issues as well as principles (Trevino and Nelson, 2016). These obligations are in
a manner that will not harm anyone inside or outside the business organisation. Integrity and
characters must be considered and creative thinking must be done in regards to potential actions.
Conclusion
From the above assignment, it can be concluded that it is very necessary for a business to operate
ethically in the market full of competition. Here, the case study of Facebook is being discussed
where there is the situation of ethical issue due to the data breach. For the Facebook, it is very
necessary to maintain a data protection and security in an effective manner as there are millions
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of users associated with it. Protection of the information and security is the main task of the
company so as to gain loyalty and trust of the users as they post their personal data. For the
ethical business, consideration of ethical philosophies and process of ethical decision making
must be used for the appropriate working.
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References
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Michaelson, C., Pratt, M.G., Grant, A.M. and Dunn, C.P., 2014. Meaningful work: Connecting
business ethics and organization studies. Journal of Business Ethics, 121(1), pp.77-90.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Reuters, 2018. Facebook dropped from Australian Ethical ETF after a data breach. [Online].
Reuters. Available at: https://www.reuters.com/article/us-facebook-Cambridge-analytica-
australi/facebook-dropped-from-australian-ethical-etf-after-data-breach-idUSKBN1GZ0KJ.
[Accessed on 17 May 2018].
Sandra Tierney, 2016. Data Protection - A Matter of Trust. [Online]. Available at:
https://www.icsa.org.uk/ireland-blog/data-protection-a-matter-of-trust. [Accessed on 17 May
2018].
Trevino, L.K., and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do
it right. John Wiley & Sons.
Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
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