Did Cambridge Analytica Debacle Kill Facebook’s Business Model?

The Dust Up Is At The Heart Of Facebook’s Business Model

The Cambridge debacle strikes at the hear of Facebook’s business model. It also forces investors, consumers and potentially, lawmakers, to become more thoughtful about it. CEO Mark Zuckerberg’s ability to collect data, analyze it and package it in a way to target advertisers is at the core of Facebook’s business model. In Q4 2017 Facebook generated nearly $13 billion in revenue – 99% of that represented advertising dollars. In the past there may have been some confusion over whether Facebook sold data to third parties. Edward Snowden also brought this to the public’s attention:

Facebook: "This is their information. They own it"
BBC: "And you won’t sell it?"
FB: "No! Of course not."

Please help this 2009 interview of Facebook's CEO get seen by people who don't use Twitter. Here's a download link so you can pull and repost it: https://t.co/c32DmpVIig pic.twitter.com/quERsO5WZi

— Edward Snowden (@Snowden) March 27, 2018

I always assumed they did. As a publicly-traded company Facebook almost has a fiduciary responsible to increase shareholder value, as long as it does not run afoul of any laws. My intuition tells me that Cambridge Analytics likely used the Facebook data to [i] search for consumers in vulnerable states like Pennsylvania or Wisconsin, [ii] determine which were likely to vote for Hillary Clinton and [iii] target them with advertisements to potentially sway them to vote for Trump or not to vote at all.

Trump was known for being efficient with his campaign spending, and such targeted ad spending could have helped him get the most for his money. This is all speculation on my part and I have no proof of this. Secondly, it does raise ethical issues over whether a foreign entity like Cambridge should have access to consumers’ data in order to influence a U.S. election.