The political consulting firm at the heart of the recent Facebook privacy scandal shuts down after mounting legal fees and exiting clients. Cambridge Analytica was at the center of the data scandal that has engulfed Facebook.
The British company said in a news release that it would be starting bankruptcy proceedings in the U.S. and U.K. Its parent company, SCL Group, is also shutting down.
The news was first reported by The Wall Street Journal, which said Cambridge Analytica had been losing clients since it was revealed in March that it had improperly obtained data on 87 million Facebook users.
Gizmodo had reported earlier on Wednesday that the company was telling employees that it would be shuttering its U.S. offices.
“While this decision was extremely painful for Cambridge Analytica’s leaders, they recognize that it is all the more difficult for the Company’s dedicated employees who learned today that they likely would be losing their jobs as a result of the damage caused to the business by the unfairly negative media coverage,” Cambridge Analytica said in its statement. “Despite the Company’s precarious financial condition, Cambridge Analytica intends to fully meet its obligations to its employees, including with respect to notice periods, severance terms, and redundancy entitlements.”
The Hill reports,
The data scandal touched off a furor that pushed Facebook into the sights of regulators around the world and unraveled Cambridge Analytica.
Alexander Nix, the firm’s CEO, was suspended in March after a British broadcaster aired hidden camera footage of him saying the company blackmails political clients’ rivals.
Cambridge Analytica was founded in 2013 by former White House chief strategist Stephen Bannon and Robert Mercer, a hedge fund billionaire and GOP mega-donor.
According to media reports, the firm used the Facebook data it obtained from a researcher’s third-party app to help build data models to be used for the Trump campaign and super PACs including Bolton’s.
The researcher, Aleksandr Kogan, sold the data to Cambridge Analytica without the knowledge of the 87 million users he had scraped information from. In March, Facebook banned Kogan and the political consulting firm from its network, saying they had violated the site’s terms.The social network discovered the misappropriated data in 2015 and demanded that the company destroy the trove. Facebook says it was assured the data had been deleted, but a whistleblower claimed this year that copies of it still existed.
Cambridge Analytica has denied any wrongdoing and said the data was not used in its work for the Trump campaign.
The company has said it deleted the trove of data. A report posted on its website says that it’s awaiting a forensic audit to confirm the information has been destroyed.“This doesn’t change our commitment and determination to understand exactly what happened and make sure it doesn’t happen again,” a Facebook spokesperson said in a statement Wednesday on news that Cambridge Analytica was shutting down. “We are continuing with our investigation in cooperation with the relevant authorities.”