As Facebook reels from 'catastrophic moment' in Cambridge Analytica crisis, Mark Zuckerberg is silent

Jessica Guynn | USA TODAY

Show Caption Hide Caption How Cambridge Analytica, Facebook swayed the 2016 election Here's how a data firm helped Donald Trump get elected as president. We have the FAQs.

SAN FRANCISCO — Facebook used to be made of corporate Teflon. Not anymore.

Growing public outrage over the misuse of the private information of tens of millions of Facebook users by the firm that claimed it helped Donald Trump win the White House has ignited a full-blown crisis, with U.S. and European lawmakers demanding hearings and investigations underway by the Federal Trade Commission and two state attorneys general.

Why has this controversy struck such a nerve with Americans? An unsuspecting electorate's personal information was exploited for political gain on behalf of a deeply divisive public figure, observers say.

"The current political environment surrounding the Trump administration has raised the stakes," said Harvard Business School professor David Yoffie.

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Even before news of a massive data mining operation of Facebook users broke, CEO Mark Zuckerberg had pledged to spend 2018 trying to fix everything that's gone wrong. Fabricated news that misled millions, live broadcasts of homicides and terrorism, racist targeting of ads, troubling search results and Russian manipulation — all had chipped away at the social network's reputation.

Then dropped bombshell reports from the New York Times and the Guardian-owned Observer alleging British data analysis firm Cambridge Analytica improperly obtained and retained the personal information of 50 million Facebook users without their permission, 30 million of them with enough details to match users to other records and build profiles of them.

Michael Useem, a professor at the Wharton School at the University of Pennsylvania, says this is a "catastrophic moment" for Facebook and predicts the Cambridge Analytica data breach will continue to be a source of "great public interest and intense scrutiny going forward."

Yet Chief Executive Officer Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg have remained silent as lawmakers in the U.S. and Europe have pummeled Facebook and its stock price has dropped 9% in two days.

Even employees are getting worried. Facebook held a meeting for them to ask questions of one of the company's lawyers on Tuesday morning, but Zuckerberg, a mainstay at all-hands gatherings, was a no-show.

"Mark, Sheryl and their teams are working around the clock to get all the facts and take the appropriate action moving forward, because they understand the seriousness of this issue," Facebook said in a statement. "The entire company is outraged we were deceived."

The dramatic fall from grace appears to have occurred when Facebook stepped on a third rail: the large-scale data collection by an outside party — Cambridge Analytica — without the company's knowledge, said Peter Crist, chairman of the executive search firm Crist Kolder Associates.

Other political campaigns — notably Obama's 2012 reelection campaign — made extensive use of Facebook data. But Obama campaign officials say they did not collect personal information without users' permission or in violation of Facebook's rules.

Facebook disclosed late Friday that it knew Cambridge Analytica had obtained user information without its consent, but it didn't verify that the firm had deleted it — and it didn't notify users.

Facebook's response to the improper handling of users' data corroded its already tarnished public image.

"They previously thought, as did their constituents and various audiences, that they controlled, owned, managed the processes and the data," Crist said. "Not so much anymore."

Facebook said Tuesday it's committed to "vigorously enforcing our policies to protect people’s information and will take whatever steps are required to see that this happens."

One unhappy user is Tommy Lei, a 29-year-old menswear fashion blogger from Los Angeles who runs MYBELONGING and uses Facebook to stay in touch with friends and promote his business.

He says the mishandling of Facebook users' data "in an ulterior and nefarious manner" during the presidential election has opened the floodgates for "more potentially manipulative social and digital campaigns in the future."

"My hope is Facebook and other social media platforms be more transparent about how our personal data is being utilized from a research and app-driven perspective and openly conduct outreach to educate those who are uninformed on the subject matter," Lei said.

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Damage control

So far, Facebook has bungled damage-control efforts, observers say.

According to the New York Times, Facebook downplayed the scope of the problem for a week, questioning whether "any of the data still remained out of its control."

Late Friday, confronted with mounting evidence that it was wrong, the Silicon Valley company tried to get ahead of media reports by putting out a blog post that it had received "reports" that Cambridge Analytica hadn’t deleted the user data and that it had suspended the firm. The next day, a reporter at the Observer called out the company for threatening to sue the paper to stop publication.

Subsequent comments on Twitter from executives to explain what happened did little to clarify anything or to reassure the public.

Facebook's second blog post on Monday, saying Cambridge Analytica had agreed to an independent audit, had to be walked back when the auditors ceased work on orders from the U.K. Information Commissioner's Office, which is pursuing its own investigation.

Over the years, this has become an all too familiar pattern for Facebook, not owning up to problems until cornered.

Just days after the 2016 election, Zuckerberg said it was “pretty crazy” to believe that "fake news on Facebook…influenced the election in any way" only to later apologize for the comment.

In September, Facebook acknowledged it had uncovered 470 accounts that promoted some 3,000 ads pushing Russian propaganda. By early October, it was admitting that Russian propaganda had reached 10 million Americans, only to ratchet that up to 126 million Americans by month's end. Just days later Facebook told Congress that the actual total was 150 million Americans.

For Facebook, that damage control strategy worked for much of its young life. Users, advertisers and investors couldn't help but like the company. But ever since Russian operatives used Facebook to influence the presidential election, it's not bouncing back from controversy the way it used to.

Facebook said Friday a British researcher and his firm, Global Science Research, legitimately gained access to the personal data of Facebook users in 2013 while working on a personality prediction app, but the researcher violated Facebook’s rules by passing it on to Cambridge Analytica.

Cambridge Analytica, backed by top Trump donor and hedge-fund billionaire Robert Mercer, was asked in December to turn over documents to special counsel Robert Mueller, as part of his investigation into collusion between the Trump campaign and Russia during the 2016 election. The Trump campaign has denied using voter data from Cambridge Analytica, saying it relied on data from the Republican National Committee, but it made use of some of the firm's staff.

In 2015, Facebook learned that the researcher broke its policies by passing on the information to Cambridge Analytica. Facebook says it was assured the information had been deleted.

"Had they fessed up and fixed it months ago, it would have not been a big deal. They might even have been viewed in a positive light. But pretending it would go away meant the lid blew off right when it collided with the ever-growing turmoil around the special counsel," said Silicon Valley futurist Paul Saffo.

Saffo says Facebook suffers from a lack of humility. "I doubt the arrogance will go away or the culture will change. So this will happen again," he said.

#DeleteFacebook gains little momentum

For now, analysts are dismissing concerns that Facebook's advertising business could be harmed, but warn that could change if tighter regulations crimp data collection.

"The radio silence from executives over the last few days has added fuel to the growing Cambridge fire and if this data leak fiasco is left to fester it could take on a life of its own leading to tougher regulatory oversight/chatter," Daniel Ives, head of technology research at GBH Insights, said in a research note.

Still there's little risk of people abandoning their Facebook accounts in droves. A #DeleteFacebook hashtag on Twitter has not gained much momentum since the scandal broke — with one notable exception.

Brian Acton, co-founder of WhatsApp, which Facebook bought for $16 billion, on Tuesday urged people to delete their accounts on the giant social network, using the hashtag. "It's time," wrote Acton, who quit Facebook earlier this year to start a foundation.

"For many of the 2 billion consumers on Facebook, there are no easy alternatives," Yoffie said. "While millennials 'multi-home,' meaning they already participating in multiple social networking sites, most of Facebook’s user base are heavily tied to the site. Switching would be hard.

"Of course, if Facebook fails to address the broader privacy concerns, those switching costs could be overcome."