The political consulting firm Cambridge Analytica announced Wednesday that it will cease most operations and file for bankruptcy over growing legal and political scrutiny of its business practices and work for President Donald Trump.
The decision was made less than two months after the firm and Facebook became embroiled in a data-harvesting scandal involving compromised personal information of up to 87 million people.
Revelations about the misuse of data, first published in March by The New York Times and The Observer of London, plunged social media giant Facebook into controversy and prompted regulators and lawmakers to open investigations into Cambridge Analytica.
In a statement posted to its website, Cambridge Analytica said the scandal had driven away virtually all of the company's customers, forcing it to file for bankruptcy in the United States and Britain. The elections division of Cambridge Analytica's British affiliate, SCL Group, will likewise shut down, the company said.
But the company's announcement left several questions unanswered, including who would retain the company's intellectual property -- the so-called psychometric voter profiles built in part with Facebook data -- and whether Cambridge Analytica's election business would return under new auspices.
"Over the past several months, Cambridge Analytica has been the subject of numerous unfounded accusations and, despite the company's efforts to correct the record, has been vilified for activities that are not only legal, but also widely accepted as a standard component of online advertising in both the political and commercial arenas," the company's statement said.
Cambridge Analytica also said the results of an independent investigation it had commissioned, which it released Wednesday, contradicted assertions made by former employees and contractors about its acquisition of Facebook data.
News of the bankruptcy was earlier reported by The Wall Street Journal and Gizmodo. Cambridge Analytica did not reply to requests for comment.
The company, bankrolled by Robert Mercer, a wealthy Republican donor who invested at least $15 million, offered tools that it claimed could identify the personalities of American voters and influence their behavior. Those modeling techniques underpinned Cambridge Analytica's work for the Trump campaign and for other candidates in 2014 and 2016.
But Cambridge Analytica came under scrutiny over the past year, first for its purported methods of profiling voters and then over allegations that it improperly harvested private data from Facebook users. Last year, the company was drawn into the special counsel's investigation of Russian interference in the 2016 election.
The company also was forced to suspend its chief executive, Alexander Nix, after a British television channel released an undercover video. In it, Nix suggested that the company had used seduction and bribery to entrap politicians and influence foreign elections.
Cambridge Analytica was able to amass its database of information on Facebook users quickly with the help of an app that purported to be a personality test. The app collected data on tens of millions of people and their Facebook friends, even those who did not download the app themselves.
Facebook has since announced changes to its policies for collecting and handling user data. Its chief executive, Mark Zuckerberg, testified last month before Congress, where he faced criticism for failing to protect users' data.
Facebook also has suspended other companies for using similar tactics. One is Cubeyou, which makes personality quizzes. That company has said it did nothing wrong and is seeking reinstatement.
Facebook's audit of Cambridge Analytica has been suspended while U.K. regulators conduct their own probe. But Facebook says the firm's decision to close "doesn't change our commitment and determination to understand exactly what happened and make sure it doesn't happen again."
Cambridge Analytica has said it is committed to helping the U.K. investigation. But the office of U.K. Information Commissioner Elizabeth Denham said in March that the firm failed to meet a deadline to produce the information requested.
Denham said the prime allegation against Cambridge Analytica is that it acquired personal data in an unauthorized way, adding that the data provisions act requires services like Facebook to have strong safeguards against the misuse of data.
A DIFFERENT FIRM
In recent months, executives at Cambridge Analytica and SCL Group, along with the Mercer family, have moved to create a new firm, Emerdata, based in Britain, according to British records.
The new company's directors include Johnson Ko Chun Shun, a Hong Kong financier and business partner of Erik Prince. Prince founded the private security firm Blackwater, which was renamed Xe Services after Blackwater contractors were convicted of killing Iraqi civilians.
Cambridge and SCL officials privately raised the possibility that Emerdata could be used for a Blackwater-style rebranding of Cambridge Analytica and the SCL Group, according to two people with knowledge of the companies who asked for anonymity to describe confidential conversations. One plan under consideration was to sell off the combined company's data and intellectual property.
An executive and a part owner of SCL Group, Nigel Oakes, has publicly described Emerdata as a way of rolling up the two companies under one new banner. Efforts to reach him by phone Wednesday were unsuccessful.
A former Cambridge Analytica employee said staff members were originally told that there would be an all-hands meeting Tuesday but that it was pushed back a day. Then, after assembling at 9:30 a.m. Wednesday, they were kept waiting through the morning and much of the afternoon before Julian Wheatland, the company's chief executive, delivered the news.
The damage to the company's reputation was simply too severe, and it was "futile" and "pointless" to try to rebuild during the investigations in the United States and Britain, Wheatland said, according to the former Cambridge Analytica employee. The former employee, who was informed by those in attendance, asked not to be identified because the person did not wish to be publicly associated with the firm.
Employees in Washington were told the news in a conference call later in the day. They were then told to turn over their identification cards and any company property they had, and go home. By 2 p.m., Cambridge Analytica offices on Pennsylvania Avenue were empty except for a single man, who refused to answer questions from a reporter.
Information for this article was contributed by Nicholas Confessore and Matthew Rosenberg of The New York Times; and by Mae Anderson of The Associated Press.
A Section on 05/03/2018