Cambridge
Analytica, a data firm that worked for President Donald
Trump’s 2016 campaign, is shutting down following allegations about its misuse
of Facebook data and the campaign tactics it pitched to clients.
In March, the company suspended its chief executive, Alexander Nix, and said it was
launching an independent investigation to determine if the company engaged in
any wrongdoing in its work on political campaigns.
The company decided to close its doors because it was losing clients and
facing mounting legal fees in the Facebook investigation, according to people
familiar with the matter. SCL Group and SCL Elections, which are affiliated
with Cambridge Analytica, also are shutting down in the U.S. and the U.K.
Cambridge Analytica and SCL Elections issued a joint statement on
Wednesday confirming the companies’ closures. “Over the past several months,
Cambridge Analytica has been the subject of numerous unfounded accusations,”
the statement said. “The siege of media coverage has driven away virtually all
of the company’s customers and suppliers. As a result, it has been determined
that it is no longer viable to continue operating the business.”
The company also said that “parallel bankruptcy proceedings” would
commence for Cambridge Analytica and “certain of the company’s U.S.
affiliates.”
Facebook's current data crisis involving Cambridge Analytica has angered
users and prompted government investigations. To understand what's happening
now, you have to look back at Facebook's old policies from 2007 to 2014. WSJ's
Shelby Holliday explains. Illustration: Laura Kammerman
Cambridge Analytica and SCL Group’s leadership also are involved in a
variety of other entities, leaving open the possibility that the companies
could rebrand their operations under a different name.
Cambridge Analytica and SCL Elections combined had close to 100
employees in 2017, according to two people familiar with the matter.
The moves followed the release of a video that depicted Mr. Nix describing to
people posing as potential clients campaign tactics such as entrapping
political opponents with bribes and sex.
The sales pitch was captured by undercover journalists at British
broadcaster Channel 4. Mr. Nix’s suspension also follows media reports that the
company gathered data from millions of Facebook Inc.user profiles without authorization.
Facebook said data from as many as 87 million of its users may have been
improperly shared with Cambridge Analytica.
In a conference call on Wednesday, Julian Wheatland, SCL chairman, told
employees that the firm was shutting down, effective Wednesday, and that
employees should turn in their computers, according to a person familiar with
the matter. He also said the company’s independent investigation into whether
Cambridge Analytica used the entrapment tactics Mr. Nix cited in the Channel 4
video had concluded and had “cleared” the company, the person said.
Cambridge Analytica has denied wrongdoing in the Facebook incident. The
company said in the Wednesday statement that despite the efforts to correct the
record, it “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.”
Ahead of the conference call on Wednesday—which was rescheduled more
than a half a dozen times since Monday—Cambridge Analytica employees appeared
to anticipate the news that was coming: On internal Slack chats, employees
exchanged Spotify playlists featuring songs with titles such as “Help!” by The
Beatles and “The End” by The Doors, according to the person familiar with the
matter.
The business had $15 million in U.S. political work in the 2016 election
cycle, according to Federal Election Commission records.
Since the 2016 campaign, Cambridge Analytica hadn’t notched a single
U.S. federal political client; it lost several commercial clients in recent
months, according to FEC records and people familiar with the matter.
The company lost one longstanding client, the John Bolton Super PAC,
when Mr. Bolton became the White House national security adviser and the super
PAC suspended its operations last month. Mr. Bolton’s super PAC had paid
Cambridge Analytica more than $1.2 million between 2014 and 2016, according to
FEC records.
A person with knowledge of the company’s current moves said no client
wanted to do business with the company anymore.
“It was just not worth continuing,” the person said. Cambridge Analytica
had tried to rebrand and regroup but the shareholders rejected the plan and
didn’t want to take on the legal liabilities associated with it, according to
the person.
Cambridge Analytica didn’t respond to a request to comment on this.
Cambridge Analytica first broke into American politics in 2013 as the
offshoot of British behavioral company SCL Group. The company, which had
attracted backing from the Mercer family, was known for its financing of
conservative candidates. Rebekah Mercer and her sister Jennifer, daughters of
hedge-fund billionaire Robert Mercer, were on the company’s board. Former White
House chief strategist Steve Bannon also served on the board before joining the
White House. Three Republican presidential campaigns—those of Mr. Trump, Sen.
Ted Cruz and neurosurgeon Ben Carson —hired the firm.
Even before the reports that Cambridge Analytica had improperly used
Facebook data, U.S. clients had said they were dissatisfied with the U.K.-based
company’s services. Representatives of both the Trump and Cruz campaigns said
the company overpromised its ability to use “psychographic” data to identify
and persuade voters.
On the same day in March that Facebook said it would suspend Cambridge Analytica from buying ads after
learning that the data firm had improperly harvested Facebook’s data, Rebekah
and Jennifer Mercer joined the board of a new company, Emerdata Ltd., based at the same address as Cambridge
Analytica’s British affiliate, according to a British corporate filing. Mr.
Nix, who became a director in late January, later filings show, was removed
from the board on March 28.