FTC opens Facebook inquiry

Data-mining firm suspends CEO after British news report

Cambridge Analytica’s board of directors has suspended chief executive Alexander Nix, shown Tuesday in London.
Cambridge Analytica’s board of directors has suspended chief executive Alexander Nix, shown Tuesday in London.

The Federal Trade Commission has opened an investigation into whether Facebook violated an agreement with the agency on data privacy, according to a person with knowledge of the inquiry, after reports that information on 50 million users was improperly obtained by the political consulting firm Cambridge Analytica.

The investigation, started in recent days, adds to the mounting pressure against Facebook about its handling of the data. Cambridge Analytica used the information to help President Donald Trump's presidential campaign profile voters during the 2016 election.

On Tuesday evening, the data firm's board of directors announced that it had suspended Chief Executive Officer Alexander Nix pending an independent investigation of his actions reported by Britain's Channel 4 News a day earlier. The station broadcast video apparently showing Nix speaking to an undercover reporter about unsavory services that Cambridge Analytica provided its clients.

The scrutiny of Facebook extends from state capitals to Europe. Attorneys general in Massachusetts and New York are investigating Facebook's handling of personal data, and the British Parliament has called for a hearing with Mark Zuckerberg, the company's chief executive. Several senators have called for him to appear in Washington.

Adding to concerns about the company is the impending departure of Alex Stamos, Facebook's chief security officer. That change was reported Monday by The New York Times.

The FTC investigation is connected to a settlement the agency reached with Facebook in 2011. The agency had accused the company of deceiving customers "by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public," according to a statement at the time.

Among several violations the FTC found, Facebook told users that third-party apps on the social media site, like games, would not be allowed to access data. But the apps, the agency found, were able to obtain almost all personal information about a user.

The agency's action against Facebook in 2011 was considered a landmark in privacy enforcement. The company could face fines of $40,000 a day per violation if the agency finds it violated the settlement.

In the recording, Nix says his company could use unorthodox methods to wage successful political campaigns for clients -- for example, that the company could "offer a large amount of money" to a rival candidate and have the whole exchange recorded so it could be posted on the Internet to show that the candidate was corrupt.

Cambridge Analytica disputed the Nix report, saying he had posed a series of "ludicrous hypothetical scenarios."

Nix said in a statement Monday that he deeply regrets his role in the meeting and has apologized to staff members, but he told the BBC that the Channel 4 sting was "intended to embarrass us."

"We see this as a coordinated attack by the media that's been going on for very, very many months in order to damage the company that had some involvement with the election of Donald Trump," he said.

Information for this article was contributed by Cecilia Kang of The New York Times and by Danica Kirka, Gregory Katz and Anick Jesdanu of The Associated Press.

A Section on 03/21/2018

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