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Cambridge Analytica shuts down amid scandal over use of Facebook data

Cambridge Analytica shuts down amid scandal over use of Facebook data
Cambridge Analytica CEO Alexander Nix speaks in Lisbon, Portugal on Nov. 9, 2017. (Antonio Cotrim / EPA/Shutterstock)

Cambridge Analytica, a political consultancy that worked for the Trump campaign and had come under attack for its use of personal Facebook data in other elections, announced on Wednesday it would cease operations and declare bankruptcy in the United States and United Kingdom.

The firm said it had lost clients because of revelations in March that it had improperly obtained the personal information of millions of Facebook users. "It is no longer viable to continue operating the business," Cambridge Analytica said in a statement.

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Cambridge Analytica defended its use of Facebook, saying it was "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 decision by the firm comes as it continues to face potential investigations and sanctions from regulators around the world for charges.

The controversial tactics of Cambridge Analytica -- whose former vice president, Republican strategist Steve Bannon, later worked for Trump's campaign and in the White House -- first came to light in March in news reports that it had amassed data from tens of millions of Americans through a Facebook quiz app. Facebook suspended the firm at the time.

In a statement Wednesday, Facebook said: "This doesn't change our commitment and determination to understand exactly what happened and make sure it doesn't happen again. We are continuing with our investigation in cooperation with the relevant authorities."

Designed by an outside researcher named Alexander Kogan, the tool, called ThisIsYourDigitalLife, collected information not only on Facebook users who approved it but also their friends. In total, Facebook has said that Cambridge Analytica had access to data on 87 million people, including 71 million Americans, in its efforts to create detailed profiles about voters' backgrounds and behaviors, as well as what types of political messages might appeal to them based on their personalities.

In 2015, Facebook demanded that Cambridge Analytica delete all the data it had collected. But a former employee turned whistleblower, Christopher Wylie, alleged this year that the data analysis firm continued to rely on Facebook information despite assuring otherwise.

The controversy has triggered a groundswell of criticism, investigations into both Cambridge Analytica and Facebook around the world, multiple hearings in Congress and the potential for fines and other penalties.

Adding to its headaches, Cambridge Analytica's since-suspended chief executive, Alexander Nix, was caught on tape by a UK news broadcaster suggesting that the firm could use bribes and sex workers to entrap politicians it had hoped to defeat. Cambridge Analytica has denied the charges.

"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 firm said in a statement Wednesday.

Even as it maintained its innocence, Cambridge Analytica acknowledged that the "siege of media coverage has driven away virtually all of the company's customers and suppliers." SCL Elections, its parent, as well as Cambridge Analytica began insolvency proceedings in the United Kingdom, and said they would soon start bankruptcy proceedings in the United States.

UPDATES:

12:35 p.m.: This article was updated with a statement from Facebook, background and a statement from Cambridge Analytica.

This article was originally published at 11:35 a.m.

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