
FTC rules 5-0 that Cambridge Analytica engaged in deceptive practices [pdf] - anigbrowl
https://www.ftc.gov/system/files/documents/cases/d09389_comm_final_opinionpublic.pdf
======
munk-a
It looks like a pretty nice outcome for CA, no persons involved are being hit
with criminal charges, instead they're limited to just constraints on future
actions - additionally CA has filed for bankruptcy and there is no initiative
I can see in this order that goes after original investors as having conspired
on these charges, so they'll lose their investment but that was probably a
write off anyways.

~~~
sigstoat
> no persons involved are being hit with criminal charges

can the FTC or whoever else is involved _at_ _this_ _stage_ even file criminal
charges against individuals?

we see over and over comments of the "omg no criminal charges" variety
whenever a government body that can't file criminal charges fails to do so.

~~~
shaneprrlt
They're known for imposing fines that are minuscule relative to the amount of
damage whoever they're investigating caused. For most deceptive operations
large enough to land on the FTC's radar, whatever fines they might end up
paying are considered a speeding ticket and cost of doing business. It's sad,
really. They're also known for being massively understaffed relative to the
amount of complaints they receive.

~~~
dylan604
So what is the difference between CA, corporate banks, etc that are
corporations that "shield" the employees from personally facing criminal
action, and me running out to file an LLC/SCorp/etc to do illegal activities
myself? Is it purely the size of their bank accounts?

~~~
wahern
It's the size of an organization and the complexity of the enterprise. Large,
sophisticated corporations effectively shield executives from personal
criminal liability because decision making is more diffuse--or at least they
have an easier time arguing that.

If a prosecutor could establish that a Fortune 500 CEO had the same,
unmoderated role in criminal activity as the CEO of a one man shell company,
then he'd be just as easy to prosecute and undoubtedly would--that'd make the
careers of the D.A. and the attorneys working the case.

There aren't many (or any?) laws that criminalize scheming, amoral profiteers
who effectively (but not literally) promote a culture of lawlessness. Even if
you write them they'd be very hard to prosecute--Due Process protections are
strong in the US and Anglosphere systems, at least if you have the money and
wherewithal.

A bigger problem is that executives and board members are financially
shielded, often through corporate-bought personal liability insurance. Maybe
things would get better if there were laws mandating clawbacks, with
independent agents[1] tasked with drafting the contracts and enforcing
clawbacks, and perhaps somehow preventing executives from insuring themselves,
such as with mandatory right of recourse clauses (i.e. insurer can always
recover their payouts from the insured, making them more like guarantors).
This aspect of corporate law is really complex though because it touches on so
many subject areas. And stuff like this has been tried--it's how we ended up
with corporate-bought personal insurance policies, a response to a brief
period where executives and board members found themselves financially exposed
during the early years of professional shareholder lawsuits.

[1] Even though technically this is supposed to be the responsibility of board
members. But that's an even thornier problem.

~~~
dylan604
Essentially, you're saying plausible deniability? "I'm the CEO of 100s to
1000s of employees. I can't possibly know the complete details of what all of
them are working on"? If you're a CEO like Steve Jobs or the Zuck, then I
would never ever ever buy that argument.

~~~
wahern
Plausible deniability + army of lawyers + crapshoot of a jury trial = risk
averse prosecutors. Lower-level employees who play a more direct role do often
get pinched. For example, in the Libor scandal.[1]

Prosecutors don't get dinged for being risk averse. And the same is true, to a
lesser extent, for regulators. But attorneys who specialize in class action
civil suits can't _afford_ to be risk averse; they make payday by being
aggressive and hunting out malfeasance, which is why business _hates_ class
actions. Corporate America has successfully systematically demonized "trial
lawyers" the same way they demonized labor unions. Even the most anti-
corporatist activists tend to assume trial lawyer lobbyists and labor unions
are more corrupt than corporations, which is dubious to say the least. (As
Jimmy Hoffa said circa 1959, "Twenty years ago the employers had all the
hoodlums working for them as strikebreakers. Now we’ve got a few, and
everybody's screaming." That doesn't excuse lawlessness, but it should effect
how we allocate limited enforcement resources.)

IMO, if we want to restore balance we need to make it easier for victims and
shareholders to pursue civil remedies independently, and strip executives and
board members of some of their financial protections. This way we realign
financial incentives in a manner that, hopefully, maximizes disincentives for
cheating (i.e. executives have to watch their back for trial lawyer "sharks"),
without having to literally make a federal case out of everything. It will be
costly, but corporate malfeasance is already costly, it's just that those
costs are hidden--at least quantitatively hidden; qualitatively we all see it.
Importantly, these costs won't need to be borne by tax payers[2] (i.e. growing
ever-despised federal bureaucracy), which isn't sustainable politically.
That's another reason why the SEC, FTC, and others don't pursue malfeasance
more aggressively--their staffs are tiny and ill-equipped to perform
investigations. It's why the SEC heavily relies on automated, heuristic
algorithms for detecting financial fraud; and why reporting requirements are
so invasive. We're relying on computers for lack of human resources, but
computers are only good at detecting the simple schemes, the reporting costs
are regressive, and prosecutions favor small fry--the type of people that
taxpayers can more readily identify with, which makes prosecutions seem unfair
and predatory.

Corporate America pushes back so heavily on this stuff because for 40 years
large corporations have slowly turned into accounting and financing firms,
with manufacturing and services as side businesses. They basically specialize
in aggressive accounting strategies, which makes them feel vulnerable. And
because that's just how business is done these days, legislators and think
tanks have internalized the notion that permitting more corporate and personal
liability for harmful accounting and financing strategies will seriously harm
the entire economy, at least as measured by GDP growth. And, to be honest, for
a brief period it very well might, until corporate America shifts away from
accounting gimmicks and more aggressively pursues other profit opportunities.

[1] As an engineer I pitch myself to managers as someone who "gets things
done". I'm an ask for forgiveness, not ask for permission kind of worker. And
I assume many on HN are the same way, both in IT and other industries. So I
don't doubt that executives often lack deep insight into the technicalities of
various schemes. And in criminal law especially, _personal_ _knowledge_ of the
technicalities is often a crucial element of liability.

[2] Hopefully most costs will be principally borne by the wealthy. But to the
extent they're borne by consumers through higher prices or less choice, they'd
be largely hidden, which is a _good_ thing, because consumers and taxpayers
aren't very good at judging long-term tradeoffs. If we can agree
democratically that corporate malfeasance needs to be aggressively addressed,
then let's just use the best strategy--the one corporate interests have the
least ability to capture and disassemble.

------
pjc50
The real question is, which company is doing the unethical data collection and
covert advertising _today_? Ready for the December UK election?

~~~
deepakhj
Cambridge Analytica -> Emerdata [https://www.fastcompany.com/90381366/the-
mysterious-afterlif...](https://www.fastcompany.com/90381366/the-mysterious-
afterlife-of-cambridge-analytica-and-its-trove-of-data)

------
etaioinshrdlu
The way I heard the story, Alexander Nix was a chronic exaggerator who pushed
the narrative that CA had a huge impact on Brexit and other elections when it
simply wasn't true. He did this in order to gain more sales. They said the
Facebook data was deleted by the time of the Trump campaign.

My theory is that they are not so different than a typical digital ad agency
but they got caught up in a political tornado. I think we should at least be
open minded to the possibility they have been scapegoated here.

~~~
rsynnott
> Nix said that his company uses honey traps, bribery stings, and prostitutes,
> for opposition research

VERY NORMAL DIGITAL AD AGENCY THINGS.

~~~
etaioinshrdlu
It is possible Nix made all that up as a weird form of bragging to close a
sale to a sleazy customer. I couldn't find any actual evidence to the
contrary. This isn't my theory, it is literally what a CA employee told me in
person.

~~~
rsynnott
In the immortal words of Mandy Rice-Davies, “well, he would, wouldn’t he”.

People quite rarely say “why, yes, my employer does crimes”.

------
ones_and_zeros
In this timeline a ruling like this probably increases their valuation, too
bad they filed for bankruptcy.

------
m0zg
I'd be interested in seeing an unanimous FTC ruling on Barack Obama's campaign
downloading and mining the entire Facebook social graph in 2012, with
Facebook's implicit consent. And unlike the Trump campaign, Obama's did use
this data for more than just winning the primary. It went something like this:
you downloaded an app on FB and that app would grab not just your data, but
also _that of your friends_. FB turned the blind eye. Nary a word from the
press, too.

[https://www.investors.com/politics/editorials/facebook-
data-...](https://www.investors.com/politics/editorials/facebook-data-scandal-
trump-election-obama-2012/)

~~~
Traster
This is basically whataboutism. If you agree with the principle you should be
calling for the people in CA to be personally culpable (and their investors
and customers, who knew full well what they were doing). If you disagree, make
an argument as to why the principle is wrong.

~~~
FpUser
_" you should be calling for the people in CA to be personally culpable"_

I am all for it. But let's follow _first come first served_ and start
punishing the earlier perpetrators first.

What you call "whataboutism" is simply people's natural feel for justice. When
you advocate punishment make sure it applies EQUALLY TO EVERY ENTITY GUILTY.
If not then people will start pointing fingers and quite rightfully. It is not
them being "whataboutists". It is you behaving like/protecting a hypocrite.

~~~
m0zg
"Somoza may be a son of a bitch, but he's our son of a bitch." \-- Franklin D.
Roosevelt

It's politics.

------
mindslight
This is what early stage regulatory capture looks like. Now that some token
bad actors have been called out, we can go back to ignoring the elephant in
the room of the too-big-to-fail surveillance companies keeping databases that
would make the staunchest Stasi agent blush.

