Why Cambridge Analytica could be this decade's Enron
The parallels may not be obvious, but this scandal could be the straw that broke the camel's back
What do you think of when you hear the name "Enron"?
For those of us of a certain age, the word "corruption" probably comes to mind, as does "dotcom bubble". Indeed, the Enron scandal was one of the standout moments of the collapse of said bubble, which is odd in many ways Enron was no neophyte, having been founded in 1985, nor was it even a technology company; it was an energy firm.
And yet its bankruptcy put the final nail in the coffin of the late-90s/early-2000s mania for all things online (including those with no obvious value) and heralded the ultimate deflation of the bubble.
Enron has become a byword for scandal and corruption, for sure, but also for catastrophic failures in the tech industry. I can't help but think of the company in the wake of Facebook's latest goof, 17 years after the original Enron scandal broke and 14 years since the company went bust.
There are echoes of the dotcom bubble, and Enron as a precipitating agent in drastic change, in the currently unfolding Cambridge Analytica scandal.
Let's get some facts clear first. I'm not claiming there are any accounting irregularities of any sort to be found within Cambridge Analytica. Its set-up is Byzantine in its complexity, but it doesn't seem to be corrupt. Nor does it seem to have necessarily done anything wrong, at least legally the morality of its behaviour is another matter entirely.
And yet, its involvement in several of the most contentious elections and votes of recent years, including Donald Trump's presidential run and Brexit, using consumer-focused internet platforms (most notably Facebook) to allegedly try and sway opinion could cause catastrophic fallout.
You may disagree, but lesser problems have brought down companies before and the collapse of Facebook which, let's not forget, is much bigger than its eponymous social media site would have a significant impact on financial markets worldwide. Depending on how deep this rabbit hole goes, who else is involved and how much confidence investors lose, it could have a knock-on effect on the wider tech industry.
It's worth remembering, as well, that the Cambridge Analytica scandal isn't happening in a vacuum. Disinformation campaigns carried out on social media by professional bot and troll farms are in the spotlight, with the likes of both Twitter and Facebook trying to clean up their act and the UK Parliament's Digital, Culture, Media and Sport committee carrying out an investigation into so-called fake news.
Indeed, Facebook CEO Mark Zuckerberg has been asked to appear in front of the committee to answer questions about his platform's involvement with Cambridge Analytica and their data sharing arrangements. He has so far declined, sending an emissary in his place, although he will appear before the US Congress next week on the same subject.
The collapsing of markets and bursting of bubbles is notoriously hard to predict. Those few prophets who do see what's coming, whether it's the folly of subprime mortgages or overvaluation of stocks, are often like Cassandra condemned to tell the truth to all, only to be dismissed by the majority until it's too late.
Of course, nothing may happen at all it's entirely possible but there are rumblings that make me feel this is more than just a passing inconvenience. As for what happens afterwards, unfortunately, my powers of foresight don't extend that far.