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Opinion: What does the Facebook Cambridge Analytica scandal mean for Australian businesses?

28 March 2018

#Data & Privacy

Lyn Nicholson

Published by Lyn Nicholson

Opinion: What does the Facebook Cambridge Analytica scandal mean for Australian businesses?

 If you are following the Facebook Cambridge Analytica scandal, you will be reading many comments about what it means for social media, for data analytics, for businesses in general and there are many grave predictions. 

An often quoted statement that “if you are not paying for a service, you are not the consumer, but you are the product”, is being repeated in this context and rightly so. 

There is also a lot of noise around this being a “watershed moment”, where consumers finally understand what they are giving away for free services. 
If you are a business that uses data in any way, it is this author’s view that the Cambridge Analytica scandal brings to the forefront the social licence issue. Many businesses concentrate on the bare legalities of what they are doing. Some try and ignore or work around the legalities and if they are not in clear breach of the  Privacy Act  because they consider they are using de-identified or anonymised information, do not want to hear a different view. 

In practicing in the privacy area over many years, it is clear to me that in addition to strict compliance with legislation, it is necessary for businesses to be transparent with consumers and to gain a “social licence” for their activities if they want to win consumer of confidence and remain sustainable. The Community Attitudes to Privacy Survey undertaken by the Office of the Australian Information Commissioner (OAIC) since 2001 continues to reinforce this view.

It will be interesting to see how this scandal plays out and whether consumers abandon Facebook or whether regulators step in. Already, Facebook in Australia is under scrutiny from the ACCC and for this scandal, from the OAIC. 

While data analytics is highly technical and most end users would not be interested in reading and understanding how it works, they are generally very clear about understanding when the fine line into “creepy” has been crossed. It is one thing to track my habits to sell me consumer products, such as shoes or cosmetics, and quite another to seek to use my known attributes to influence political outcomes. 

Once consumers are more broadly aware that they are being used in games in which they are not the winners, and this extends far beyond Cambridge Analytica and into the whole spectrum of behavioural advertising and how the revenue model for this works, then we can expect a backlash. Once a consumer backlash starts, we can expect regulators who have stood back to become more active in the space. 

The choice then for businesses, as I see it, is to be transparent, continually explain what you do and obtain a social licence for your activities or expect, in the not too distant future, to become heavily regulated which will likely have a negative impact on the profitability and sustainability of your business.

Lyn Nicholson



Lyn Nicholson, General Counsel
T: +61 2 8083 0463


Dan Pearce, Partner
T: +61 3 9321 9840


Trent Taylor, Partner
T: +61 7 3135 0668


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Lyn Nicholson

Published by Lyn Nicholson

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