Is the internet a danger to democracy?

Has democracy been hacked?

The jury is still out on the extent to which political-consulting firm Cambridge Analytica's harvesting of Facebook data and psychology-based micro-targeting methods genuinely influenced the 2016 Trump campaign, or the Brexit vote. Perhaps no clear verdict will ever be delivered. In the US, notwithstanding Mark Zuckerberg's grillings on Capitol Hill last week, policymakers remain much more focused on Russian interference than the impact of Cambridge Analytica's tactics.

In the UK there is an overwhelming sense among the political class that Brexit is traumatic enough without digging too deeply into whether Vote Leave manipulated electoral law to circumvent spending limits by channelling an extra £625,000 to another campaign (as a whistleblower claims). Those like Leave.EU's Arron Banks, who once boasted in print of Cambridge Analytica's involvement, now play it down and in the post-truth age nobody seems to care much.

Isn't that a bit too sanguine?

Maybe so. It's true that as a result of the Channel 4 expos last month, Cambridge Analytica has come to appear laughably inept rather than wickedly omnipotent. Believing that they were wooing a Sri Lankan client, the firm's chief executive Alexander Nix and a senior colleague made implausible boasts about the scale of their involvement in the Trump campaign, and described dirty-tricks tactics such as honey traps and bribes. (Nix has now been suspended by his board a meaningless public-relations move, say critics.) In the film, he no longer appeared to be a smooth-talking seer and more a bit of a buffoon. But the reality perhaps lies between the two extremes. Certainly the story of Cambridge Analytica, and its parent/sibling company SCL, remains a disturbing and salutary one.

Start your trial of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

In what way?

The point is that whether or not Cambridge Analytica swung Trump's victory or Brexit, it has shown how easy it might be to influence votes if you have a rich backer. SCL was founded by Nigel Oakes (under the scientific-sounding name Strategic Communication Laboratories) in 1993, and in its early days was involved in "marketing aromatics" the use of scents to make shoppers spend more money. In 2005 it positioned itself as the first political consultancy to offer psychological warfare services, or "psyops", to the British military.

It moved on to deploy its brand of micro-targeted propaganda on election campaigns in the developing world, before setting up Cambridge Analytica as a subsidiary in 2013 with the support of Robert Mercer, a billionaire Republican donor, and Steve Bannon, who ran the Mercer-funded right-wing opinion site Breitbart. Mercer invested $10m with the aim of influencing the 2014 congressional elections, claimed one former employee in The Washington Post (he had put a similar amount into Breitbart). Bannon then allegedly signed off on spending nearly $1m to acquire data including Facebook profiles. Cambridge Analytica later won contracts first on Ted Cruz's presidential campaign, then on Trump's, which ultimately paid it $5.9m for its services.

Why is all this disturbing?

Effective democracy depends on public debate and deliberation, on political parties that run public campaigns, on transparency and a basis on which governments can be held to account. Micro-targeting on the basis of data-harvesting leads to a more fractured democracy in which false claims cannot be subjected to public scrutiny and it's easier to exceed spending limits. This undermines the idea that voters are not the unwitting tools of propaganda machines. So these events are worrying as a guide to what could happen to democracy in the future. The age of Facebook an age where users are not consumers, they're the product is an ideal breeding ground for misinformation and mass-data gathering. And there are signs that more and more money is being spent in these channels to influence elections across the world.

How widespread is the problem?

Take Latin America, where Andrs Seplveda, a now-jailed hacker, has given a compelling account to Bloomberg of his illegal work hacking opponents, stealing campaign strategies and manipulating social media across the region. He claims to have spent $600,000 on Enrique Pea Nieto's successful presidential campaign in Mexico in 2012. Or Africa, where Cambridge Analytica was paid $6m for its work for Kenya's Uhuru Kenyatta last year, amid chaotic elections that were characterised by micro-targeting and misinformation.

More openly, in Europe, Hungary's ruling party which was re-elected this month spends tens of millions of euros of public money on highly partisan government-information campaigns that amount to electioneering. The result was an election "characterised by a pervasive overlap between state and ruling-party resources, undermining contestants' ability to compete on an equal basis", said election observers.

How serious could the consequences be?

Very bad, say Nic Cheeseman and Brian Klaas, two academics specialising in democracy, in a recent Spectator article that draws on their new book How to Rig an Election. "In many parts of the world, election rigging is now not the exception but the norm. It's a multi-billion-dollar industry in which government contracts flow to those who deliver the right' result." By replacing uninformed votes with misinformed ones, this helps prop up despots, fuel populism and even increase political violence. "Firms such as Cambridge Analytica need to be subject to tighter regulation and scrutiny." If not, "election quality will continue to decline", undermining democracy.