A Look into the recent issues that shook the market and brought disasters to top brands. A quick look at Data Breach and debt issues.

1. FASHION AND APPAREL MARKETTING (FST 4005)
Assignment 1
The brand disasters – Data Breach & Debit Issues
Submitted By,
N Saranya
16BFT1006

2. Google+ & Facebook:
Google+ allowed third party developers to collect data from people who gave it permission.
Remember, that’s ok and is allowed.
However, Google+ also allowed third party developers to access the data of all the friends, of people
who had given permission to use the app. Once again, the friends are not giving permission to share
their data with third parties, so that should not be allowed (but it was allowed by Google+).
When Google discovered the data leak, they chose to stay quiet.
An internal company memo among Google’s legal department said that if they disclosed the data leak,
it would probably result in Google ‘coming into the spotlight alongside or even instead of Facebook
despite having stayed under the radar throughout the Cambridge Analytica scandal’.
The memo also said about Google CEO Sundar Pichai, that it ‘almost guarantees Sundar will testify
before Congress’.
Yesterday, a little while after news of the potential Google+ leak went live, Google put up a post too.
‘we are shutting down Google+ for consumers’, confirmed one line in reactionary post.
They said 500,000 accounts could have been affected, but they can’t be sure. They also said that
although the security flaw existed, they ‘found no evidence that any profile data was misused’ and
that none of the thresholds for public disclosure were met.
The demise of Google+ also came as a result of a bug discovered last year but acknowledged for the
first time by Google on Monday, and the flaw in one of its Google+ "People APIs" exposed some private
user data to third-party developers, including such information as the occupations, genders, ages, and
email addresses of many users.
The Google+ vulnerability was discovered at a time that almost coincided with the notorious privacy
leakage scandal of the world's largest social media network Facebook, which has been widely criticized
for its failure to protect its users' private data.
Facebook has been under heavy scrutiny about its privacy policy after a British data mining firm
Cambridge Analytica was accused of illegally accessing the data of 87 million Facebook users without
their knowledge.
What’s the controversy about Facebook?
Cambridge Analytica (CA) is a UK-based data analytics firm with its parent company named Strategic
Communications Laboratories. The job of this data analytics firm is to come up with online political
campaigns, influence potential voters online and it does this by combining data from multiple sources
including online information.
This time, as per the allegations, the said data analytics firm has extracted the data with the help of a
personality quiz on Facebook. The quiz is called “this is your digital life” and was taken up by nearly
300,000 people. The app illegally acquired data of the users’ friends and managed to get access to
nearly 50 million profiles which is against Facebook guidelines. This data was then used to create a
psychological profile of the users as well as their friends based on their online activities which was
further misused for targeted political advertising during UK’s Brexit referendum as well as during the
2016 US presidential elections.

3. However, CA has refuted the allegations stating that it does not hold data from Facebook profiles. The
firm admitted that it had contracted a company, Global Science Research (GSR), for a large-scale
research project. As per the remarks made by CA, GSR only obtained data in accordance with the UK
Data Protection Act and after seeking user consent.
How did Facebook CEO react to this?
Facebook CEO Mark Zuckerberg wrote a post on his personal page saying, “We have a responsibility
to protect your data, and if we can’t then we don’t deserve to serve you. I’ve been working to
understand exactly what happened and how to make sure this doesn’t happen again. The good news
is that the most important actions to prevent this from happening again today we have already taken
years ago.” The Facebook CEO acknowledged that the company did make mistakes and more stringent
actions are needed to be taken to check this.
He also wrote, “the whole incident of data breaching is a breach of trust between Facebook and the
people who share their data with us and expect us to protect it. We will do everything to ensure it
doesn’t happen again.”
While addressing the question of fixing the issue, Zuckerberg said, “they will investigate all apps that
had access to large amounts of information before the company changed its policies in 2014.”
Facebook will conduct a full audit of any app with suspicious activity and if something is found amiss,
the developers concerned will be banned from the network, the CEO informed.
What’s Indian Govt’s response?
The controversy has caused a lot of upheaval amongst Indian political parties as well as the Lok Sabha
elections are approaching. Ravi Shankar Prasad, Minister of Information and Technology, said Indian
government will take serious actions if Facebook’s negligence cause any disturbance to India’s
electoral process. “If need be, strong action will be taken. Let me make it very, very clear, we fully
support freedom of press, speech and expression; we fully support free exchange of ideas on social
media. But any attempt, covert or overt, by social media, including Facebook, of trying to influence
India’s electoral process through undesirable means will neither be appreciated nor be tolerated,”
Prasad said.
The minister added that the government could also summon Facebook CEO Mark Zuckerberg if
needed. “Mr Mark Zuckerberg, you better note the observation of the IT Minister of India. We
welcome Facebook in India, but if any data theft of Indians is done through the collusion of Facebook’s
system, it shall not be tolerated. We have got stringent powers in the IT Act, we shall use it, including
summoning you to India,” said the minister.
Indian political parties, BJP and Congress are accusing each other of having a connection with data
firm Cambridge Analytica and its parent firm Strategic Communications Laboratories (SCL). Whereas
Prasad from BJP alleged that the controversial firm was in talks with the Congress party for the 2019
Lok Sabha elections, Congress has denied all such charges. “Indian National Congress or the Congress
president has never used or never hired the services of a company called Cambridge Analytica. It is a
fake agenda and white lie being dished out by Union Law Minister Ravi Shankar Prasad,” said
Surjewala. “BJP’s factory of fake news has produced one more fake product today. It appears fake
statements, fake press conferences & fake agendas have become every day character of BJP,” he
added.

4. Kingfisher:
Global aviation industry is passing through challenging times due to unprecedented fuel price
hike during the last 4 years, turbulent financial markets and economic recession. Vijay Malaya’s dream
bird, Kingfisher Airlines - popularly known as The King of Good Times - is witnessing its worst phase.
Indian domestic aviation is suffering from a serious market failure, caused by misguided government
policy and ministers need to step in quickly to fix it. In India, most of the upcoming airlines added a
large number of aircraft since 2006 and deployed them mostly on metro sectors resulting into suicidal
price war among all the airlines. Every airline in India is currently suffering from operating losses.
• Kingfisher’s net worth has been completely eroded, while its auditors had raised
several questions about its accounting practices in its annual report.
• Kingfisher Airlines Ltd’s loan funds stand at Rs7, 543 crore (debt-to-equity ratio of
about 3.2) & that of Jet Airways (India) Ltd’s is Rs14, 123 crore (debt-to-equity about
4.2).
• Spice jet Ltd, on the other hand, has lowest debt at Rs712 crore (debt-to-equity about
0.7).
• • Kingfisher’s fixed assets stand at Rs2, 286 crore, but it has a negative net working
capital (excluding cash and bank balance) of Rs1, 970 crore. Jet Airways has a much
stronger asset base with the value of its fixed assets at Rs14,417 crore; its negative
net working capital (excluding cash and bank balances) is relatively much lower at
Rs560 crore. Spice Jet has a total fixed asset base of Rs1, 115 crore.
• • Kingfisher could not deliver on profitability even last year when the going was
considered to be good. According to analysts, the sector experienced its best returns
in the quarter ended December 2010. Even during such times, Kingfisher’s net loss for
fiscal 2011 stood at Rs1, 027 crore. That’s when Jet had managed a net profit of Rs9.69
crore—on a stand-alone basis—and Spice Jet posted a net profit of Rs101 crore. Spice
Jet’s net profitability, of course, was also supported by relatively lower interest
expenses. For the September quarter, Kingfisher’s operating losses are higher than
the other two, with Jet’s operating loss being far lower. Kingfisher’s fuel and interest
expense (Kingfisher’s debt is also probably costlier than that of Jet Airways) as a
percentage of revenue is higher than that of Jet.
• A higher interest cost, coupled with higher operating losses, has led to pressure on
Kingfisher’s ability to service its interest and debt obligations. Further, Kingfisher’s
current liabilities have increased by 23% in September from March (an indication that
it may be
• Stretching payments to suppliers). Naturally, Kingfisher seems to be the worst
affected of all the three.
• Revenue growth for Kingfisher domestically was very weak, falling 3% to Rs. 1,184
Crore from Rs. 1,227 Crore
• International Revenue growth was even worse, falling 9% to Rs. 363 Crore from Rs.
398 Crore
• Passengers carried fell 15% to 2.63 million; antithetical to general market trends.
• Domestic Passenger Yield fell 3% to Rs. 3,804 despite capacity discipline.
• International Passenger Yield rose 5% to Rs. 10, 864.
• EBTIDAR Profit (which measures operating results before taxes, interest, depreciation
, loan amortization, and rents) of Rs. 125 Crore (Rs. 284 Crore in Q3 10-11), EBITDAR

5. profit of Rs. 161 Crore on Domestic (Profit of Rs. 225 Crore in Q3 10-11), and EBITDAR
loss of Rs. 36 Crore on International (Rs. 59 Crore profit in Q3 10-11)
• Kingfisher deferred almost 213.4 Crores worth of losses into future taxes under
“Deferred Tax Asset”
• There was a onetime special item of almost Rs. 79.25 crore that contributed to the
loss.
Result:
Running an airline in India is a mugs’ game. Once defined as the simple business of “getting
bums on seats” – more “bums” mean better bottom line – the way the Indian industry is being run,
one wonders if the “bums” are paying enough for the seats they sit on. Almost paradoxically despite
their continual shrinkage in the domestic market, Kingfisher has continued to post solid, if
unspectacular operating figures in the domestic market. Kingfisher plans to increase revenues through
more efficient operations, while simultaneously controlling costs by shedding some realty assets
(including its Mumbai corporate office), entering sale and leasebacks for some Airbus aircraft, and
switching some high-cost rupee loans into low-cost foreign currency loans. There has also been
speculation the carrier will permanently reduce its fleet of 66 aircraft (the same level as Jun-2010) to
35 aircraft. Kingfisher Airlines is also working “aggressively” with a consortium of banks, which hold a
23% stake in the company, to further reduce interest costs and raise working capital.