Cambridge Analytica's closure may be a sign of what's to come after Facebook data scandal

Alex Sass is in the happiness business — his app, PostMood, uses Facebook data to give people a picture of how they are feeling. But at his own office, where the team is still trying to sort out Facebook's tighter rules around how developers use data, it doesn't take an app to see the mood has shifted.

"Ours has certainly been depleting somewhat recently," he said of workplace happiness, laughing ruefully.

Sass was in the room Tuesday when Facebook CEO Mark Zuckerberg told the crowd at the San Jose Convention Centre that he knows "it hasn't been easy being a developer these last couple of months."

The 33-year-old tech billionaire was speaking at a two-day conference meant to focus on the future of Facebook, with topics ranging from mobile gaming to app-based ads.

But this time, there were also questions around a growing data-use scandal that had some third-party developers whose businesses rely on Facebook wondering if they even have a future.

The furor around data use and privacy blew up in recent weeks with allegations of improper data use by Cambridge Analytica. The U.K.-based data analysis firm has been scrutinized in the media and by lawmakers worldwide, and recently announced its shutdown and bankruptcy even as a probe into its conduct continues.

Hoping for a 'survivable storm'

One of the responses from Facebook in the wake of the scandal has been to limit the amount of personal data third-party developers can collect. Sass's company, and many others, will struggle without access to some of that data. 

After the most recent changes, production at Sass's company has "come somewhat to a standstill."

So he flew all the way from London to Facebook's annual convention in California, determined to get answers.

What he really wanted to know was is the data analysis his company relies on to serve users still OK?

"We're a tiny company and we have to pay our staff and know when to draw our investments down."

Sass, whose company is still on Facebook, said he hopes the recent tempest will be a "survivable storm."

But some other companies are already facing more substantial struggles after being barred from the online platform, which says it had more than 1.4 billion daily active users on average last March.

Market research firm Cubeyou is one of the firms that was removed from Facebook after it faced allegations of misusing data it collected.

According to Cubeyou's CEO Federico Treu, his company anonymizes the personal data it collects and "never sold data to anybody."

Treu called Facebook's decision to boot them off the platform heavy-handed. 

"Facebook just didn't even much look into this specific situation ... just threw us under the bus in order to focus the attention from politics and public attention to something else," Treu said. "So we're kind of caught in the middle."

Facebook declined a request to comment from CBC News.

Treu said he believes Facebook is an "amazing tool." But he thinks the recent crackdown is overly broad and hypocritical.

"Facebook's business model is about monitoring-slash-stalking two billion people every single day and collecting all the information on these people," Treu said from the conference this week. "Not that different from the practice that has been condemned by public opinion recently." 

Is Facebook too big?

The tech company's response to the scandal has highlighted the perils of an entire economic ecosystem dependent on one massive host.

It reminds Canadian academic Mike Ananny, who studies online communication at the University of Southern California, of the concern around Microsoft that emerged in the 1990s, when the federal government launched an antitrust case seeking to split up the company. 

That case dragged on for years before ending with a settlement. What the Microsoft case didn't end with was any clear sense of how internet giants like Facebook and Google might be regulated.

Ananny, from Belleville, Ont., said right now it's an open question as to "whether or not these companies should exist at this scale at all."

"Facebook and Google are both starting to appear more powerful than I think people have understood them to be," he said. "And I think that's what we'll see in the next months, or maybe a year or so, is regulators saying there's a broader problem here — it's not just a Facebook problem, it's a broader problem with how social media work."