December 18, 2018
A recent New York Times article has shown that Facebook shared its user data, especially messages to friends, to over 150 other companies, including many in Silicon Valley. Does this new piece of information start the beginning of the end of a tech giant?
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In a recent December 2018 New York Times article (Dance, LaForia & Confessore), it was discovered that Facebook, while creating its own protective information wall, shared user data (including messages to friends) to other tech companies such as Amazon, Spotify, and Microsoft. It comes on the heels of founder Mark Zuckerberg testifying in front of a congressional committee, regarding the alleged hijacking of its site by foreign actors trying to influence the 2016 election, discovery of data sharing, and accusations that it censored ideas and comments by conservative personalities. The sharing of its user data did not have the best protection and was not as strong as it could have been. After media reporting and user backlash, this doesn't improve the perception among some, like me, that Facebook has a serious crisis on its hands that could irrevocably ruin its high trajectory and profitable business model over the past 15 years.
Personal user data and preferences have become the 21st century's most powerful commodity, especially in the proliferation of tech companies most of which are located in Silicon Valley. Purchasing choices are the new "black gold (oil)," which companies desperately want so they can better provide items that people want to buy. In other words, if you know what people want to purchase, a company can tailor any type of production to what is selling well. It improves efficiency, reduces costs and increases profit margins. Knowing what people have the interest to buy is the intelligence that modern companies increasingly want to gain a market edge. Facebook realized this. Since the company did not manufacture a product, it had to generate revenue somehow. Collecting the meta-data of its users, then packaging those characteristics and selling that information to advertisers and other companies allowed Facebook to generate positive cash flow. As a result, billions of advertising revenue comes into the bank account of Facebook, buoyed by expansive user growth. One can understand why their users' information is so precious to the company.
The New York Times article provided insight as to how the company took advantage of this information and sold it to other large Silicon Valley companies, who then tailored it to their advantage financially as well. Privacy was not a major issue when Facebook began its rapid rise. Only after investigative reports and complaints from users did the company enact the way it operates, at least on the surface, to change public perception. The Federal Trade Commission (FTC) created a consent agreement with the company in 2011 to structure a better model in terms of protecting user data and to not share user data without explicit permission. The recent revelations could threaten the purported agreement with the government, but Facebook has stated through its spokespersons that all companies who enter into contracts with the company must abide by Facebook policies.
One of the most troubling aspects of Facebook's agreements with other companies is Yandex, which is a Russian search engine. The fact that a foreign-owned company, a Russian one to boot, was allowed to extract meta-data from Facebook users is cause for immense concern. It is not too far to imagine that the country's intelligence services were probably given access to the data that Yandex collected. If the Democrats were concerned with Russian "meddling," then this discovery should get the Intelligence Committee in the House to go into overdrive. If any connection is proven between Yandex and the Russian intelligence community, then it could spur Congress into more investigations into Facebook, and this could drive company stock to dangerously low levels. It might lead to Zuckerberg's ouster as CEO.
Facebook could be a test case for privacy, data collection and informational transaction laws that will determine the level of regulation for Silicon Valley tech companies in the future. Since the company and its founder are an American success story, some legislators could be tepid about their desire for investigations. However, providing transparency for tech companies will give their users confidence that their data will be treated with respect, much like a person's health records. Here are some ways Facebook can provide that comfort to their users:
1) Provide all Facebook users with an upfront method to protect their data, a list of things to do so that each individual can determine on their own what information can be viewed, what is hidden and who can access that data. Facebook has options in "settings" that have been around, but this needs to be done through a public relations initiative or a firm specializing in privacy, and have its employees in an official company capacity provide assistance to users to make these changes. This will give the company positive impressions amongst its legion of users, and keep open the lines of communication and to build on that relationship.
2) Mark Zuckerberg and Sheryl Sandberg should step down from the management of the company. Both have played an integral part in obfuscation of their intention to providing users information to outside companies and withholding those key relationships with Congress, including Mr. Zuckerberg's testimony in front of a Senate committee. Their fingerprints are on the approval of working with and sharing user data with these companies, and their resignations would send a clear signal that Facebook is serious about making significant changes in how the company's business model functions. Additionally, both Ms. Sandberg and Mr. Zuckerberg should testify in front of the committee again, and be honest and candid in terms of what they did, and how they plan to make changes before their removal from day to day operations of the company.
3) Congress should introduce legislation to regulate the powerful and influential tech sector, including protecting the free speech for everyone. These protective rules must show that popular companies in Silicon Valley must be adherent to specific and open terms of relationships with their users, and how if any information that is shared with outside firms, it must be made public and what type of information can be shared. I believe that this type of legislation can have strong bipartisan support, and it can go a long way to show that Congress does care about the privacy of American citizens, and for those who choose to conduct business with these influential companies, especially Facebook.
I feel that Silicon Valley companies must protect their users from manipulation, unfair business practices, and treat them with respect so that their associations with these companies are valued. New rules will introduce better management of those users. Hopefully, the future will make online interactions better for everyone involved, and provide a blueprint for new and emerging companies to properly seek the business of every citizen in this country.
The New York Times article provided insight as to how the company took advantage of this information and sold it to other large Silicon Valley companies, who then tailored it to their advantage financially as well. Privacy was not a major issue when Facebook began its rapid rise. Only after investigative reports and complaints from users did the company enact the way it operates, at least on the surface, to change public perception. The Federal Trade Commission (FTC) created a consent agreement with the company in 2011 to structure a better model in terms of protecting user data and to not share user data without explicit permission. The recent revelations could threaten the purported agreement with the government, but Facebook has stated through its spokespersons that all companies who enter into contracts with the company must abide by Facebook policies.
One of the most troubling aspects of Facebook's agreements with other companies is Yandex, which is a Russian search engine. The fact that a foreign-owned company, a Russian one to boot, was allowed to extract meta-data from Facebook users is cause for immense concern. It is not too far to imagine that the country's intelligence services were probably given access to the data that Yandex collected. If the Democrats were concerned with Russian "meddling," then this discovery should get the Intelligence Committee in the House to go into overdrive. If any connection is proven between Yandex and the Russian intelligence community, then it could spur Congress into more investigations into Facebook, and this could drive company stock to dangerously low levels. It might lead to Zuckerberg's ouster as CEO.
Facebook could be a test case for privacy, data collection and informational transaction laws that will determine the level of regulation for Silicon Valley tech companies in the future. Since the company and its founder are an American success story, some legislators could be tepid about their desire for investigations. However, providing transparency for tech companies will give their users confidence that their data will be treated with respect, much like a person's health records. Here are some ways Facebook can provide that comfort to their users:
1) Provide all Facebook users with an upfront method to protect their data, a list of things to do so that each individual can determine on their own what information can be viewed, what is hidden and who can access that data. Facebook has options in "settings" that have been around, but this needs to be done through a public relations initiative or a firm specializing in privacy, and have its employees in an official company capacity provide assistance to users to make these changes. This will give the company positive impressions amongst its legion of users, and keep open the lines of communication and to build on that relationship.
2) Mark Zuckerberg and Sheryl Sandberg should step down from the management of the company. Both have played an integral part in obfuscation of their intention to providing users information to outside companies and withholding those key relationships with Congress, including Mr. Zuckerberg's testimony in front of a Senate committee. Their fingerprints are on the approval of working with and sharing user data with these companies, and their resignations would send a clear signal that Facebook is serious about making significant changes in how the company's business model functions. Additionally, both Ms. Sandberg and Mr. Zuckerberg should testify in front of the committee again, and be honest and candid in terms of what they did, and how they plan to make changes before their removal from day to day operations of the company.
3) Congress should introduce legislation to regulate the powerful and influential tech sector, including protecting the free speech for everyone. These protective rules must show that popular companies in Silicon Valley must be adherent to specific and open terms of relationships with their users, and how if any information that is shared with outside firms, it must be made public and what type of information can be shared. I believe that this type of legislation can have strong bipartisan support, and it can go a long way to show that Congress does care about the privacy of American citizens, and for those who choose to conduct business with these influential companies, especially Facebook.
I feel that Silicon Valley companies must protect their users from manipulation, unfair business practices, and treat them with respect so that their associations with these companies are valued. New rules will introduce better management of those users. Hopefully, the future will make online interactions better for everyone involved, and provide a blueprint for new and emerging companies to properly seek the business of every citizen in this country.
This is worrisome activity at higher levels of Facebook which will generate mistrust of the social media process. You have summarized the problems and provided some solutions. Well done,
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