Case Study: Facebook’s “Unfriendly” Privacy Policies
Facebook CEO, Marc Zuckerberg, couldn’t quite believe all the attention he was getting. Facebook was on the verge of its initial public offering (IPO), and it seemed that the media couldn’t get enough of this Cinderella story. Zuckerberg had created a primitive version of the social media application in his Harvard dorm room. Thanks to its immediate popularity, he commercialized this product and founded Facebook, a pioneer in social networking. There were 1.4 billion active users on Facebook and the company’s revenue exceeded $12 billion. As Zuckerberg traveled around the country to promote the IPO, the press followed him everywhere. The Facebook IPO took place on May 18, 2012, making many of its brash and talented managers instant millionaires by the end of 2014. Since the IPO, Facebook’s user base has expanded to 2.7 billion. It has also grown by making strategic acquisitions including WhatsApp and Instagram
Most people at the social network company welcomed the publicity and attention surrounding the IPO. But over the years Facebook has attracted negative publicity and unwelcome attention for its controversial privacy policies. Facebook has had to deal with several embarrassing missteps as it struggles to reconcile user privacy with an open network. The company’s policies have been the object of scrutiny by the U.S. Federal Trade Commission, which has investigated a number of privacy-related complaints. Problems arise from Facebook’s business model: collect voluminous information about the user base so that advertisers can target Facebook users with more precision.57 This case reviews some of Facebook’s most contentious privacy policies and disputes.
Facebook first caught the attention of privacy advocates in 2007, when it implemented a technology known as the “News Feed.” This feature was designed to display in real time changes a person makes to her user profile on the home pages of all of her online friends. A Facebook user like Sally no longer had to visit the pages of all her friends to see updates since those updates were now automatically shared in a stream of data appearing on Sally’s homepage. To the surprise of the company, users initially balked at this innovation and Facebook had to abandon this default feature, but it has now become the “most valuable billboard on earth.”
In that same year, Facebook launched an ill-fated venture known as the Beacon program, a new way to “socially distribute information.” Thanks to Beacon, advertisers and web merchants could track user purchases across the internet. A Facebook user’s purchase on a website (such as Amazon) was disclosed to his or her network of friends as soon as the purchase was made. This information was conveyed without the user’s knowledge or consent. The Facebook community protested the online tracking along with the immediate disclosure of these aspects of their personal history. As resistance mounted, Facebook abruptly ended the program.
In 2010, Facebook once again shocked many of its users by suddenly changing its privacy settings. In its early years, Facebook shared most profile fields only with friends and friends of friends. But the policy was modified so that information that was once private such as one’s profile picture, name, gender, address, professional networks, and so forth, became publicly available by default to everyone online. As one observer noted, Facebook changed the defaults to more efficiently monetize customer information and because the company “appreciated its power.” Facebook’s decision to make previously confidential information “publicly available” was reversed thanks to public protest, and users now have the capability to control access to most of their personal information.
Despite these and other problems, Zuckerberg insisted in 2010 that privacy was no longer a “social norm.” There was an expectation that people wanted to be more open about their lives and activities. Zuckerberg and other Facebook executives remained convinced that the social media company’s innovations were ahead of the convictions of its user base and not in opposition to them.
In order to expand its revenues the corporation decided to open its platform to outside developers. Programmers could build Facebook games, develop personality tests, or construct other apps. These programs were offered to users for free in exchange for information. For a few years the Facebook developer platform hosted several popular games including Farmville and Candy Crush. Facebook customers agreed to give these game developers access to their data in exchange for playing these games. However, there were no protections for the reuse of these data collected by the developers. Algorithms were extracting items such as users’ messages and photographs. One game developer used Facebook data to construct unauthorized profiles of children on its own website. Facebook had allowed for the sharing of its customer data without a system to prevent any abuses.
In 2009, Facebook introduced a remarkable innovation which it called the “Like” button. The famous plug-in was a matter of internal debate among Facebook executives for some time. But they gradually realized that this simple button could “transform the platform from a book into a blizzard of mirrors.” The more things a user liked, the more she revealed about herself, her preferences, interests, and aspirations. Facebook now knew what their users “liked” along with their friends and relationships. This data gold mine allowed advertisers to target those Facebook users with even greater precision.
Facebook’s tracking of its users across the internet had begun in 2010 with the help of the Like button. At first, Facebook denied that it was tracking users as they surfed the web. But by 2014 internet tracking was an established corporate policy and part of the contract between Facebook and its users. Facebook collects data on its users’ internet browsing even when they are no longer logged into their Facebook accounts. This happens by means of a small piece of technology known as the “datr” cookie that Facebook deposits in each user’s web browser (once they log on to Facebook.com). The datr cookie informs Facebook whenever that browser visits a website with an active social plug-in, such as the “like” button. This tracking of website activities and purchases allows Facebook to build a more detailed profile of their users as the basis for more personal ads. Users are informed of the tracking (in the dense terms-of-service agreement), but they do not have the option to opt out of this practice, which has riled European authorities. They claim that Facebook has unfairly leveraged its power to collect data on the activities of Facebook users on those third-party sites that use tools such as the “like” button.
It remains to be seen whether Facebook can successfully fend off regulators in Europe and the United States and live up to the expectations of its investors, who expect the company to continue leveraging the commercial value of the information it collects. Facebook became a social media behemoth by collecting user data when there were few privacy restrictions. There are now stricter laws in Europe, and if similar laws minimizing data collection are enacted in other countries, Facebook may be able to crush would be competitors who want to challenge Facebook using the same business model that made Zuckerberg’s company so successful.
Questions:
What is your opinion Facebook not being transparent about the like button function to be used as a data collection tool with your information without your consent? What are your thoughts about the Facebook invading your privacy and using your information for marketing purposes? Is this ethical? Should the US overment intervene more like EU has done? Why? Why not?
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