Privacy Watch: Facebook Rebounds, But Privacy Concerns Accelerate

Xconomy San Francisco — 

After Facebook posted a record profit of almost $7 billion in the fourth quarter on nearly $17 billion in revenue last week, an early investor, former advisor to CEO Mark Zuckerberg, and current shareholder said he’s making it a mission to “fix’’ the 15-year-old tech giant.

Roger McNamee, in a podcast interview with The New York Times, says the company is a dangerous, predatory instrument that uses the fun and convenience of its app to get users addicted. It then extracts reams of their private information, McNamee says, and allows advertisers and propagandists to tap it to manipulate users’ buying decisions—and even the ideas they believe in.

The publication of McNamee’s new book, ZUCKED: Waking Up to the Facebook Catastrophe, is just one of many signs over the first month of 2019 that Facebook (NASDAQ: FB) hasn’t dampened the state of alarm about data privacy that was triggered in early 2018, when the company came under the harsh spotlight of government investigations into Russia’s interference in the 2016 presidential election campaign.

Russian attackers who targeted false and divisive ads and messages to a wide range of voters in 2016 allegedly made use of millions of Facebook profiles that had been obtained by a political consulting firm, Cambridge Analytica, under a Facebook policy that was later amended.

Menlo Park, CA-based Facebook is still recovering from a tailspin in July, when its second-quarter numbers revealed a slowing growth rate and disappointing usage data that may have reflected public dismay over the data privacy scandals. Its share price plummeted, quickly shaving more than $100 billion from its market capitalization. The erosion continued until December 24, when the shares closed at $124 apiece. But in the wake of Facebook’s fourth-quarter earnings report on Jan. 30, company shares reached more than $165 each, continuing a climb from that December low. However, they still haven’t returned to the high of more than $217 a share, just before the July free-fall.

Facebook’s privacy missteps heighten attention on practices of other companies

The scrutiny of Facebook by U.S. legislators, regulators, prosecutors, consumer groups, shareholders, European privacy commissions, and others now extends broadly to tech companies such as Google and Twitter, and also to many others that collect the data of individuals, such as credit reporting agencies like Equifax (NYSE: EFX) and Experian.

Facebook and Twitter (NYSE: TWTR) have since made efforts to purge hate speech and false news accounts from their pages, and to de-activate inauthentic and automated accounts that spread that malicious content widely. European regulators gave them some props recently for progress on those fronts, though they said more needs to be done.

But McNamee and other critics say Facebook leaders still haven’t given individual users meaningful control over the capture and use of their personal data. This extends not only to the photos and messages people post, but also to their behavior, because Facebook tracks their locations, the timing of their movements, and the connections users make along the way, he says.

“They continue to deny the fundamental issue—that their business practices, their culture, and their business model together create this toxic stew, a form of capitalism that the Harvard professor Shoshana Zuboff calls ‘surveillance capitalism,’ ” McNamee told The Times.

Zuboff, a tenured professor at the Harvard Business School, has just released a book on the topic: The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power.”

Far from putting the privacy issue to bed, recent revelations about the activities of tech behemoths have revived the alarms. It also sparked a power struggle among them.

At the end of January, reports surfaced that both Facebook and Google (NASDAQ: GOOGL) operated “research” programs that induced users to permit a comprehensive surveillance of their online activity, according to TechCrunch.

Since 2016, Facebook’s Project Atlas had reportedly paid users, including teenagers as young as 13, at least $20 a month to install a virtual private network app called “Facebook Research” that funneled their traffic to the company.

To distribute the app to consumers, Facebook used a conduit Apple had granted to its fellow tech giants for distributing internal company iOS apps only to their employees—instead using the conduit to send the app to consumers while bypassing the App Store. When this use directed at consumers was revealed, Apple shut off access to that conduit, declaring it a violation of its policies.

Apple’s apparent moves to make its stance on privacy a feature that distinguishes it from its competitors may be one demonstration of the growing prominence of user data privacy as a front-burner business and policy issue.

Last year, Apple CEO Tim Cook advocated for nationwide U.S. data privacy laws, charging that personal details about users, collected by tech giants, are being “weaponized” against them and the nation at large.

Apple itself came under scrutiny last week, however, after outsiders discovered that a flaw in FaceTime, the company’s group video chat feature, could be used to capture audio and video from an unwitting user’s iPhone even if the person had not answered the call. Apple moved to fix the bug, while news writers and bloggers rushed to offer users instructions on disabling FaceTime on their phones and laptops.

New data-capturing technologies may force policy choices

Consumers and public officials are grappling with the privacy tradeoffs that come with the … Next Page »

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