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?