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Chapter 4 Ethical and Social Issues in Information Systems 187 worldwide subscribers Just like its fellow tech titan and rival Google, Facebook's revenue comes almost entirely from advertising. Facebook does not have a diverse array of hot new gadgets like Apple does, a global network of brick-and-mortar retail outlets like Walmart does, or a full inventory of software for sale. All Facebook has to sell is your personal information and the information of hundreds of millions of others with Facebook accounts Advertisers have long understood the value of Facebook's unprecedented trove of personal informa- tion. They can serve ads using highly specific details such as relationship status, location, employment status, favorite books, movies, or TV shows and a host of other categories. For example, an Atlanta woman who posts that she has become engaged might be offered an ad for a wedding photogra- pher on her Facebook page. When advertisements are served to finely targeted subsets of users, the response is much more successful than traditional types of advertising A growing number of companies both big and small have taken notice. In 2015, Facebook generated $17.9 billion in revenue, 94 percent of which ($16.8 billion) was from selling ads and the remainder from selling games and virtual goods. Facebook's revenues in 2015 grew by 43 percent over the previous year driven mostly by adding new users and showing 40 percent more ads than a year earlier. A major con tributor to revenue growth in 2015 is ads sold in the mobile News Feed That was good news for Facebook, which is expected to continue to increase its revenue in com- ing years, but is it good news for you, the Facebook user? More than ever, companies such as Facebook and Google, which made approximately $67 billion in advertising revenue in 2015, are using your online activity to develop a frighteningly accurate picture of your life. Facebook's goal is to serve advertisements that are more relevant to you than anywhere else on the web, but the personal information it gathers about you both with and without your consent can also be used against you in other ways. Facebook has a diverse array of compelling and useful features. Facebook's partnership with the Department of Labor helps connect yob seekers and employers, Facebook has helped families find lost pets: Facebook allows active-duty soldiers to stay in touch with their families, it gives smaller companies a chance to further their e-commerce efforts and larger companies a chance to solidify their brands; and, per haps most obviously, Facebook allows you to keep in touch with your friends, relatives, local restaurants, and in short, just about all things you are interested in more easily. These are the reasons so many people use Facebook-it provides value to use However, Facebook's goal is to get its users to share as much data as possible because the more Facebook knows about you, the more accurately it can serverelevant advertisements to you. Face book CEO Mark Zuckerberg often says that people want the world to be more open and connected. It's unclear whether that is truly the case, but it is tainly true that Facebook wants the world to be more open and connected because it stands to make more money in that world. Critics of Facebook are con cerned that the existence of a repository of personal data of the size that Facebook has amassed requires protections and privacy controls that extend far beyond those that Facebook currently offers Facebook wanting to make more money is under standable, but the company has a checkered past of privacy violations and missteps that raise doubts about whether it should be responsible for the personal data of hundreds of millions of people. There are no laws in the United States that give consumers the right to know what data companies like Facebook have com piled. You can challenge information in credit reports, but you can't even see what data Facebook has gath cred about you, let alone try to change it. It's different in Europe: you can request Facebook to turn over a report of all the information it has about you More than ever your every move every click on social networks is being used by outside entities to assess your interests and behavior and then pitch you an ad based on this knowledge. Law enforce ment agencies use social networks to gather ev dence on tax evaders and other criminals employers use social networks to make decisions about propeo tive candidates for jobs, and data aggregators are cathering as much information about you as they can sell to the highest bidder, Facebook has admitted that it uses a software bug or code to track users across the Internet even if they are not using Facebook Think you own your face? Febook's newest pri vacy issue involves its facial recognition software used for photo tacing of users. This agu s tions" feature is automatically on when you sign up and there is no ser consent. A federal court in 2016 allowed a lawsuit to go forward contesting Facebook's right to photo tag without ser consent. This feature is in violation of several state laws that we tocar the privacy of biometric data. A recent Consumer Reports study found that of 150 million Americans on Facebook, everday at least 4.8 million are willingly sharing information Chapter 4 Ethical and Social Issues in Information Systems 189 as a condition of using the service, users grant the company wide latitude in using their information in advertising. This includes a person's name, photo, comments, and other information. Facebook's exist ing policies make clear that users are required to grant the company wide permission to use their personal information in advertising as a condition of using the service. This includes social advertising, by which your personal information is broadcast to your friends and, indeed, the entire Facebook service if the company sees fit. Although users can limit some uses, an advanced degree in Facebook data features is required. Ad-based firms like Facebook, and hundreds of others, including Google, justify their collection of personal information by arguing that consumers, by virtue of using the service, implicitly know about the data collection efforts and the role of advertisers in paying for the service and must, therefore, believe they are receiving real economic value from ads This line of reasoning received a blow when in June 2015, researchers at the Annenberg School of Com- munication at the University of Pennsylvania found that 65 percent of Americans feel they have lost con- trol over their information to advertisers, 84 percent want to control their information, and 91 percent do not believe it is fair for companies to offer discounts or coupons in exchange for their personal informa- tion without their knowledge. In June 2015, Facebook held its first ever privacy conference as part of a growing effort to convince users it really is concerned about privacy and aware of public criticism of the firm. It has hired more than 50 privacy experts focused on Facebook's privacy practices. Critics asked Facebook why it doesn't offer an ad-free service-like music streaming sites-for a monthly fee. Others wanted to know why Face book does not allow users just to opt out of tracking. But these kinds of changes would be very difficult for Facebook because its business model depends entirely on the unfettered use of its users' personal private information, just like it declares in its data use policy. That policy declares very openly that if you use Facebook, you don't have any privacy with respect to any data you provide to it. Source Samuel Gibbs WhatsApp, Facebook and Google Face Tough New Privacy Rules Under EC Proposal." The Guardian, Jan. uary 10, 2017: Stephanie Bodoni, Google, Facebook Face Tighter EU Grip With New Privacy Law, Bloomberg News, January 10, 2017Hannah Kuchler and Duncan Robinson, "Facebook Privacy Case Referred to Europe's Top Court, Financial Times, September 16, 2016: "Privacy Shield the New Deal Governing How Europe's User Data is sent to the US" Reuters February 29, 2016; Katie Collins, Facebook's Newest Privacy Problem: Faceprint' Data, CNET, May 16, 2016, United States District Court Northern Dis. trict of California in Re Facebook Biometric Information Privacy Litigation Case No. 15-C03747-JD Order Re Motion to Dismiss and Summary Judgment, May 6, 2016; Jessica Guynn, "Facebook to Face Privacy Lawsuit over Photo Tassing. USA Today, May 6, 2016; Natasha Singer Sharing Data, but Not Happily. New York Times, June 4, 2015; Sam Schechner and Natalia Drodiak, "Bel. gium Takes Facebook to Court over Privacy, User Tracking." Wall Street Journal, June 16, 2015 Deepa Seetharaman, "At Facebook Summit, Little Consensus on Privacy," New York Times, June 4, 2015; Zeynep Tufecki, Let Me Pay for Facebook, New York Times, June 4, 2015, IBM, "IBM and Facebook Team Up to Deliver Per sonalized Brand Experiences through People-Based Marketing." press release, May 6, 2015, Lisa Fleisher, Admitting Tracking Bug. Facebook Defends European Privacy Practices Wall Street Journal April 9, 2015, Facebook, Inc., SEC Form 10K filed with the Securi- ties and Exchange Commission for the fiscal year ending Decem. ber 31, 2014, January 29, 2015, Anna North How Your Facebook Likes Could Cost You a Job," New York Times, January 20, 2015; Natasha Singer, "Didn't Read Those Terms of Service? Here's What You Agreed to Give Up. New York Times, April 28, 2014 CASE STUDY QUESTIONS 4-13 Perform an ethical analysis of Facebook. What is the ethical dilemma presented by this case? 4-14 What is the relationship of privacy to Face- book's business model? 4-15 Describe the weaknesses of Facebook's privacy policies and features. What people, organiza tion, and technology factors have contributed to those weaknesses? 4-16 Will Facebook be able to have a successful busi- ness model without invading privacy? Explain your answer. Could Facebook take any mea- sures to make this possible