PROBLEM SOLVIG BUSINESS CASE. NEED DETAILED ANSWER

acebook describes its corporate mission as giv- Facebook in the normal course of business, including ing people the power to build community and users' religion, race, ethnicity, personal interests, bring the world closer together. In 2017 and and political views. The ads targeted groups who had 2018 these lofty objectives took a serious blow when opposing political views, with the intention of inten- it became known that Facebook had lost control of sifying social conflict among them the personal information users share on the site. How could all this happen? As it turns out, it was Facebook had allowed its platform to be exploited by quite easy and inexpensive, given the design and Russian intelligence and political consultants with the management of Facebook. Once Facebook grants ac- intention of intensifying existing political cleavages, cess to advertisers, app developers, or researchers, driving people away from community and from one it has a very limited capability to control how that another during the U.S. presidential election of 2016. information is used. Third-party agreements and In January 2018, a founder and former employee policies are rarely reviewed by Facebook to check of a political consulting and voter profiling company for compliance, Facebook executives claimed they called Cambridge Analytica revealed that his firm had were as shocked as others that 87 million Facebook harvested the personal information of as many as 87 users had their personal information harvested by million users of Facebook, and used this information Russian intelligence agencies and used by Cambridge in an effort to influence the U.S. presidential election Analytica to target political ads. of 2016. Facebook does not sell the personal informa It gets worse: In early June 2018. several months tion of its users, but it did allow third-party apps to after Facebook was forced to explain its privacy mea- obtain the personal information of Facebook users. sures and pledge reforms in the wake of the Cambridge In this case, a U.K. researcher was granted access to Analytica scandal, the New York Times reported that 50,000 Facebook users for the purpose of research. He Facebook had data-sharing partnerships with at least developed an app quiz that claimed to measure users' 60 device makers. Facebook allowed Apple, Samsung, personality traits. Facebook's design allowed this app Amazon, and other companies that sell mobile phones, to not only collect the personal information of people tablets, TVs, and video game consoles to gain access who agreed to take the survey, but also the personal not only to data about Facebook users but also personal information of all the people in those users' Facebook data about their friends--without their explicit consent. social network. The researcher sold the data to As of 2015, Facebook had supposedly prohibited app Cambridge Analytica, who in turn used it to send tar software developers from collecting information about geted political ads in the presidential election. customers' friends. Apparently, these restrictions did In a Senate hearing in October 2017, Facebook not extend to device makers. testified that Russian operatives had exploited Shortly thereafter, it was also revealed that Facebook's social network in an effort to influence Facebook had struck customized data-sharing deals the 2016 presidential election. More than 130,000 that gave select companies such as Royal Bank of fake messages and stories had been sent to Facebook Canada and Nissan Motor Co. special access to user users in the United States using an army of auto- records, even though Facebook claimed it had it mated software bots, built and operated by several walled off that information in 2015. Certain compa- thousand Russian-based hackers working for a n ies were also allowed access to additional in Russian intelligence agency, the Internet Research tion about a user's Facebook friends. Agency. (A bot is a software program that performs Facebook again came under attack from the press, an automated task, and is often on the Internet for privacy advocates, and government authorities for malicious purposes-see Chapter 8.) Using 75,000 pleading ignorance and for allowing uncontrolled data fake Facebook accounts, and 230,000 bots, the sharing to happen. For the first time since its found- Russian messages were sent to an estimated 146 mil. ing, Facebook is facing a serious existential crisis, and lion people on Facebook. The messages targeted peo- potentially a threat to its business model. Facebook's ple based on their personal information collected by current crisis follows from a history of privacy abuses in its short 14-year life. Facebook has quickly morphed download all the information they had collected on from a small, niche networking site for mostly Ivy a person, even though users had no legal right to de- League college students into a publicly traded com mand that information. pany with a market worth of $534 billion in 2018 Think you own your face? Not on Facebook, thanks Facebook boasts that it is free to join and always will to its facial recognition software for photo tagging of be, so where's the money coming from to service 2.1 users. This "tag suggestions" feature is automatically billion worldwide subscribers? Just like its fellow tech on when you sign up, and there is no user consent. A titan and rival Google, Facebook's revenue comes al- federal court in 2016 allowed a lawsuit to go forward most entirely from advertising (97 percent of $40.6 bil contesting Facebook's right to photo tag without user lion in revenue in 2017). Facebook watches what you consent. This feature is in violation of several state do on Facebook and then sells that information and in- laws that seek to secure the privacy of biometric data, formation about your friends to advertisers, not just on A Consumer Reports study found that among Facebook but all over the web. As Tim Cook, CEO of 150 million Americans on Facebook every day, at Apple, noted, at Facebook, the product they sell is you. least 4.8 million were willingly sharing informa- More than ever, companies such as Facebook and tion that could be used against them in some way. Google, which made approximately $110 billion in ad- That includes plans to travel on a particular day, vertising revenue in 2017, are using your online activ which burglars could use to time robberies, or ity to develop a frighteningly accurate digital picture Liking a page about a particular health condition of your life, and then selling access to their platform of or treatment, which might prompt insurers to deny personal information to advertisers. Facebook's goal is coverage. Credit card companies and similar orga- to serve advertisements that are more relevant to you nizations have begun engaging in weblining, taken than anywhere else on the web, but the personal infor- from the term redlining, by altering their treatment mation it gathers about you both with and without your of you based on the actions of other people with consent can also be used against you in other ways. profiles similar to yours. Employers can assess your Facebook has a diverse array of compelling and personality and behavior by using your Facebook useful features. It has helped families find lost pets Likes. Thirteen million users have never adjusted and allows active-duty soldiers to stay in touch with Facebook's privacy controls, which allow friends their families; it gives smaller companies a chance to using Facebook applications to transfer your data un- further their e-commerce efforts and larger compa- wittingly to a third party without your knowledge. nies a chance to solidify their brands; and, perhaps Why, then, do so many people share sensitive most obviously, Facebook makes it easier for you details of their life on Facebook? Often, it's because to keep in touch with your friends, relatives, local users do not realize that their data are being col- restaurants, and, in short, just about all the things lected and transmitted in this way. A Facebook user's you are interested in. These are the reasons so many friends are not notified if information about them people use Facebook-it provides real value to users. is collected by that user's applications. Many of The cost of participating in the Facebook platform is Facebook's features and services are enabled by de- that your personal information is shared with adver- fault when they are launched without notifying users, tisers and with others you may not know. and a study by Siegel + Gale found that Facebook's Facebook has a checkered past of privacy viola- privacy policy is more difficult to comprehend than tions and missteps that raise doubts about whether it government notices or typical bank credit card agree- should be responsible for the personal data of billions ments, which are notoriously dense. Did you know of people. There are no laws in the United States that that whenever you log into a website using Facebook, give consumers the right to know what data compa- Facebook shares some personal information with that nies like Facebook have compiled. You can challenge site and can track your movements in that site? Next information in credit reports because of the Fair time you visit Facebook, click Privacy Settings and Credit Reporting Act, but until recently, you could see whether you can understand your options, not obtain what data Facebook has gathered about However, there are some signs that Facebook you. It's been different in Europe: for several years, might become more responsible with its data col- users had the right to demand that Facebook turn lection processes, whether by its own volition or over a report of all the information it had collected because it is forced to do so. As a publicly traded on individuals. In 2018, Facebook allowed users to company, Facebook now invites more scrutiny from investors and regulators. In 2018, in response to a web through its Facebook Audience Network, which maelstrom of criticism in the United States, and keeps track of what its users do on other websites and Europe's new General Data Protection Regulation then targets ads to those users on those websites. (GDPR), Facebook changed its privacy policy to make Critics have asked Facebook why it doesn't offer it easier for users to select their privacy preferences; an ad-free service-like music streaming sites-for to know exactly what they are consenting to; to down a monthly fee. Others want to know why Facebook load users' personal archives and the information that does not allow users just to opt out of tracking. But Facebook collects and shares, including facial images; these kinds of changes would be very difficult for to restrict click bait and spam in newsfeeds; to more Facebook because its business model depends entirely closely monitor app developers' use of personal infor- on the largely unfettered use of its users' personal mation; and to increase efforts to eliminate millions private information, just as it declares in its data use of fake accounts. Facebook hired 10,000 new em policy. That policy states very openly that if you use ployees and several hundred fact-checking firms to Facebook you agree to their terms of service, which identify and eliminate fake news. For the first time in enable it to share your information with third parties. its history, Facebook is being forced to apply editorial controls to the content posted by users and, in that sense, become more like a traditional publisher and Sources: Deepa Seetharaman and Kirsten Grind, Facebook Gave Some Companies Access to Additional Data About Users' Friends." news outlet that takes responsibility for its content. Wall Street Journal, June 8, 2018; Natalia Drozdiak, Sam Schechner, Unfortunately, as researchers have long known, and and Valentina Pop, Mark Zuckerberg Apologizes to EU Lawmakers Facebook executives understand, very few users for Facebook's Fake News Failures, Wall Street Journal, May 22, estimated to be less than 12 percent--take the time 2018; Cecilia Kang and Sheera Frenkel, "Facebook Says Cambridge Analytica Harvested Data of Up to 87 Million Users," New York to understand and adjust their privacy preferences. Times, April 24, 2018; Eduardo Porter, "The Facebook Fallacy: In reality, user choice is not a powerful check on Privacy Is Up to You, Nelo York Times, April 24, 2018, Jack Nicas, Facebook's use of personal information. "Facebook to Require Verified Identities for Future Political Ads, New York Times, April 6, 2018; Sheera Frenkel and Natasha Singer, Although U.S. Facebook users have little recourse "Facebook Introduces Central Page for Privacy and Security to access data that Facebook has collected on them, Settings, New York Times, March 28, 2018 David Mayer, "Facebook users from other countries have done better. In Is Giving You New Privacy Options, But It's Clear What It Wants You Europe, over 100,000 Facebook users have already to Choose, Fortune, March 19, 2018; Matthew Rosenberg, Nicholas Contessore, and Carole Cadwallacir "How Trump Consultants requested their data, and European law requires Exploited the Faceboxk Data of Millions," New York Times, March Facebook to respond to these requests within 40 17, 2018; Sheera Frenkel, "Tech Giants Brace for Europe's New Data Privacy Rules," New York Times, January 28, 2018: Georgia Wells and days. Government privacy regulators from France, Deepa Seetharaman, "New Facebook Data Shows Russians Targeted Spain, Italy, Germany, Belgium, and the Netherlands Users by Education, Religion, Politics, Wall Street Journal, November have been actively investigating Facebook's privacy 1, 2017, Hunt Allcott and Matthew Gentzkow, "Social Media and controls as the European Union pursues more strin- Fake News in the 2016 Election, Journal of Economic Perspectives, March, 2017; Samuel Gibbs, Facebook Facing Privacy Actions gent privacy protection legislation. Access Europe as France Fines Fimm 150k, The Guardian, May While Facebook has shut down several of its more 16, 2017; and Katie Collins, "Facebook's Newest Privacy Problem: egregious privacy-invading features, and enhanced Faceprint' Data, CNET, May 16, 2016. its consent process, the company's data use policies make it very clear that, as a condition of using the CASE STUDY QUESTIONS service, users grant the company wide latitude in 4-13 Perform an ethical analysis of Facebook, What is the ethical dilemma presented by this case? default option for users is "opt-in"; most users do not 4-14 What is the relationship of privacy to know how to control use of their information; and Facebook's business model? they cannot "opt out of all sharing if they want to 4-15 Describe the weaknesses of Facebook's privacy use Facebook. This is called the "control paradox" by policies and features. What management, orga- researchers: even when users are given controls over nization, and technology factors have contrib- uted to those weaknesses? choose not to use those controls. Although users can 4.16 Will Facebook be able to have a successful busi- limit some uses of their information, an advanced de- ness model without invading privacy? Explain gree in Facebook data features is required. Facebook your answer. Could Facebook take any mea- shows you ads not only on Facebook but across the sures to make this possible