From the time of Facebook’s inception in a Harvard University dorm room, Mark Zuckerberg’s goal was to develop software to share information. His first software allowed Harvard students to see who had signed up for classes because he understood how important the social aspects of interacting with friends in the classroom really were. He moved on to a rating system for women that his friends could share and revise, based on their experiences. The software moved beyond these narrow focuses to become a social network that could link friends with other friends on the Internet. Named after his student and faculty guide at his prep school, “The Facebook” was born. It quickly spread to other Ivy League schools, and officially became Facebook in 2004.1 So, 20 years after George Orwell’s future world of constant electronic monitoring of individuals was predicted to occur in his book 1984, Facebook allowed the constant electronic monitoring of “friends” of individuals anywhere in the world. As a result, from its inception, privacy has been an issue of concern pertaining to Facebook.

The Early Days of Facebook

Zuckerberg’s casual attitude toward others’ privacy was evident from the start when he “hacked” into Harvard’s database to get dorm ID pictures of the women he was evaluating on his software system. His view about privacy appeared to be entrenched in his, and later his staff’s, belief system, which made the sharing of information part of Facebook’s identity and mission.

Different rationales may explain the low priority that Zuckerberg gave to privacy. First, privacy does not work well with sharing information. In addition, since the original Facebook was basically a “closed” social network system with college students interacting with other college students, everyone was a “friend.” This allowed frank and open discussions and pictures/videos posted because the “outside” world did not have access to the individual’s Facebook page.

Facebook, whose first members were required to have a college e-mail address with an.edu suffix, kept its original strategy of being designed for college students to socialize with each other for only a year. Zuckerberg realized that if Facebook were to grow, it could not continue to support a closed system. Therefore, his first step to opening the system was to allow high school students to join. This step occurred on September 2, 2005. By this date, Facebook was in 882 colleges and approximately 85% of students in those colleges had Facebook pages. The level of market saturation encouraged Zuckerberg to open Facebook. High school students were the first logical extension because they are possible future college students who would continue to use Facebook. As a result, the system opened somewhat but was still “closed” to outsiders. The degree of openness was hard to determine because high school students were not issued e-mail addresses. It became increasingly more difficult to monitor who was creating a Facebook account. Again, privacy was a major issue because it appeared market growth was the focus of Facebook’s strategic actions.

Invasion of privacy concerns started in Facebook’s infancy. In a January 2006 article in the New York Times, college students complained that campus police were checking on Facebook for parties or other “activities.”

Police waited until the party was in full swing and then paid a visit to check for any illegal activities that were taking place at the party. The official response from the campus police was that noise rather than Facebook was the reason why the police showed up at the party. Even at this stage, though, people were complaining about privacy, as well as free speech, and the online “addiction” of checking their Facebook pages 20 times a day. In 2006, nearly 75% of the students checked their Facebook accounts once a day, and the average user checked his or her account six times a day.

In 2006, privacy concerns related to stalking caused the University of New Mexico to ban access to Facebook from its computer servers. In addition, in 2006, parents and students were worried about potential employers getting access to campus e-mail accounts and checking their prospective employees on Facebook before hiring them. Campus police around the United States started to warn students that if there are pictures of illegal activities posted on their Facebook accounts, they could be arrested with the picture used as evidence.4 Six months later, another article in the New York Times also highlighted the danger of posting “inappropriate” information and pictures on Facebook. One consulting company was reviewing candidates for a summer internship and looked at their Facebook pages, which showed an applicant smoking marijuana and describing personal obsessions. The hiring manager stated that he questioned how he could hire someone who would willingly post such material online, knowing that it could be reviewed by strangers. In another example, a candidate was rejected because there was a picture of her passed out from drinking too much, and another firm rejected a candidate when it read on his Facebook page that he liked “to blow things up.”

September 26, 2006

On September 26, 2006, Facebook, which now had approximately 9 million users, allowed anyone 13 years of age or older to set up a Facebook account. Thus, the system became completely open to almost everyone in the world. In addition to allowing anyone access to Facebook, Facebook also started implementing its News Feed feature. However, Facebook was still slow in addressing the privacy issues related to an “open” global social network system.

News Feed Feature

The News Feed feature gave users instant update information on individuals’ Facebook pages by constantly monitoring the activities on every Facebook account. As a result, all posted friends automatically were informed about any adjustment made on a Facebook page. This was the first “tangible” example of Facebook infringing on the privacy of the users. Because the system was tracking every single action by every account holder, users became flooded with updates from “friends” they had forgotten about months or years ago. In addition, every user now realized that Facebook was monitoring every single Facebook action globally. This was a change from the previous method in which individuals had to physically search each friend to see if any revisions had been made to his or her Facebook account. Some users quickly realized that they did not need to know every detail about every friend’s life.

When users complained to Zuckerberg about the News Feed tracking system, his famous response was “Calm down. Breathe. We hear you.” Facebook then allowed users an option to opt out of the News Feed feature or to shield specific information on their pages.

News Feed set two precedents for Facebook. The first was that, whether consciously or not, it was Facebook’s first attempt to collect data on everyone, who could in the future be analyzed and potentially targeted for specific marketing campaigns. The second precedent was that it was the first in a number of occurrences where Facebook pushed the limits of privacy and reacted only after the users gave feedback or complaints. Almost 3 years later, in May 2009, Facebook reached an agreement to implement new safety and privacy rules to protect children from predators and inappropriate content.

Marketplace Feature

In May 2007, Facebook started to allow free classified advertising listings for its 22 million members. It was the first of many ways in which Facebook started to offer diversified products to encourage enrollment and longer viewing times on Facebook. Again, whether conscious or not, Facebook was now evolving into a revenue-generating company. Although the classified ads were free when introduced, it gave Facebook the opportunity to charge for this service in the future at minimal cost because Facebook had already created the infrastructure to support it. In addition, the information would become increasingly valuable to Facebook and to the advertisers that would pay Facebook to advertise on their websites. By developing a marketplace feature, Facebook continued to expand its access to data that represent the personal involvements and interests of their users. This access provides another level of data that Facebook can use to build a customized data-driven profile of each user by setting up classified categories such as housing, jobs, items, and other services.8 Facebook continues to develop detailed information on such critical user data as type of employment, where users live or want to live, and what their specific interests are. These data may not appear on their Facebook accounts but can be linked by Facebook to each individual user......

Questions

1. Why is Facebook so successful?

2. Can Facebook survive as a publicly traded company? Why or why not?

3. It appears that Facebook operates with an “oops, I did it again” philosophy. Will this philosophy continue to work once the company is publicly traded?

4. Comment on each of the ethical issues mentioned in this case. Rank them on a scale from 1 to 10, 1 being the least ethical and 10 being the most ethical actions. Defend your rankings.