312 posts categorized "Social Networking" Feed

Facebook To Pay $40 Million To Advertisers To Resolve Allegations of Inflated Advertising Metrics

Facebook logo According to court papers last week, Facebook has entered a proposed settlement agreement where it will pay $40 million to advertisers to resolve allegations in a class-action lawsuit that the social networking platform inflated video advertising engagement metrics. Forbes explained:

"The metrics in question are critical for advertisers on video-based content platforms such as YouTube and Facebook because they show the average amount of time users spend watching their content before clicking away. During the 18 months between February of 2015 and September of 2016, Facebook was incorrectly calculating — and consequently, inflating — two key metrics of this type. Members of the class action are alleging that the faulty metrics led them to spend more money on Facebook ads than they otherwise would have..."

Metrics help advertisers determine if the ads they paid for are delivering results. Reportedly, the lawsuit took three years and Facebook denied any wrongdoing. The proposed settlement must be approved by a court. About $12 million of the $40 million total will be used to pay plaintiffs' attorney fees.

A brief supporting the proposed settlement provided more details:

" One metric—“Average Duration of Video Viewed”—depicted the average number of seconds users watched the video; another—–“Average Percentage of Video Viewed”—depicted the average percentage of the video ad that users watched... Starting in February 2015, Facebook incorrectly calculated Average Duration of Video Viewed... The Average View Duration error, in turn, led to the Average Percentage Viewed metric also being inflated... Because of the error, the average watch times of video ads were exaggerated for about 18 months... Facebook acknowledges there was an error. But Facebook has argued strenuously that the error was an innocent mistake that Facebook corrected shortly after discovering it. Facebook has also pointed out that some advertisers likely never viewed the erroneous metrics and that because Facebook does not set prices based on the impacted metrics, the error did not lead to overcharges... The settlement provides a $40 million cash fund from Facebook, which constitutes as much as 40% of what Plaintiffs estimate they may realistically have been able to recover had the case made it to trial and had Plaintiffs prevailed. Facebook’s $40 million payment will... also cover the costs of settlement administration, class notice, service awards, and Plaintiffs’ litigation costs24 and attorneys’ fees."

It seems that besides a multitude of data breaches and privacy snafus, Facebook can't quite operate reliably its core advertising business. What do you think?


3 Countries Sent A Joint Letter Asking Facebook To Delay End-To-End Encryption Until Law Enforcement Has Back-Door Access. 58 Concerned Organizations Responded

Plenty of privacy and surveillance news recently. Last week, the governments of three countries sent a joint, open letter to Facebook.com asking the social media platform to delay implementation of end-to-end encryption in its messaging apps until back-door access can be provided for law enforcement.

Facebook logo Buzzfeed News published the joint, open letter by U.S. Attorney General William Barr, United Kingdom Home Secretary Priti Patel, acting US Homeland Security Secretary Kevin McAleenan, and Australian Minister for Home Affairs Peter Dutton. The letter, dated October 4th, was sent to Mark Zuckerberg, the Chief Executive Officer of Facebook. It read in part:

"OPEN LETTER: FACEBOOK’S “PRIVACY FIRST” PROPOSALS

We are writing to request that Facebook does not proceed with its plan to implement end-to-end encryption across its messaging services without ensuring that there is no reduction to user safety and without including a means for lawful access to the content of communications to protect our citizens.

In your post of 6 March 2019, “A Privacy-Focused Vision for Social Networking,” you acknowledged that “there are real safety concerns to address before we can implement end-to-end encryption across all our messaging services.” You stated that “we have a responsibility to work with law enforcement and to help prevent” the use of Facebook for things like child sexual exploitation, terrorism, and extortion. We welcome this commitment to consultation. As you know, our governments have engaged with Facebook on this issue, and some of us have written to you to express our views. Unfortunately, Facebook has not committed to address our serious concerns about the impact its proposals could have on protecting our most vulnerable citizens.

We support strong encryption, which is used by billions of people every day for services such as banking, commerce, and communications. We also respect promises made by technology companies to protect users’ data. Law abiding citizens have a legitimate expectation that their privacy will be protected. However, as your March blog post recognized, we must ensure that technology companies protect their users and others affected by their users’ online activities. Security enhancements to the virtual world should not make us more vulnerable in the physical world..."

The open, joint letter is also available on the United Kingdom government site. Mr. Zuckerberg's complete March 6, 2019 post is available here.

Earlier this year, the U.S. Federal Bureau of Investigation (FBI) issued a Request For Proposals (RFP) seeking quotes from technology companies to build a real-time social media monitoring tool. It seems, such a tool would have limited utility without back-door access to encrypted social media accounts.

In 2016, the Federal Bureau of Investigation (FBI) filed a lawsuit to force Apple Inc. to build "back door" software to unlock an attacker's iPhone. Apple refused as back-door software would provide access to any iPhone, not only this particular smartphone. Ultimately, the FBI found an offshore tech company to build the backdoor. Later that year, then FBI Director James Comey suggested a national discussion about encryption versus safety. It seems, the country still hasn't had that conversation.

According to BuzzFeed, Facebook's initial response to the joint letter:

"In a three paragraph statement, Facebook said it strongly opposes government attempts to build backdoors."

We shall see if Facebook holds steady to that position. Privacy advocates quickly weighed in. The Electronic Frontier Foundation (EFF) wrote:

"This is a staggering attempt to undermine the security and privacy of communications tools used by billions of people. Facebook should not comply. The letter comes in concert with the signing of a new agreement between the US and UK to provide access to allow law enforcement in one jurisdiction to more easily obtain electronic data stored in the other jurisdiction. But the letter to Facebook goes much further: law enforcement and national security agencies in these three countries are asking for nothing less than access to every conversation... The letter focuses on the challenges of investigating the most serious crimes committed using digital tools, including child exploitation, but it ignores the severe risks that introducing encryption backdoors would create. Many people—including journalists, human rights activists, and those at risk of abuse by intimate partners—use encryption to stay safe in the physical world as well as the online one. And encryption is central to preventing criminals and even corporations from spying on our private conversations... What’s more, the backdoors into encrypted communications sought by these governments would be available not just to governments with a supposedly functional rule of law. Facebook and others would face immense pressure to also provide them to authoritarian regimes, who might seek to spy on dissidents..."

The new agreement the EFF referred to was explained in this United Kingdom announcement:

"The world-first UK-US Bilateral Data Access Agreement will dramatically speed up investigations and prosecutions by enabling law enforcement, with appropriate authorisation, to go directly to the tech companies to access data, rather than through governments, which can take years... The current process, which see requests for communications data from law enforcement agencies submitted and approved by central governments via Mutual Legal Assistance (MLA), can often take anywhere from six months to two years. Once in place, the Agreement will see the process reduced to a matter of weeks or even days."

The Agreement will each year accelerate dozens of complex investigations into suspected terrorists and paedophiles... The US will have reciprocal access, under a US court order, to data from UK communication service providers. The UK has obtained assurances which are in line with the government’s continued opposition to the death penalty in all circumstances..."

On Friday, a group of 58 privacy advocates and concerned organizations from several countries sent a joint letter to Facebook regarding its end-to-end encryption plans. The Center For Democracy & Technology (CDT) posted the group's letter:

"Given the remarkable reach of Facebook’s messaging services, ensuring default end-to-end security will provide a substantial boon to worldwide communications freedom, to public safety, and to democratic values, and we urge you to proceed with your plans to encrypt messaging through Facebook products and services. We encourage you to resist calls to create so-called “backdoors” or “exceptional access” to the content of users’ messages, which will fundamentally weaken encryption and the privacy and security of all users."

It seems wise to have a conversation to discuss all of the advantages and disadvantages; and not selectively focus only upon some serious crimes while ignoring other significant risks, since back-door software can be abused like any other technology. What are your opinions?


Transcripts Of Internal Facebook Meetings Reveal True Views Of The Company And Its CEO

Facebook logo It's always good for consumers -- and customers -- to know a company's positions on key issues. Thanks to The Verge, we now know more about Facebook's views. Portions of the leaked transcripts included statements by Mr. Zuckerberg, Facebook's CEO, during internal business meetings. The Verge explained the transcripts:

"In two July meetings, Zuckerberg rallied his employees against critics, competitors, and Senator Elizabeth Warren, among others..."

Portions of statements by Mr. Zuckerberg included:

"I’m certainly more worried that someone is going to try to break up our company... So there might be a political movement where people are angry at the tech companies or are worried about concentration or worried about different issues and worried that they’re not being handled well. That doesn’t mean that, even if there’s anger and that you have someone like Elizabeth Warren who thinks that the right answer is to break up the companies... I mean, if she gets elected president, then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge... breaking up these companies, whether it’s Facebook or Google or Amazon, is not actually going to solve the issues. And, you know, it doesn’t make election interference less likely. It makes it more likely because now the companies can’t coordinate and work together. It doesn’t make any of the hate speech or issues like that less likely. It makes it more likely..."

An October 1st post by Mr. Zuckerberg confirmed the transcripts. Earlier this year, Mr. Zuckerberg called for more government regulation. Given his latest comments, we now know his true views.

Also, C/Net reported:

"In an interview with the Today show that aired Wednesday, Instagram CEO Adam Mosseri said he generally agrees with the comments Zuckerberg made during the meetings, adding that the company's large size can help it tackle issues like hate speech and election interference on social media."

The claim by Mosseri, Zuckerberg and others that their company needs to be even bigger to tackle issues is frankly -- laughable. Consumers are concerned about several different issues: privacy, hacked and/or cloned social media accounts, costs, consumer choice, surveillance, data collection we can't opt out of, the inability to delete Facebook and other mobile apps, and elections interference. A recent study found that consumers want social sites to collect less data.

Industry consolidation and monopolies/oligopolies usually result with reduced consumer choices and higher prices. Prior studies have documented this. The lack of ISP competition in key markets meant consumers in the United States pay more for broadband and get slower speeds compared to other countries. At the U.S. Federal Trade Commission's "Privacy, Big Data, And Competition" hearing last year, the developers of the Brave web browser submitted this feedback:

""First, big tech companies “cross-use” user data from one part of their business to prop up others. This stifles competition, and hurts innovation and consumer choice. Brave suggests that FTC should investigate..."

Facebook is already huge, and its massive size still hasn't stopped multiple data breaches and privacy snafus. Rather, the snafus have demonstrated an inability (unwillingness?) by the company and its executives to effectively tackle and implement solutions to adequately and truly protect users' sensitive information. Mr. Zuckerberg has repeatedly apologized, but nothing ever seems to change. Given the statements in the transcripts, his apologies seem even less believable and less credible than before.

Alarmingly, Facebook has instead sought more ways to share users' sensitive data. In August of 2018, reports surfaced that Facebook approached several major banks and offered to share its detailed financial information about consumers in order, "to boost user engagement." Reportedly, the detailed financial information included debit/credit/prepaid card transactions and checking account balances. Also last year, Facebook's Onavo VPN App was removed from the Apple App store because the app violated data-collection policies. Not good.

Plus, the larger problem is this: Facebook isn't just a social network. It is also an advertiser, publishing platform, dating service, and wannabe payments service. There are several anti-trust investigations underway involving Facebook. Remember, Facebook tracks both users and non-users around the internet. So, claims about it needing to be bigger to solve problem are malarkey.

And, Mr. Zuckerberg's statements seem to mischaracterize Senator Warren's positions by conflating and ignoring (or minimizing) several issues. Here is what Senator Warren actually stated in March, 2019:

"America’s big tech companies provide valuable products but also wield enormous power over our digital lives. Nearly half of all e-commerce goes through Amazon. More than 70% of all Internet traffic goes through sites owned or operated by Google or Facebook. As these companies have grown larger and more powerful, they have used their resources and control over the way we use the Internet to squash small businesses and innovation, and substitute their own financial interests for the broader interests of the American people... Weak antitrust enforcement has led to a dramatic reduction in competition and innovation in the tech sector. Venture capitalists are now hesitant to fund new startups to compete with these big tech companies because it’s so easy for the big companies to either snap up growing competitors or drive them out of business. The number of tech startups has slumped, there are fewer high-growth young firms typical of the tech industry, and first financing rounds for tech startups have declined 22% since 2012... To restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last, it’s time to break up our biggest tech companies..."

Senator Warren listed several examples:

"Using Mergers to Limit Competition: Facebook has purchased potential competitors Instagram and WhatsApp. Amazon has used its immense market power to force smaller competitors like Diapers.com to sell at a discounted rate. Google has snapped up the mapping company Waze and the ad company DoubleClick... Using Proprietary Marketplaces to Limit Competition: Many big tech companies own a marketplace — where buyers and sellers transact — while also participating on the marketplace. This can create a conflict of interest that undermines competition. Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version. Google allegedly snuffed out a competing small search engine by demoting its content on its search algorithm, and it has favored its own restaurant ratings over those of Yelp."

Mr. Zuckerberg would be credible if he addressed each of these examples. In the transcript from The Verge, he didn't.

And, there is plenty of blame to spread around on executives in both tech companies and anti-trust regulators in government. Readers wanting to learn more can read about hijacked product pages and other chaos among sellers on the Amazon platform. There's plenty to fault tech companies for, and it isn't a political attack.

Plenty of operational failures, data security failures, and willful sharing of consumers' data collected. What are your opinions of the transcript?


Survey Asked Americans Which They Consider Safer: Self-Driving Ride-Shares Or Solo Ride-Shares With Human Drivers

Many consumers use ride-sharing services, such as Lyft and Uber. We all have heard about self-driving cars. A polling firm asked consumers a very relevant question: "Which ride is trusted more? Would you rather take a rideshare alone or a self-driving car?" The results may surprise you.

The questions are relevant given news reports about sexual assaults and kidnapping ride-sharing drivers and imposters. A pedestrian death involving a self-driving ride-sharing car highlighted the ethical issues about who machines should save when fatal crashes can't be avoided. Developers have admitted that self-driving cars can be hacked by bad actors, just like other computers and mobile devices. And, new car buyers stated clear preferences when considering self-driving (a/k/a autonomous) vehicles versus standard vehicles with self-driving modes.

Using Google Consumer Surveys, The Zebra surveyed 2,000 persons in the United States during August, 2019 and found:

"53 percent of people felt safer taking a self-driving car than driver-operated rideshare alone; Baby Boomers (age 55-plus) were the only age group to prefer a solo Uber ride over a driverless car; Gen Z (ages 18–24) were most open to driverless rideshares: 40 percent said they were willing to hail a ride from one."

Founded 7 years ago, The Zebra describes itself as, "the nation's leading insurance comparison site." The survey also found:

"... Baby Boomers were the only group to trust solo ridesharing more than they would a ride in a self-driving car... despite women being subjected to higher rates of sexual violence, the poll found women were only slightly more likely than men to choose a self-driving car over ridesharing alone (53 percent of women compared to 52 percent of men).

It seems safe to assume: trust it or not, the tech is coming. Quickly. What are your opinions?


Court Okays 'Data Scraping' By Analytics Firm Of Users' Public LinkedIn Profiles. Lots Of Consequences

LinkedIn logo Earlier this week, a Federal appeals court affirmed an August 2017 injunction which required LinkedIn, a professional networking platform owned by Microsoft Corporation, to allow hiQ Labs, Inc. to access members' profiles. This ruling has implications for everyone.

hiQ Labs logo First, some background. The Naked Security blog by Sophos explained in December, 2017:

"... hiQ is a company that makes its money by “scraping” LinkedIn’s public member profiles to feed two analytical systems, Keeper and Skill Mapper. Keeper can be used by employers to detect staff that might be thinking about leaving while Skill Mapper summarizes the skills and status of current and future employees. For several years, this presented no problems until, in 2016, LinkedIn decided to offer something similar, at which point it sent hiQ and others in the sector cease and desist letters and started blocking the bots reading its pages."

So, hiQ apps use algorithms which determine for its clients (prospective or current employers) which employees will stay or go. Gizmodo explained the law which LinkedIn used in its arguments in court, namely the:

".... practice of scraping publicly available information from their platform violated the 1986 Computer Fraud and Abuse Act (CFAA). The CFAA is infamously vaguely written and makes it illegal to access a “protected computer” without or in excess of “authorization”—opening the door to sweeping interpretations that could be used to criminalize conduct not even close to what would traditionally be understood as hacking.

Second, the latest court ruling basically said two things: a) it is legal (and doesn't violate hacking laws) for companies to scrape information contained in publicly available profiles; and b) LinkedIn must allow hiQ (and potentially other firms) to continue with data-scraping. This has plenty of implications.

This recent ruling may surprise some persons, since the issue of data scraping was supposedly settled law previously. MediaPost reported:

"Monday's ruling appears to effectively overrule a decision issued six years ago in a dispute between Craigslist and the data miner 3Taps, which also scraped publicly available listings. In that matter, 3Taps allegedly scraped real estate listings and made them available to the developers PadMapper and Lively. PadMapper allegedly meshed Craigslist's apartment listings with Google maps... U.S. District Court Judge Charles Breyer in the Northern District of California ruled in 2013 that 3Taps potentially violated the anti-hacking law by scraping listings from Craigslist after the company told it to stop doing so."

So, you can bet that both social media sites and data analytics firms closely watched and read the appeal court's ruling this week.

Third, in theory any company or agency could then legally scrape information from public profiles on the LinkedIn platform. This scraping could be done by industries and/or entities (e.g., spy agencies worldwide) which job seekers didn't intend nor want.

Many consumers simply signed up and use LinkedIn to build professional relationship and/or to find jobs, either fulltime as employees or as contractors. The 2019 social media survey by Pew Research found that 27 percent of adults in the United States use LinkedIn, but higher usage penetration among persons with college degrees (51 percent), persons making more than $75K annually (49 percent), persons ages 25 - 29 (44 percent), persons ages 30 - 49 (37 percent), and urban residents (33 percent).  

I'll bet that many LinkedIn users never imagined that their profiles would be used against them by data analytics firms. Like it or not, that is how consumers' valuable, personal data is used (abused?) by social media sites and their clients.

Fourth, the practice of data scraping has divided tech companies. Again, from the Naked Security blog post in 2017:

"Data scraping, its seems, has become a booming tech sector that increasingly divides the industry ideologically. One side believes LinkedIn is simply trying to shut down a competitor wanting to access public data LinkedIn merely displays rather than owns..."

The Electronic Frontier Foundation (EFF), the DuckDuckGo search engine, and the Internet Archived had filed an amicus brief with the appeals court before its ruling. The EFF explained the group's reasoning and urged the:

"... Court of Appeals to reject LinkedIn’s request to transform the CFAA from a law meant to target serious computer break-ins into a tool for enforcing its computer use policies. The social networking giant wants violations of its corporate policy against using automated scripts to access public information on its website to count as felony “hacking” under the Computer Fraud and Abuse Act, a 1986 federal law meant to criminalize breaking into private computer systems to access non-public information. But using automated scripts to access publicly available data is not "hacking," and neither is violating a website’s terms of use. LinkedIn would have the court believe that all "bots" are bad, but they’re actually a common and necessary part of the Internet. "Good bots" were responsible for 23 percent of Web traffic in 2016..."

So, bots are here to stay. And, it's up to LinkedIn executives to find a solution to protect their users' information.

Fifth, according to the Reuters report the court judge suggested a solution for LinkedIn by "eliminating the public access option." Hmmmm. Public, or at least broad access, is what many job seekers desire. So, a balance needs to be struck between truly "public" where anyone, anywhere worldwide could access public profiles, versus intended targets (e.g., hiring executives in potential employers in certain industries).

Sixth, what struck me about the court ruling this week was that nobody was in the court room representing the interests of LinkedIn users, of which I am one. MediaPost reported:

"The appellate court discounted LinkedIn's argument that hiQ was harming users' privacy by scraping data even when people used a "do not broadcast" setting. "There is no evidence in the record to suggest that most people who select the 'Do Not Broadcast' option do so to prevent their employers from being alerted to profile changes made in anticipation of a job search," the judges wrote. "As the district court noted, there are other reasons why users may choose that option -- most notably, many users may simply wish to avoid sending their connections annoying notifications each time there is a profile change." "

What? Really?! We LinkedIn users have a natural, vested interest in control over both our profiles and the sensitive, personal information that describes each of us in our profiles. Somebody at LinkedIn failed to adequately represent users' interests of its users, the court didn't really listen closely nor seek out additional evidence, or all of the above.

Maybe the "there is no evidence in the record" regarding the 'Do Not Broadcast' feature will be the basis of another appeal or lawsuit.

With this latest court ruling, we LinkedIn users have totally lost control (except for deleting or suspending our LinkedIn accounts). It makes me wonder how a court could reach its decision without hearing directly from somebody representing LinkedIn users.

Seventh, it seems that LinkedIn needs to modify its platform in three key ways:

  1. Allow its users to specify which uses or applications (e.g., find fulltime work, find contract work, build contacts in my industry or area of expertise, find/screen job candidates, advertise/promote a business, academic research, publish content, read news, dating, etc.) their profiles can only be used for. The 'Do Not Broadcast' feature is clearly not strong enough;
  2. Allow its users to specify or approve individual users -- other actual persons who are LinkedIn users and not bots nor corporate accounts -- who can access their full, detailed profiles; and
  3. Outline in the user agreement the list of applications or uses profiles may be accessed for, so that both prospective and current LinkedIn users can make informed decisions. 

This would give LinkedIn users some control over the sensitive, personal information in their profiles. Without control, the benefits of using LinkedIn quickly diminish. And, that's enough to cause me to rethink my use of LinkedIn, and either deactivate or delete my account.

What are your opinions of this ruling? If you currently use LinkedIn, will you continue using it? If you don't use LinkedIn and were considering it, will you still consider using it?


Google And YouTube To Pay $170 Million In Proposed Settlement To Resolve Charges Of Children's Privacy Violations

Google logo Today's blog post contains information all current and future parents should know. On Tuesday, the U.S. Federal Trade Commission (FTC) announced a proposed settlement agreement where YouTube LLC, and its parent company, Google LLC, will pay a monetary fine of $170 million to resolve charges that the video-sharing service illegally collected the personal information of children without their parents' consent.

YouTube logo The proposed settlement agreement requires YouTube and Google to pay $136 million to the FTC and $34 million to New York State to resolve charges that the video sharing service violated the Children’s Online Privacy Protection Act (COPPA) Rule. The announcement explained the allegations:

"... that YouTube violated the COPPA Rule by collecting personal information—in the form of persistent identifiers that are used to track users across the Internet—from viewers of child-directed channels, without first notifying parents and getting their consent. YouTube earned millions of dollars by using the identifiers, commonly known as cookies, to deliver targeted ads to viewers of these channels, according to the complaint."

"The COPPA Rule requires that child-directed websites and online services provide notice of their information practices and obtain parental consent prior to collecting personal information from children under 13, including the use of persistent identifiers to track a user’s Internet browsing habits for targeted advertising. In addition, third parties, such as advertising networks, are also subject to COPPA where they have actual knowledge they are collecting personal information directly from users of child-directed websites and online services... the FTC and New York Attorney General allege that while YouTube claimed to be a general-audience site, some of YouTube’s individual channels—such as those operated by toy companies—are child-directed and therefore must comply with COPPA."

While $170 million is a lot of money, it is tiny compared to the $5 billion fine by the FTC assessed against Facebook. The fine is also tiny compared to Google's earnings. Alphabet Inc., the holding company which owns Google, generated pretax net income of $34.91 billion during 2018 on revenues of $136.96 billion.

In February, the FTC concluded a settlement with Musical.ly, a video social networking app now operating as TikTok, where Musical.ly paid $5.7 million to resolve allegations of COPPA violations. Regarding the proposed settlement with YouTube, Education Week reported:

"YouTube has said its service is intended for ages 13 and older, although younger kids commonly watch videos on the site and many popular YouTube channels feature cartoons or sing-a-longs made for children. YouTube has its own app for children, called YouTube Kids; the company also launched a website version of the service in August. The site says it requires parental consent and uses simple math problems to ensure that kids aren't signing in on their own. YouTube Kids does not target ads based on viewer interests the way YouTube proper does. The children's version does track information about what kids are watching in order to recommend videos. It also collects personally identifying device information."

The proposed settlement also requires YouTube and Google:

"... to develop, implement, and maintain a system that permits channel owners to identify their child-directed content on the YouTube platform so that YouTube can ensure it is complying with COPPA. In addition, the companies must notify channel owners that their child-directed content may be subject to the COPPA Rule’s obligations and provide annual training about complying with COPPA for employees who deal with YouTube channel owners. The settlement also prohibits Google and YouTube from violating the COPPA Rule, and requires them to provide notice about their data collection practices and obtain verifiable parental consent before collecting personal information from children."

The complaint and proposed consent decree were filed in the U.S. District Court for the District of Columbia. After approval by a judge, the proposed settlement become final. Hopefully, the fine and additional requirements will be enough to deter future abuses.


FBI Seeks To Monitor Twitter, Facebook, Instagram, And Other Social Media Accounts For Violent Threats

Federal Bureau of Investigation logo The U.S. Federal Bureau of Investigation (FBI) issued on July 8th a Request For Proposals (RFP) seeking quotes from technology companies to build a "Social Media Alerting" tool, which would enable the FBI to monitor in real-time accounts in several social media services for violence threats. The RFP, which was amended on August 7th, stated:

"The purpose of this procurement is to acquire the services of a company to proactively identify and reactively monitor threats to the United States and its interests through a means of online sources. A subscription to this service shall grant the Federal Bureau of Investigation (FBI) access to tools that will allow for the exploitation of lawfully collected/acquired data from social media platforms that will be stored, vetted and formatted by a vendor... This synopsis and solicitation is being issued as Request for Proposal (RFP) number DJF194750PR0000369 and... This announcement is supplemented by a detailed RFP Notice, an SF-33 document, an accompanying Statement of Objectives (SOO) and associated FBI documents..."

"Proactively identify" suggests the usage of software algorithms or artificial intelligence (AI). And, the vendor selected will archive the collected data for an undisclosed period of time. The RFP also stated:

"Background: The use of social media platforms, by terrorist groups, domestic threats, foreign intelligence services, and criminal organizations to further their illegal activity creates a demonstrated need for tools to properly identify the activity and react appropriately. With increased use of social media platforms by subjects of current FBI investigations and individuals that pose a threat to the United States, it is critical to obtain a service which will allow the FBI to identify relevant information from Twitter, Facebook, Instagram, and other Social media platforms in a timely fashion. Consequently, the FBI needs near real time access to a full range of social media exchanges..."

For context, in 2016 the FBI attempted to force Apple Computer to build "backdoor software" to unclock an alleged terrorist's iPhone in California. The FBI later found an offshore technology company to build its backdoor.

The documents indicate that the FBI wants its staff to use the tool at both headquarters and field-office locations globally, and with mobile devices. The SOO document stated:

"FBI personnel are deployed internationally and sometimes in areas of press censorship. A social media exploitation tool with international reach and paired with a strong language translation capability, can become crucial to their operations and more importantly their safety. The functions of most value to these individuals is early notification, broad international reach, instant translation, and the mobility of the needed capability."

The SOO also explained the data elements too be collected:

"3.3.2.2.1 Obtain the full social media profile of persons-of-interest and their affiliation to any organization or groups through the corroboration of multiple social media sources... Items of interest in this context are social networks, user IDs, emails, IP addresses and telephone numbers, along with likely additional account with similar IDs or aliases... Any connectivity between aliases and their relationship must be identifiable through active link analysis mapping..."
"3.3.3.2.1 Online media is monitored based on location, determined by the users’ delineation or the import of overlays from existing maps (neighborhood, city, county, state or country). These must allow for customization as AOR sometimes cross state or county lines..."

While the document mentioned "user IDs" and didn't mention passwords, the implication seems clear that the FBI wants both in order to access and monitor in real-time social media accounts. And, the "other Social Media platforms" statement raises questions. What is the full list of specific services that refers to? Why list only the three largest platforms by name?

As this FBI project proceeds, let's hope that the full list of social sites includes 8Chan, Reddit, Stormfront, and similar others. Why? In a study released in November of 2018, the Center for Strategic and International Studies (CSIS) found:

"Right-wing extremism in the United States appears to be growing. The number of terrorist attacks by far-right perpetrators rose over the past decade, more than quadrupling between 2016 and 2017. The recent pipe bombs and the October 27, 2018, synagogue attack in Pittsburgh are symptomatic of this trend. U.S. federal and local agencies need to quickly double down to counter this threat. There has also been a rise in far-right attacks in Europe, jumping 43 percent between 2016 and 2017... Of particular concern are white supremacists and anti-government extremists, such as militia groups and so-called sovereign citizens interested in plotting attacks against government, racial, religious, and political targets in the United States... There also is a continuing threat from extremists inspired by the Islamic State and al-Qaeda. But the number of attacks from right-wing extremists since 2014 has been greater than attacks from Islamic extremists. With the rising trend in right-wing extremism, U.S. federal and local agencies need to shift some of their focus and intelligence resources to penetrating far-right networks and preventing future attacks. To be clear, the terms “right-wing extremists” and “left-wing extremists” do not correspond to political parties in the United States..."

The CSIS study also noted:

"... right-wing terrorism commonly refers to the use or threat of violence by sub-national or non-state entities whose goals may include racial, ethnic, or religious supremacy; opposition to government authority; and the end of practices like abortion... Left-wing terrorism, on the other hand, refers to the use or threat of violence by sub-national or non-state entities that oppose capitalism, imperialism, and colonialism; focus on environmental or animal rights issues; espouse pro-communist or pro-socialist beliefs; or support a decentralized sociopolitical system like anarchism."

Terrorism is terrorism. All of it needs to be prosecuted including left-, right-, domestic, and foreign. (This prosecutor is doing the right thing.) It seems wise to monitor the platform where suspects congregate.

This project also raises questions about the effectiveness of monitoring social media? Will this really works. Digital Trends reported:

"Companies like Google, Facebook, Twitter, and Amazon already use algorithms to predict your interests, your behaviors, and crucially, what you like to buy. Sometimes, an algorithm can get your personality right – like when Spotify somehow manages to put together a playlist full of new music you love. In theory, companies could use the same technology to flag potential shooters... But preventing mass shootings before they happen raises thorny legal questions: how do you determine if someone is just angry online rather than someone who could actually carry out a shooting? Can you arrest someone if a computer thinks they’ll eventually become a shooter?"

Some social media users have already experienced inaccuracies (failures?) when sites present irrelevant advertisements and/or political party messaging based upon supposedly accurate software algorithms. The Digital Trends article also dug deeper:

"A Twitter spokesperson wouldn’t say much directly about Trump’s proposal, but did tell Digital Trends that the company suspended 166,513 accounts connected to the promotion of terrorism during the second half of 2018... Twitter also frequently works to help facilitate investigations when authorities request information – but the company largely avoids proactively flagging banned accounts (or the people behind them) to those same authorities. Even if they did, that would mean flagging 166,513 people to the FBI – far more people than the agency could ever investigate."

Then, there is the problem of the content by users in social media posts:

"Even if someone does post to social media immediately before they decide to unleash violence, it’s often not something that would trip up either Twitter or Facebook’s policies. The man who killed three people at the Gilroy Garlic Festival in Northern California posted to Instagram from the event itself – once calling the food served there “overprices” and a second that told people to read a 19th-century pro-fascist book that’s popular with white nationalists."

Also, Amazon got caught up in the hosting mess with 8Chan. So, there is more news to come.

Last, this blog post explored the problems with emotion recognition by facial-recognition software. Let's hope this FBI project is not a waste of taxpayer's hard-earned money.


Emotion Recognition: Facial Recognition Software Based Upon Valid Science or Malarkey?

The American Civil Liberties Union (ACLU) reported:

"Emotion recognition is a hot new area, with numerous companies peddling products that claim to be able to read people’s internal emotional states, and artificial intelligence (A.I.) researchers looking to improve computers’ ability to do so. This is done through voice analysis, body language analysis, gait analysis, eye tracking, and remote measurement of physiological signs like pulse and breathing rates. Most of all, though, it’s done through analysis of facial expressions.

A new study, however, strongly suggests that these products are built on a bed of intellectual quicksand... after reviewing over 1,000 scientific papers in the psychological literature, these experts came to a unanimous conclusion: there is no scientific support for the common assumption “that a person’s emotional state can be readily inferred from his or her facial movements.” The scientists conclude that there are three specific misunderstandings “about how emotions are expressed and perceived in facial movements.” The link between facial expressions and emotions is not reliable (i.e., the same emotions are not always expressed in the same way), specific (the same facial expressions do not reliably indicate the same emotions), or generalizable (the effects of different cultures and contexts has not been sufficiently documented)."

Another reason why this is important:

"... an entire industry of automated purported emotion-reading technologies is quickly emerging. As we wrote in our recent paper on “Robot Surveillance,” the market for emotion recognition software is forecast to reach at least $3.8 billion by 2025. Emotion recognition (aka “affect recognition” or “affective computing”) is already being incorporated into products for purposes such as marketing, robotics, driver safety, and audio “aggression detectors.”

Regular readers of this blog are familiar with aggression detectors and the variety of industries where the technology is already deployed. And, one police body-cam maker says it won't deploy facial recognition in its products due to problems with the technology.

Yes, reliability matters -- especially when used for surveillance purposes. Nobody wants law enforcement making decisions about persons based upon software built using unreliable or fake science masquerading as reliable, valid science. Nobody wants education and school officials making decisions about students using unreliable software. Nobody wants hospital administrators and physicians making decisions about patients based upon unreliable software.

What are your opinions?


White Hat Hacker: Social Media Is a 'Goldmine For Details' For Cyberattacks Targeting Companies

Many employees are their own worst enemy when they start a new job. In this Fast Company article, a white hat hacker explains the security fails by employees which compromise their employer's data security.

Stephanie “Snow” Carruthers, the chief people hacker within a group at IBM Inc., explained that hackers troll:

"... social media for photos, videos, and other clues that can help them better target your company in an attack. I know this because I’m one of them... I’m part of an elite team of hackers within IBM known as X-Force Red. Companies hire us to find gaps in their security – before the real bad guys do... Social media posts are a goldmine for details that aid in our “attacks.” What you find in the background of photos is particularly revealing... The first thing you may be surprised to know is that 75% of the time, the information I’m finding is coming from interns or new hires. Younger generations entering the workforce today have grown up on social media, and internships or new jobs are exciting updates to share. Add in the fact that companies often delay security training for new hires until weeks or months after they’ve started, and you’ve got a recipe for disaster..."

The obvious security fails include selfie photos by interns or new hires wearing their security badges, selfies showing log-in credentials on computer screens, and selfies showing passwords written on post-it notes attached to computer monitors. Less obvious security fails include group photos by interns or new hires with their work team. Group photos can help hackers identify team members to craft personalized and more effective phishing e-mails and text messages using co-workers' names, to trick recipients into opening attachments containing malware.

This highlights one business practice interns and new hires should understand. Your immediate boss or supervisor won't scour your social media accounts looking for security fails. Your employer will outsource the job to another company, which will.

If you just started a new job, don't be that clueless employee posting security fails to your social media accounts. Read and understand your employer's social media policy. If you are a manager, schedule security training for your interns and new hires ASAP.


FTC Levies $5 Billion Fine, 'New Restrictions, And Modified Corporate Structure' To Hold Facebook Accountable. Will These Actions Prevent Future Privacy Abuses?

The U.S. Federal Trade Commission (FTC) announced on July 24th a record-breaking fine against Facebook, Inc., plus new limitations on the social networking service. The FTC announcement stated:

"Facebook, Inc. will pay a record-breaking $5 billion penalty, and submit to new restrictions and a modified corporate structure that will hold the company accountable for the decisions it makes about its users’ privacy, to settle Federal Trade Commission charges that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information... The settlement order announced [on July 24th] also imposes unprecedented new restrictions on Facebook’s business operations and creates multiple channels of compliance..."

During 2018, Facebook generated after-tax profits of $22.1 billion on sales of $55.84 billion. While a $5 billion fine is a lot of money, the company can easily afford the record-breaking fine. The fine equals about one month's revenues, or a little over 4 percent of its $117 billion in assets.

U.S. Federal Trade Commission. New compliance system for Facebook. Click to view larger version The FTC announcement explained several "unprecedented" restrictions in the settlement order. First, the restrictions are designed to:

"... prevent Facebook from deceiving its users about privacy in the future, the FTC’s new 20-year settlement order overhauls the way the company makes privacy decisions by boosting the transparency of decision making... It establishes an independent privacy committee of Facebook’s board of directors, removing unfettered control by Facebook’s CEO Mark Zuckerberg over decisions affecting user privacy. Members of the privacy committee must be independent and will be appointed by an independent nominating committee. Members can only be fired by a supermajority of the Facebook board of directors."

Facebook logo Second, the restrictions mandated compliance officers:

"Facebook will be required to designate compliance officers who will be responsible for Facebook’s privacy program. These compliance officers will be subject to the approval of the new board privacy committee and can be removed only by that committee—not by Facebook’s CEO or Facebook employees. Facebook CEO Mark Zuckerberg and designated compliance officers must independently submit to the FTC quarterly certifications that the company is in compliance with the privacy program mandated by the order, as well as an annual certification that the company is in overall compliance with the order. Any false certification will subject them to individual civil and criminal penalties."

Third, the new order strengthens oversight:

"... The order enhances the independent third-party assessor’s ability to evaluate the effectiveness of Facebook’s privacy program and identify any gaps. The assessor’s biennial assessments of Facebook’s privacy program must be based on the assessor’s independent fact-gathering, sampling, and testing, and must not rely primarily on assertions or attestations by Facebook management. The order prohibits the company from making any misrepresentations to the assessor, who can be approved or removed by the FTC. Importantly, the independent assessor will be required to report directly to the new privacy board committee on a quarterly basis. The order also authorizes the FTC to use the discovery tools provided by the Federal Rules of Civil Procedure to monitor Facebook’s compliance with the order."

Fourth, the order included six new privacy requirements:

"i) Facebook must exercise greater oversight over third-party apps, including by terminating app developers that fail to certify that they are in compliance with Facebook’s platform policies or fail to justify their need for specific user data; ii) Facebook is prohibited from using telephone numbers obtained to enable a security feature (e.g., two-factor authentication) for advertising; iii) Facebook must provide clear and conspicuous notice of its use of facial recognition technology, and obtain affirmative express user consent prior to any use that materially exceeds its prior disclosures to users; iv) Facebook must establish, implement, and maintain a comprehensive data security program; v) Facebook must encrypt user passwords and regularly scan to detect whether any passwords are stored in plaintext; and vi) Facebook is prohibited from asking for email passwords to other services when consumers sign up for its services."

Wow! Lots of consequences when a manager builds a corporation with a, "move fast and break things" culture, values, and ethics. Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division said:

"The Department of Justice is committed to protecting consumer data privacy and ensuring that social media companies like Facebook do not mislead individuals about the use of their personal information... This settlement’s historic penalty and compliance terms will benefit American consumers, and the Department expects Facebook to treat its privacy obligations with the utmost seriousness."

There is disagreement among the five FTC commissioners about the settlement, as the vote for the order was 3 - 2. FTC Commissioner Rebecca Kelly Slaughter stated in her dissent:

"My principal objections are: (1) The negotiated civil penalty is insufficient under the applicable statutory factors we are charged with weighing for order violators: injury to the public, ability to pay, eliminating the benefits derived from the violation, and vindicating the authority of the FTC; (2) While the order includes some encouraging injunctive relief, I am skeptical that its terms will have a meaningful disciplining effect on how Facebook treats data and privacy. Specifically, I cannot view the order as adequately deterrent without both meaningful limitations on how Facebook collects, uses, and shares data and public transparency regarding Facebook’s data use and order compliance; (3) Finally, my deepest concern with this order is that its release of Facebook and its officers from legal liability is far too broad..."

FTC Commissioners Noah Joshua Phillips and Christine S. Wilson stated on July 24th in an 8-page joint statement (Adobe PDF) with Chairman Joseph J. Simons of the U.S. District Court for the District of Columbia:

"In 2012, Facebook entered into a consent order with the FTC, resolving allegations that the company misrepresented to consumers the extent of data sharing with third-party applications and the control consumers had over that sharing. The 2012 order barred such misrepresentations... Our complaint announced today alleges that Facebook failed to live up to its commitments under that order. Facebook subsequently made similar misrepresentations about sharing consumer data with third-party apps and giving users control over that sharing, and misrepresented steps certain consumers needed to take to control [over] facial recognition technology. Facebook also allowed financial considerations to affect decisions about how it would enforce its platform policies against third-party users of data, in violation of its obligation under the 2012 order... The $5 billion penalty serves as an important deterrent to future order violations... For purposes of comparison, the EU’s General Data Protection Regulation (GDPR) is touted as the high-water mark for comprehensive privacy legislation, and the penalty the FTC has negotiated is over 20 times greater than the largest GDPR fine to date... IV. The Settlement Far Exceeds What Could be Achieved in Litigation and Gives Consumers Meaningful Protections Now... Even assuming the FTC would prevail in litigation, a court would not give the Commission carte blanche to reorganize Facebook’s governance structures and business operations as we deem fit. Instead, the court would impose the relief. Such relief would be limited to injunctive relief to remedy the specific proven violations... V. Mark Zuckerberg is Being Held Accountable and the Order Cabins His Authority Our dissenting colleagues argue that the Commission should not have settled because the Commission’s investigation provides an inadequate basis for the decision not to name Mark Zuckerberg personally as a defendant... The provisions of this Order extinguish the ability of Mr. Zuckerberg to make privacy decisions unilaterally by also vesting responsibility and accountability for those decisions within business units, DCOs, and the privacy committee... the Order significantly diminishes Mr. Zuckerberg’s power — something no government agency, anywhere in the world, has thus far accomplished. The Order requires multiple information flows and imposes a robust system of checks and balances..."

Time will tell how effective the order's restrictions and $5 billion are. That Facebook can easily afford the penalty suggests the amount is a weak deterrence. If all or part of the penalty is tax-deductible (yes, tax-deductible fines have happened before to directly reduce a company's taxes), then that would weaken the deterrence effectiveness. And, if all or part of the fine is tax-deductible, then we taxpayers just paid for part of Facebook's alleged wrongdoing. I'll bet most taxpayers wouldn't want that.

Facebook stated in a July 24th news release that its second-quarter 2019 earnings included:

"... an additional $2.0 billion legal expense related to the U.S. Federal Trade Commission (FTC) settlement and a $1.1 billion income tax expense due to the developments in Altera Corp. v. Commissioner, as discussed below. As the FTC expense is not expected to be tax-deductible, it had no effect on our provision for income taxes... In July 2019, we entered into a settlement and modified consent order to resolve the inquiry of the FTC into our platform and user data practices. Among other matters, our settlement with the FTC requires us to pay a penalty of $5.0 billion and to significantly enhance our practices and processes for privacy compliance and oversight. In particular, we have agreed to implement a comprehensive expansion of our privacy program, including substantial management and board of directors oversight, stringent operational requirements and reporting obligations, and a process to regularly certify our compliance with the privacy program to the FTC. In the second quarter of 2019, we recorded an additional $2.0 billion accrual in connection with our settlement with the FTC, which is included in accrued expenses and other current liabilities on our condensed consolidated balance sheet."

"Not expected to be" is not the same as definitely not. And, business expenses reduce a company's taxable net income.

A copy of the FTC settlement order with Facebook is also available here (Adobe PDF format; 920K bytes). Plus, there is more:

"... the FTC also announced today separate law enforcement actions against data analytics company Cambridge Analytica, its former Chief Executive Officer Alexander Nix, and Aleksandr Kogan, an app developer who worked with the company, alleging they used false and deceptive tactics to harvest personal information from millions of Facebook users. Kogan and Nix have agreed to a settlement with the FTC that will restrict how they conduct any business in the future."

Cambridge Analytica was involved in the massive Facebook data breach in 2018 when persons allegedly posed as academic researchers in order to download Facebook users' profile information they really weren't authorized to access.

What are your opinions? Hopefully, some tax experts will weigh in about the fine.


Evite Admitted Data Breach. Doesn't Disclose The Number Of Users Affected

Evite logo Evite, the online social and invitations site, disclosed last month a data breach affecting some of its users:

"We became aware of a data security incident involving potential unauthorized access to our systems in April 2019. We engaged one of the leading data security firms and launched a thorough investigation. The investigation potentially traced the incident to malicious activity starting on February 22, 2019. On May 14, 2019, we concluded that an unauthorized party had acquired an inactive data storage file associated with our user accounts... Upon discovering the incident, we took steps to understand the nature and scope of the issue, and brought in external forensic consultants that specialize in cyber-attacks. We coordinated with law enforcement regarding the incident, and are working with leading security experts to address any vulnerabilities..."

Evite was founded in 1998, so there could be plenty of users affected. The breach announcement did not disclose the number of users affected.

The Evite breach announcement also said, "No user information more recent than 2013 was contained in the file" which was accessed/stolen by unauthorized persons. Evite said it has notified affected users, and has reset the passwords of affected users. The Evite system will prompt affected users to create new passwords when signing into the service.

The announcement listed the data elements accessed/stolen: names, usernames, email addresses, and passwords. If users also entered their birth dates, phone numbers, and mailing addresses then those data elements were also access/stolen. Social Security numbers were not affected since Evite doesn't collect this data. Evite said payment information (e.g., credit cards, debit cards, bank accounts, etc.) was not affected because:

"We do not store financial or payment information. If you opted to store your payment card in your account, your payment information is maintained by and stored on the internal systems of our third-party vendor."

Thank goodness for small wonders. The Evite disclosure did not explain why passwords were not encrypted, nor if that or other data elements would be encrypted in the future. As with any data breach, context matters. ZD Net reported:

"... a hacker named Gnosticplayers put up for sale the customer data of six companies, including Evite. The hacker claimed to be selling ten million Evite user records that included full names, email addresses, IP addresses, and cleartext passwords. ZDNet reached out to notify Evite of the hack and that its data was being sold on the dark web on April 15; however, the company never returned our request for comment... Back in April, the data of 10 million Evite users was put up for sale on a dark web marketplace for ฿0.2419 (~$1,900). The same hacker has breached, stolen, and put up for sale the details of over one billion users from many other companies, including other major online services, such as Canva, 500px, UnderArmor, ShareThis, GfyCat, Ge.tt, and others."

The incident is another reminder of the high value of consumers' personal data, and that hackers take action quickly to use or sell stolen data.


Facebook Announced New Financial Services Offering Available in 2020

On Tuesday, Facebook announced its first financial services offering which will be available in 2020:

"... we’re sharing plans for Calibra, a newly formed Facebook subsidiary whose goal is to provide financial services that will let people access and participate in the Libra network. The first product Calibra will introduce is a digital wallet for Libra, a new global currency powered by blockchain technology. The wallet will be available in Messenger, WhatsApp and as a standalone app — and we expect to launch in 2020... Calibra will let you send Libra to almost anyone with a smartphone, as easily and instantly as you might send a text message and at low to no cost. And, in time, we hope to offer additional services for people and businesses, like paying bills with the push of a button, buying a cup of coffee with the scan of a code or riding your local public transit..."

Long before the announcement, consumers crafted interesting nicknames for the financial service, such as #FaceCoin and #Zuckbucks. Good to see people with a sense of humor.

On a more serious topic, after multiple data breaches and privacy snafus at Facebook (plus repeated promises by CEO Zuckerberg that his company will do better), many people are understandably concerned about data security and privacy. Facebook's announcement also addressed security and privacy:

"... Calibra will have strong protections... We’ll be using all the same verification and anti-fraud processes that banks and credit cards use, and we’ll have automated systems that will proactively monitor activity to detect and prevent fraudulent behavior... We’ll also take steps to protect your privacy. Aside from limited cases, Calibra will not share account information or financial data with Facebook or any third party without customer consent. This means Calibra customers’ account information and financial data will not be used to improve ad targeting on the Facebook family of products. The limited cases where this data may be shared reflect our need to keep people safe, comply with the law and provide basic functionality to the people who use Calibra. Calibra will use Facebook data to comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity."

So, the new Calibra subsidiary promised that it won't share users' account information with Facebook's core social networking service, except when it will -- to "comply with the law." The announcement encourages interested persons to sign up for email updates. This leaves Calibra customers to trust Facebook's wall separating its business units. "Provide basic functionality to the people who use Calibra" sounds like a huge loophole to justify any data sharing.

Tech and financial experts quickly weighed in on the announcement and its promises. TechCrunch explained why Facebook created a new business subsidiary. After Calibra's Tuesday announcement:

"... critics started harping about the dangers of centralizing control of tomorrow’s money in the hands of a company with a poor track record of privacy and security. Facebook anticipated this, though, and created a subsidiary called Calibra to run its crypto dealings and keep all transaction data separate from your social data. Facebook shares control of Libra with 27 other Libra Association founding members, and as many as 100 total when the token launches in the first half of 2020. Each member gets just one vote on the Libra council, so Facebook can’t hijack the token’s governance even though it invented it."

TechCrunch also explained the risks to Calibra customers:

"... that leaves one giant vector for abuse of Libra: the developer platform... Apparently Facebook has already forgotten how allowing anyone to build on the Facebook app platform and its low barriers to “innovation” are exactly what opened the door for Cambridge Analytica to hijack 87 million people’s personal data and use it for political ad targeting. But in this case, it won’t be users’ interests and birthdays that get grabbed. It could be hundreds or thousands of dollars’ worth of Libra currency that’s stolen. A shady developer could build a wallet that just cleans out a user’s account or funnels their coins to the wrong recipient, mines their purchase history for marketing data or uses them to launder money..."

During the coming months, hopefully Calibra will disclose the controls it will implement on the developer platform to prevent abuses, theft, and fraud.

Readers wanting to learn more should read the Libra White Paper, which provides more details about the companies involved:

"The Libra Association is an independent, not-for-profit membership organization headquartered in Geneva, Switzerland. The association’s purpose is to coordinate and provide a framework for governance for the network... Members of the Libra Association will consist of geographically distributed and diverse businesses, nonprofit and multilateral organizations, and academic institutions. The initial group of organizations that will work together on finalizing the association’s charter and become “Founding Members” upon its completion are, by industry:

1. Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
2. Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Mercado Pago, Spotify AB, Uber Technologies, Inc.
3. Telecommunications: Iliad, Vodafone Group
4. Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
5. Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
6. Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking"

Yes, the ride-hailing company, Uber, is involved. Yes, the same ride-hailing service which which paid $148 million to settle lawsuits and a coverup from a data breach in 2016. Yes, the same ride-hailing service with a history of data security, compliance, cultural, and privacy snafus. This suggests -- for better or worse -- that in the future consumers will be able to pay for Uber rides using the Libra Network.

Calibra hopes to have about 100 members in the Libra Association by the service launch in 2020. Clearly, there will be plenty more news to come. Below are draft screen images of the new app.

Early version of screen images of the Calibra mobile app. Click to view larger version


Study: While Consumers Want Sites Like Facebook And Google To Collect Less Data, Few Want To Pay For Privacy

A recent study by the Center For Data Innovation explored consumers' attitudes about online privacy. One of the primary findings:

"... when potential tradeoffs were not part of the question approximately 80 percent of Americans agreed that they would like online services such as Facebook and Google to collect less of their data..."

So, most survey participants want more online privacy as defined by less data collected about them. That is good news, right? Maybe. The researchers dug deeper to understand survey participants' views about "tradeoffs" - various ways of paying for online privacy. It found that support for more privacy (e.g., less data collected):

"... eroded when respondents considered these tradeoffs... [support] dropped by 6 percentage points when respondents were asked whether they would like online services to collect less data even if it means seeing ads that are less useful. Support dropped by 27 percentage points when respondents considered whether they would like less data collection even if it means seeing more ads than before. And it dropped by 26 percentage points when respondents were asked whether they would like less data collection even if it means losing access to some features they use now."

So, support for more privacy fell if irrelevant ads, more ads, and/or fewer features were the consequences. There is more:

"The largest drop in support (53 percentage points) came when respondents were asked whether they would like online services to collect less of their data even if it means paying a monthly subscription fee."

This led to a second major finding:

"Only one in four Americans want online services such as Facebook and Google to collect less of their data if it means they would have to start paying a monthly subscription fee..."

So, most want privacy but few are willing to pay for it. This is probably reassuring news for executives in a variety of industries (e.g., social media, tech companies, device manufacturers, etc.) to keep doing what they are doing: massive data collection of consumers' data via sites, mobile apps, partnerships, and however else they can get it.

Next, the survey asked participants if they would accept more data collection if that provided more benefits:

"... approximately 74 percent of Americans opposed having online services such as Google and Facebook collect more of their data. But that opposition decreased by 11 percentage points... if it means seeing ads that are more useful. It dropped by 17 percentage points... if it means seeing fewer ads than before and... if it means getting access to new features they would use. The largest decrease in opposition (18 percentage points) came... if it means getting more free apps and services..."

So, while most consumers want online privacy, they can be easily persuaded to abandon their positions with promises of more benefits. The survey included a national online poll of 3,240 U.S. adult Internet users. It was conducted December 13 - 16, 2018.

What to make of these survey results? Americans are fickle and lazy. We say we want online privacy, but few are willing to pay for it. While nothing in life is free, few consumers seem to realize that this advice applies to online privacy, too. Plus, consumers seem to highly value convenience regardless of the consequences.

What do you think?


UK Parliamentary Committee Issued Its Final Report on Disinformation And Fake News. Facebook And Six4Three Discussed

On February 18th, a United Kingdom (UK) parliamentary committee published its final report on disinformation and "fake news." The 109-page report by the Digital, Culture, Media, And Sport Committee (DCMS) updates its interim report from July, 2018.

The report covers many issues: political advertising (by unnamed entities called "dark adverts"), Brexit and UK elections, data breaches, privacy, and recommendations for UK regulators and government officials. It seems wise to understand the report's findings regarding the business practices of U.S.-based companies mentioned, since these companies' business practices affect consumers globally, including consumers in the United States.

Issues Identified

First, the DCMS' final report built upon issues identified in its:

"... Interim Report: the definition, role and legal liabilities of social media platforms; data misuse and targeting, based around the Facebook, Cambridge Analytica and Aggregate IQ (AIQ) allegations, including evidence from the documents we obtained from Six4Three about Facebook’s knowledge of and participation in data-sharing; political campaigning; Russian influence in political campaigns; SCL influence in foreign elections; and digital literacy..."

The final report includes input from 23 "oral evidence sessions," more than 170 written submissions, interviews of at least 73 witnesses, and more than 4,350 questions asked at hearings. The DCMS Committee sought input from individuals, organizations, industry experts, and other governments. Some of the information sources:

"The Canadian Standing Committee on Access to Information, Privacy and Ethics published its report, “Democracy under threat: risks and solutions in the era of disinformation and data monopoly” in December 2018. The report highlights the Canadian Committee’s study of the breach of personal data involving Cambridge Analytica and Facebook, and broader issues concerning the use of personal data by social media companies and the way in which such companies are responsible for the spreading of misinformation and disinformation... The U.S. Senate Select Committee on Intelligence has an ongoing investigation into the extent of Russian interference in the 2016 U.S. elections. As a result of data sets provided by Facebook, Twitter and Google to the Intelligence Committee -- under its Technical Advisory Group -- two third-party reports were published in December 2018. New Knowledge, an information integrity company, published “The Tactics and Tropes of the Internet Research Agency,” which highlights the Internet Research Agency’s tactics and messages in manipulating and influencing Americans... The Computational Propaganda Research Project and Graphika published the second report, which looks at activities of known Internet Research Agency accounts, using Facebook, Instagram, Twitter and YouTube between 2013 and 2018, to impact US users"

Why Disinformation

Second, definitions matter. According to the DCMS Committee:

"We have even changed the title of our inquiry from “fake news” to “disinformation and ‘fake news’”, as the term ‘fake news’ has developed its own, loaded meaning. As we said in our Interim Report, ‘fake news’ has been used to describe content that a reader might dislike or disagree with... We were pleased that the UK Government accepted our view that the term ‘fake news’ is misleading, and instead sought to address the terms ‘disinformation’ and ‘misinformation'..."

Overall Recommendations

Summary recommendations from the report:

  1. "Compulsory Code of Ethics for tech companies overseen by independent regulator,
  2. Regulator given powers to launch legal action against companies breaching code,
  3. Government to reform current electoral communications laws and rules on overseas involvement in UK elections, and
  4. Social media companies obliged to take down known sources of harmful content, including proven sources of disinformation"

Role And Liability Of Tech Companies

Regarding detailed observations and findings about the role and liability of tech companies, the report stated:

"Social media companies cannot hide behind the claim of being merely a ‘platform’ and maintain that they have no responsibility themselves in regulating the content of their sites. We repeat the recommendation from our Interim Report that a new category of tech company is formulated, which tightens tech companies’ liabilities, and which is not necessarily either a ‘platform’ or a ‘publisher’. This approach would see the tech companies assume legal liability for content identified as harmful after it has been posted by users. We ask the Government to consider this new category of tech company..."

The UK Government and its regulators may adopt some, all, or none of the report's recommendations. More observations and findings in the report:

"... both social media companies and search engines use algorithms, or sequences of instructions, to personalize news and other content for users. The algorithms select content based on factors such as a user’s past online activity, social connections, and their location. The tech companies’ business models rely on revenue coming from the sale of adverts and, because the bottom line is profit, any form of content that increases profit will always be prioritized. Therefore, negative stories will always be prioritized by algorithms, as they are shared more frequently than positive stories... Just as information about the tech companies themselves needs to be more transparent, so does information about their algorithms. These can carry inherent biases, as a result of the way that they are developed by engineers... Monika Bickert, from Facebook, admitted that Facebook was concerned about “any type of bias, whether gender bias, racial bias or other forms of bias that could affect the way that work is done at our company. That includes working on algorithms.” Facebook should be taking a more active and urgent role in tackling such inherent biases..."

Based upon this, the report recommended that the UK's new Centre For Ethics And Innovation (CFEI) should play a key role as an advisor to the UK Government by continually analyzing and anticipating gaps in governance and regulation, suggesting best practices and corporate codes of conduct, and standards for artificial intelligence (AI) and related technologies.

Inferred Data

The report also discussed a critical issue related to algorithms (emphasis added):

"... When Mark Zuckerberg gave evidence to Congress in April 2018, in the wake of the Cambridge Analytica scandal, he made the following claim: “You should have complete control over your data […] If we’re not communicating this clearly, that’s a big thing we should work on”. When asked who owns “the virtual you”, Zuckerberg replied that people themselves own all the “content” they upload, and can delete it at will. However, the advertising profile that Facebook builds up about users cannot be accessed, controlled or deleted by those users... In the UK, the protection of user data is covered by the General Data Protection Regulation (GDPR). However, ‘inferred’ data is not protected; this includes characteristics that may be inferred about a user not based on specific information they have shared, but through analysis of their data profile. This, for example, allows political parties to identify supporters on sites like Facebook, through the data profile matching and the ‘lookalike audience’ advertising targeting tool... Inferred data is therefore regarded by the ICO as personal data, which becomes a problem when users are told that they can own their own data, and that they have power of where that data goes and what it is used for..."

The distinction between uploaded and inferred data cannot be overemphasized. It is critical when evaluating tech companies statements, policies (e.g., privacy, terms of use), and promises about what "data" users have control over. Wise consumers must insist upon clear definitions to avoided getting misled or duped.

What might be an exampled of inferred data? What comes to mind is Facebook's Ad Preferences feature allows users to review and delete the "Interests" -- advertising categories -- Facebook assigns to each user's profile. (The service's algorithms assign Interests based groups/pages/events/advertisements users "Liked" or clicked on, posts submitted, posts commented upon, and more.) These "Interests" are inferred data, since Facebook assigned them, and uers didn't.

In fact, Facebook doesn't notify its users when it assigns new Interests. It just does it. And, Facebook can assign Interests whether you interacted with an item once or many times. How relevant is an Interest assigned after a single interaction, "Like," or click? Most people would say: not relevant. So, does the Interests list assigned to users' profiles accurately describe users? Do Facebook users own the Interests list assigned to their profiles? Any control Facebook users have seems minimal. Why? Facebook users can delete Interests assigned to their profiles, but users cannot stop Facebook from applying new Interests. Users cannot prevent Facebook from re-applying Interests previously deleted. Deleting Interests doesn't reduce the number of ads users see on Facebook.

The only way to know what Interests have been assigned is for Facebook users to visit the Ad Preferences section of their profiles, and browse the list. Depending how frequently a person uses Facebook, it may be necessary to prune an Interests list at least once monthly -- a cumbersome and time consuming task, probably designed that way to discourage reviews and pruning. And, that's one example of inferred data. There are probably plenty more examples, and as the report emphasizes users don't have access to all inferred data with their profiles.

Now, back to the report. To fix problems with inferred data, the DCMS recommended:

"We support the recommendation from the ICO that inferred data should be as protected under the law as personal information. Protections of privacy law should be extended beyond personal information to include models used to make inferences about an individual. We recommend that the Government studies the way in which the protections of privacy law can be expanded to include models that are used to make inferences about individuals, in particular during political campaigning. This will ensure that inferences about individuals are treated as importantly as individuals’ personal information."

Business Practices At Facebook

Next, the DCMS Committee's report said plenty about Facebook, its management style, and executives (emphasis added):

"Despite all the apologies for past mistakes that Facebook has made, it still seems unwilling to be properly scrutinized... Ashkan Soltani, an independent researcher and consultant, and former Chief Technologist to the US Federal Trade Commission (FTC), called into question Facebook’s willingness to be regulated... He discussed the California Consumer Privacy Act, which Facebook supported in public, but lobbied against, behind the scenes... By choosing not to appear before the Committee and by choosing not to respond personally to any of our invitations, Mark Zuckerberg has shown contempt towards both the UK Parliament and the ‘International Grand Committee’, involving members from nine legislatures from around the world. The management structure of Facebook is opaque to those outside the business and this seemed to be designed to conceal knowledge of and responsibility for specific decisions. Facebook used the strategy of sending witnesses who they said were the most appropriate representatives, yet had not been properly briefed on crucial issues, and could not or chose not to answer many of our questions. They then promised to follow up with letters, which -- unsurprisingly -- failed to address all of our questions. We are left in no doubt that this strategy was deliberate."

So, based upon Facebook's actions (or lack thereof), the DCMS concluded that Facebook executives intentionally ducked and dodged issues and questions.

While discussing data use and targeting, the report said more about data breaches and Facebook:

"The scale and importance of the GSR/Cambridge Analytica breach was such that its occurrence should have been referred to Mark Zuckerberg as its CEO immediately. The fact that it was not is evidence that Facebook did not treat the breach with the seriousness it merited. It was a profound failure of governance within Facebook that its CEO did not know what was going on, the company now maintains, until the issue became public to us all in 2018. The incident displays the fundamental weakness of Facebook in managing its responsibilities to the people whose data is used for its own commercial interests..."

So, internal management failed. That's not all. After a detailed review of the GSR/Cambridge Analytica breach and Facebook's 2011 Consent Decree with the U.S. Federal Trade Commission (FTC), the DCMS Committee concluded (emphasis and text link added):

"The Cambridge Analytica scandal was facilitated by Facebook’s policies. If it had fully complied with the FTC settlement, it would not have happened. The FTC Complaint of 2011 ruled against Facebook -- for not protecting users’ data and for letting app developers gain as much access to user data as they liked, without restraint -- and stated that Facebook built their company in a way that made data abuses easy. When asked about Facebook’s failure to act on the FTC’s complaint, Elizabeth Denham, the Information Commissioner, told us: “I am very disappointed that Facebook, being such an innovative company, could not have put more focus, attention and resources into protecting people’s data”. We are equally disappointed."

Wow! Not good. There's more:

"... a current court case at the San Mateo Superior Court in California also concerns Facebook’s data practices. It is alleged that Facebook violated the privacy of US citizens by actively exploiting its privacy policy... The published ‘corrected memorandum of points and authorities to defendants’ special motions to strike’, by the complainant in the case, the U.S.-based app developer Six4Three, describes the allegations against Facebook; that Facebook used its users’ data to persuade app developers to create platforms on its system, by promising access to users’ data, including access to data of users’ friends. The case also alleges that those developers that became successful were targeted and ordered to pay money to Facebook... Six4Three lodged its original case in 2015, after Facebook removed developers’ access to friends’ data, including its own. The DCMS Committee took the unusual, but lawful, step of obtaining these documents, which spanned between 2012 and 2014... Since we published these sealed documents, on 14 January 2019 another court agreed to unseal 135 pages of internal Facebook memos, strategies and employee emails from between 2012 and 2014, connected with Facebook’s inappropriate profiting from business transactions with children. A New York Times investigation published in December 2018 based on internal Facebook documents also revealed that the company had offered preferential access to users data to other major technology companies, including Microsoft, Amazon and Spotify."

"We believed that our publishing the documents was in the public interest and would also be of interest to regulatory bodies... The documents highlight Facebook’s aggressive action against certain apps, including denying them access to data that they were originally promised. They highlight the link between friends’ data and the financial value of the developers’ relationship with Facebook. The main issues concern: ‘white lists’; the value of friends’ data; reciprocity; the sharing of data of users owning Android phones..."

You can read the report's detailed descriptions of those issues. A summary: a) Facebook allegedly used promises of access to users' data to lure developers (often by overriding Facebook users' privacy settings); b) some developers got priority treatment based upon unclear criteria; c) developers who didn't spend enough money with Facebook were denied access to data previously promised; d) Facebook's reciprocity clause demanded that developers also share their users' data with Facebook; e) Facebook's mobile app for Android OS phone users collected far more data about users, allegedly without consent, than users were told; and f) Facebook allegedly targeted certain app developers (emphasis added):

"We received evidence that showed that Facebook not only targeted developers to increase revenue, but also sought to switch off apps where it considered them to be in competition or operating in a lucrative areas of its platform and vulnerable to takeover. Since 1970, the US has possessed high-profile federal legislation, the Racketeer Influenced and Corrupt Organizations Act (RICO); and many individual states have since adopted similar laws. Originally aimed at tackling organized crime syndicates, it has also been used in business cases and has provisions for civil action for damages in RICO-covered offenses... Despite specific requests, Facebook has not provided us with one example of a business excluded from its platform because of serious data breaches. We believe that is because it only ever takes action when breaches become public. We consider that data transfer for value is Facebook’s business model and that Mark Zuckerberg’s statement that “we’ve never sold anyone’s data” is simply untrue.” The evidence that we obtained from the Six4Three court documents indicates that Facebook was willing to override its users’ privacy settings in order to transfer data to some app developers, to charge high prices in advertising to some developers, for the exchange of that data, and to starve some developers—such as Six4Three—of that data, thereby causing them to lose their business. It seems clear that Facebook was, at the very least, in violation of its Federal Trade Commission settlement."

"The Information Commissioner told the Committee that Facebook needs to significantly change its business model and its practices to maintain trust. From the documents we received from Six4Three, it is evident that Facebook intentionally and knowingly violated both data privacy and anti-competition laws. The ICO should carry out a detailed investigation into the practices of the Facebook Platform, its use of users’ and users’ friends’ data, and the use of ‘reciprocity’ of the sharing of data."

The Information Commissioner's Office (ICO) is one of the regulatory agencies within the UK. So, the Committee concluded that Facebook's real business model is, "data transfer for value" -- in other words: have money, get access to data (regardless of Facebook users' privacy settings).

One quickly gets the impression that Facebook acted like a monopoly in its treatment of both users and developers... or worse, like organized crime. The report concluded (emphasis added):

"The Competitions and Market Authority (CMA) should conduct a comprehensive audit of the operation of the advertising market on social media. The Committee made this recommendation its interim report, and we are pleased that it has also been supported in the independent Cairncross Report commissioned by the government and published in February 2019. Given the contents of the Six4Three documents that we have published, it should also investigate whether Facebook specifically has been involved in any anti-competitive practices and conduct a review of Facebook’s business practices towards other developers, to decide whether Facebook is unfairly using its dominant market position in social media to decide which businesses should succeed or fail... Companies like Facebook should not be allowed to behave like ‘digital gangsters’ in the online world, considering themselves to be ahead of and beyond the law."

The DCMS Committee's report also discussed findings from the Cairncross Report. In summary, Damian Collins MP, Chair of the DCMS Committee, said:

“... we cannot delay any longer. Democracy is at risk from the malicious and relentless targeting of citizens with disinformation and personalized ‘dark adverts’ from unidentifiable sources, delivered through the major social media platforms we use everyday. Much of this is directed from agencies working in foreign countries, including Russia... Companies like Facebook exercise massive market power which enables them to make money by bullying the smaller technology companies and developers... We need a radical shift in the balance of power between the platforms and the people. The age of inadequate self regulation must come to an end. The rights of the citizen need to be established in statute, by requiring the tech companies to adhere to a code of conduct..."

So, the report seems extensive, comprehensive, and detailed. Read the DCMS Committee's announcement, and/or download the full DCMS Committee report (Adobe PDF format, 3,5o7 kilobytes).

Once can assume that governments' intelligence and spy agencies will continue to do what they've always done: collect data about targets and adversaries, use disinformation and other tools to attempt to meddle in other governments' activities. It is clear that social media makes these tasks far easier than before. The DCMS Committee's report provided recommendations about what the UK Government's response should be. Other countries' governments face similar decisions about their responses, if any, to the threats.

Given the data in the DCMS report, it will be interesting to see how the FTC and lawmakers in the United States respond. If increased regulation of social media results, tech companies arguably have only themselves to blame. What do you think?


Senators Demand Answers From Facebook And Google About Project Atlas And Screenwise Meter Programs

After news reports surfaced about Facebook's Project Atlas, a secret program where Facebook paid teenagers (and other users) for a research app installed on their phones to track and collect information about their mobile usage, several United States Senators have demanded explanations. Three Senators sent a join letter on February 7, 2019 to Mark Zuckerberg, Facebook's chief executive officer.

The joint letter to Facebook (Adobe PDF format) stated, in part:

"We write concerned about reports that Facebook is collecting highly-sensitive data on teenagers, including their web browsing, phone use, communications, and locations -- all to profile their behavior without adequate disclosure, consent, or oversight. These reports fit with Longstanding concerns that Facebook has used its products to deeply intrude into personal privacy... According to a journalist who attempted to register as a teen, the linked registration page failed to impose meaningful checks on parental consent. Facebook has more rigorous mechanism to obtain and verify parental consent, such as when it is required to sign up for Messenger Kids... Facebook's monitoring under Project Atlas is particularly concerning because the data data collection performed by the research app was deeply invasive. Facebook's registration process encouraged participants to "set it and forget it," warning that if a participant disconnected from the monitoring for more than ten minutes for a few days, that they could be disqualified. Behind the scenes, the app watched everything on the phone."

The letter included another example highlighting the alleged lack of meaningful disclosures:

"... the app added a VPN connection that would automatically route all of a participant's traffic through Facebook's servers. The app installed a SSL root certificate on the participant's phone, which would allow Facebook to intercept or modify data sent to encrypted websites. As a result, Facebook would have limitless access to monitor normally secure web traffic, even allowing Facebook to watch an individual log into their bank account or exchange pictures with their family. None of the disclosures provided at registration offer a meaningful explanation about how the sensitive data is used, how long it is kept, or who within Facebook has access to it..."

The letter was signed by Senators Richard Blumenthal (Democrat, Connecticut), Edward J. Markey (Democrat, Massachusetts), and Josh Hawley (Republican, Mississippi). Based upon news reports about how Facebook's Research App operated with similar functionality to the Onavo VPN app which was banned last year by Apple, the Senators concluded:

"Faced with that ban, Facebook appears to have circumvented Apple's attempts to protect consumers."

The joint letter also listed twelve questions the Senators want detailed answers about. Below are selected questions from that list:

"1. When did Project Atlas begin and how many individuals participated? How many participants were under age 18?"

"3. Why did Facebook use a less strict mechanism for verifying parental consent than is Required for Messenger Kids or Global Data Protection Requlation (GDPR) compliance?"

"4.What specific types of data was collected (e.g., device identifieers, usage of specific applications, content of messages, friends lists, locations, et al.)?"

"5. Did Facebook use the root certificate installed on a participant's device by the Project Atlas app to decrypt and inspect encrypted web traffic? Did this monitoring include analysis or retention of application-layer content?"

"7. Were app usage data or communications content collected by Project Atlas ever reviewed by or available to Facebook personnel or employees of Facebook partners?"

8." Given that Project Atlas acknowledged the collection of "data about [users'] activities and content within those apps," did Facebook ever collect or retain the private messages, photos, or other communications sent or received over non-Facebook products?"

"11. Why did Facebook bypass Apple's app review? Has Facebook bypassed the App Store aproval processing using enterprise certificates for any other app that was used for non-internal purposes? If so, please list and describe those apps."

Read the entire letter to Facebook (Adobe PDF format). Also on February 7th, the Senators sent a similar letter to Google (Adobe PDF format), addressed to Hiroshi Lockheimer, the Senior Vice President of Platforms & Ecosystems. It stated in part:

"TechCrunch has subsequently reported that Google maintained its own measurement program called "Screenwise Meter," which raises similar concerns as Project Atlas. The Screenwise Meter app also bypassed the App Store using an enterprise certificate and installed a VPN service in order to monitor phones... While Google has since removed the app, questions remain about why it had gone outside Apple's review process to run the monitoring program. Platforms must maintain and consistently enforce clear policies on the monitoring of teens and what constitutes meaningful parental consent..."

The letter to Google includes a similar list of eight questions the Senators seek detailed answers about. Some notable questions:

"5. Why did Google bypass App Store approval for Screenwise Meter app using enterprise certificates? Has Google bypassed the App Store approval processing using enterprise certificates for any other non-internal app? If so, please list and describe those apps."

"6. What measures did Google have in place to ensure that teenage participants in Screenwise Meter had authentic parental consent?"

"7. Given that Apple removed Onavoo protect from the App Store for violating its terms of service regarding privacy, why has Google continued to allow the Onavo Protect app to be available on the Play Store?"

The lawmakers have asked for responses by March 1st. Thanks to all three Senators for protecting consumers' -- and children's -- privacy... and for enforcing transparency and accountability.


Survey: Users Don't Understand Facebook's Advertising System. Some Disagree With Its Classifications

Most people know that many companies collect data about their online activities. Based upon the data collected, companies classify users for a variety of reasons and purposes. Do users agree with these classifications? Do the classifications accurately describe users' habits, interests, and activities?

Facebook logo To answer these questions, the Pew Research Center surveyed users of Facebook. Why Facebook? Besides being the most popular social media platform in the United States, it collects:

"... a wide variety of data about their users’ behaviors. Platforms use this data to deliver content and recommendations based on users’ interests and traits, and to allow advertisers to target ads... But how well do Americans understand these algorithm-driven classification systems, and how much do they think their lives line up with what gets reported about them?"

The findings are significant. First:

"Facebook makes it relatively easy for users to find out how the site’s algorithm has categorized their interests via a “Your ad preferences” page. Overall, however, 74% of Facebook users say they did not know that this list of their traits and interests existed until they were directed to their page as part of this study."

So, almost three quarters of Facebook users surveyed don't know what data Facebook has collected about them, nor how to view it (nor how to edit it, or how to opt out of the ad targeting classifications). According to Wired magazine, Facebook's "Your Ad Preferences" page:

"... can be hard to understand if you haven’t looked at the page before. At the top, Facebook displays “Your interests.” These groupings are assigned based on your behavior on the platform and can be used by marketers to target you with ads. They can include fairly straightforward subjects, like “Netflix,” “Graduate school,” and “Entrepreneurship,” but also more bizarre ones, like “Everything” and “Authority.” Facebook has generated an enormous number of these categories for its users. ProPublica alone has collected over 50,000, including those only marketers can see..."

Now, back to the Pew survey. After survey participants viewed their Ad Preferences page:

"A majority of users (59%) say these categories reflect their real-life interests, while 27% say they are not very or not at all accurate in describing them. And once shown how the platform classifies their interests, roughly half of Facebook users (51%) say they are not comfortable that the company created such a list."

So, about half of persons surveyed use a site whose data collection they are uncomfortable with. Not good. Second, substantial groups said the classifications by Facebook were not accurate:

"... about half of Facebook users (51%) are assigned a political “affinity” by the site. Among those who are assigned a political category by the site, 73% say the platform’s categorization of their politics is very or somewhat accurate, while 27% say it describes them not very or not at all accurately. Put differently, 37% of Facebook users are both assigned a political affinity and say that affinity describes them well, while 14% are both assigned a category and say it does not represent them accurately..."

So, significant numbers of users disagree with the political classifications Facebook assigned to their profiles. Third, its' not only politics:

"... Facebook also lists a category called “multicultural affinity”... this listing is meant to designate a user’s “affinity” with various racial and ethnic groups, rather than assign them to groups reflecting their actual race or ethnic background. Only about a fifth of Facebook users (21%) say they are listed as having a “multicultural affinity.” Overall, 60% of users who are assigned a multicultural affinity category say they do in fact have a very or somewhat strong affinity for the group to which they are assigned, while 37% say their affinity for that group is not particularly strong. Some 57% of those who are assigned to this category say they do in fact consider themselves to be a member of the racial or ethnic group to which Facebook assigned them."

The survey included a nationally representative sample of 963 Facebook users ages 18 and older from the United States. The survey was conducted September 4 to October 1, 2018. Read the entire survey at the Pew Research Center site.

What can consumers conclude from this survey? Social media users should understand that all social sites, and especially mobile apps, collect data about you, and then make judgements... classifications about you. (Remember, some Samsung phone owners were unable to delete Facebook and other mobile apps users. And, everyone wants your geolocation data.) Use any tools the sites provide to edit or adjust your ad preferences to match your interests. Adjust the privacy settings on your profile to limit the data sharing as much as possible.

Last, an important reminder. While Facebook users can edit their ad preferences and can opt out of the ad-targeting classifications, they cannot completely avoid ads. Facebook will still display less-targeted ads. That is simply, Facebook being Facebook to make money. That probably applies to other social sites, too.

What are your opinions of the survey's findings?


Facebook Paid Teens To Install Unauthorized Spyware On Their Phones. Plenty Of Questions Remain

Facebook logoWhile today is the 15th anniversary of Facebook,  more important news rules. Last week featured plenty of news about Facebook. TechCrunch reported on Tuesday:

"Since 2016, Facebook has been paying users ages 13 to 35 up to $20 per month plus referral fees to sell their privacy by installing the iOS or Android “Facebook Research” app. Facebook even asked users to screenshot their Amazon order history page. The program is administered through beta testing services Applause, BetaBound and uTest to cloak Facebook’s involvement, and is referred to in some documentation as “Project Atlas” — a fitting name for Facebook’s effort to map new trends and rivals around the globe... Facebook admitted to TechCrunch it was running the Research program to gather data on usage habits."

So, teenagers installed surveillance software on their phones and tablets, to spy for Facebook on themselves, Facebook's competitors,, and others. This is huge news for several reasons. First, the "Facebook Research" app is VPN (Virtual Private Network) software which:

"... lets the company suck in all of a user’s phone and web activity, similar to Facebook’s Onavo Protect app that Apple banned in June and that was removed in August. Facebook sidesteps the App Store and rewards teenagers and adults to download the Research app and give it root access to network traffic in what may be a violation of Apple policy..."

Reportedly, the Research app collected massive amounts of information: private messages in social media apps, chats from in instant messaging apps, photos/videos sent to others, emails, web searches, web browsing activity, and geo-location data. So, a very intrusive app. And, after being forced to remove oneintrusive app from Apple's store, Facebook continued anyway -- with another app that performed the same function. Not good.

Second, there is the moral issue of using the youngest users as spies... persons who arguably have the lease experience and skills at reading complex documents: corporate terms-of-use and privacy policies. I wonder how many teenagers notified their friends of the spying and data collection. How many teenagers fully understood what they were doing? How many parents were aware of the activity and payments? How many parents notified the parents of their children's friends? How many teens installed the spyware on both their iPhones and iPads? Lots of unanswered questions.

Third, Apple responded quickly. TechCrunch reported Wednesday morning:

"... Apple blocked Facebook’s Research VPN app before the social network could voluntarily shut it down... Apple tells TechCrunch that yesterday evening it revoked the Enterprise Certificate that allows Facebook to distribute the Research app without going through the App Store."

Facebook's usage of the Enterprise Certificate is significant. TechCrunch also published a statement by Apple:

"We designed our Enterprise Developer Program solely for the internal distribution of apps within an organization... Facebook has been using their membership to distribute a data-collecting app to consumers, which is a clear breach of their agreement with Apple. Any developer using their enterprise certificates to distribute apps to consumers will have their certificates revoked..."

So, the Research app violated Apple's policy. Not good. The app also performs similar functions as the banned Onavo VPN app. Worse. This sounds like an end-run to me. So as punishment for its end-run actions, Apple temporarily disable the certificates for internal corporate apps.

Axios described very well Facebook's behavior:

"Facebook took a program designed to let businesses internally test their own app and used it to monitor most, if not everything, a user did on their phone — a degree of surveillance barred in the official App Store."

And the animated Facebook image in the Axios article sure looks like a liar-liar-logo-on-fire image. LOL! Pure gold! Seriously, Facebook's behavior indicates questionable ethics, and/or an expectation of not getting caught. Reportedly, the internal apps which were shut down included shuttle schedules, campus maps, and company calendars. After that, some Facebook employees discussed quitting.

And, it raises more questions. Which Facebook executives approved Project Atlas? What advice did Facebook's legal staff provide prior to approval? Was that advice followed or ignored?

Google logo Fourth, TechCrunch also reported:

"Facebook’s Research program will continue to run on Android."

What? So, Google devices were involved, too. Is this spy program okay with Google executives? A follow-up report on Wednesday by TechCrunch:

"Google has been running an app called Screenwise Meter, which bears a strong resemblance to the app distributed by Facebook Research that has now been barred by Apple... Google invites users aged 18 and up (or 13 if part of a family group) to download the app by way of a special code and registration process using an Enterprise Certificate. That’s the same type of policy violation that led Apple to shut down Facebook’s similar Research VPN iOS app..."

Oy! So, Google operates like Facebook. Also reported by TechCrunch:

"The Screenwise Meter iOS app should not have operated under Apple’s developer enterprise program — this was a mistake, and we apologize. We have disabled this app on iOS devices..."

So, Google will terminate its spy program on Apple devices, but continue its own program with Facebook. Hmmmmm. Well, that answers some questions. I guess Google executives are okay with this spy program. More questions remain.

Fifth, Facebook tried to defend the Research app and its actions in an internal memo to employees. On Thursday, TechCrunch tore apart the claims in an internal Facebook memo from vice president Pedro Canahuati. Chiefly:

"Facebook claims it didn’t hide the program, but it was never formally announced like every other Facebook product. There were no Facebook Help pages, blog posts, or support info from the company. It used intermediaries Applause and CentreCode to run the program under names like Project Atlas and Project Kodiak. Users only found out Facebook was involved once they started the sign-up process and signed a non-disclosure agreement prohibiting them from discussing it publicly... Facebook claims it wasn’t “spying,” yet it never fully laid out the specific kinds of information it would collect. In some cases, descriptions of the app’s data collection power were included in merely a footnote. The program did not specify data types gathered, only saying it would scoop up “which apps are on your phone, how and when you use them” and “information about your internet browsing activity.” The parental consent form from Facebook and Applause lists none of the specific types of data collected...

So, Research app participants (e.g., teenagers, parents) couldn't discuss nor warn their friends (and their friends' parents) about the data collection. I strongly encourage everyone to read the entire TechCrunch analysis. It is eye-opening.

Sixth, a reader shared concerns about whether Facebook's actions violated federal laws. Did Project Atlas violate the Digital Millennium Copyright Act (DMCA); specifically the "anti-circumvention" provision, which prohibits avoiding the security protections in software? Did it violate the Computer Fraud and Abuse Act? What about breach-of-contract and fraud laws? What about states' laws? So, one could ask similar questions about Google's actions, too.

I am not an attorney. Hopefully, some attorneys will weigh in on these questions. Probably, some skilled attorneys will investigate various legal options.

All of this is very disturbing. Is this what consumers can expect of Silicon Valley firms? Is this the best tech firms can do? Is this the low level the United States has sunk to? Kudos to the TechCrunch staff for some excellent reporting.

What are your opinions of Project Atlas? Of Facebook's behavior? Of Google's?


Samsung Phone Owners Unable To Delete Facebook And Other Apps. Anger And Privacy Concerns Result

Some consumers have learned that they can't delete Facebook and other mobile apps from their Samsung smartphones. Bloomberg described one consumer's experiences:

"Winke bought his Samsung Galaxy S8, an Android-based device that comes with Facebook’s social network already installed, when it was introduced in 2017. He has used the Facebook app to connect with old friends and to share pictures of natural landscapes and his Siamese cat -- but he didn’t want to be stuck with it. He tried to remove the program from his phone, but the chatter proved true -- it was undeletable. He found only an option to "disable," and he wasn’t sure what that meant."

Samsung phones operate using Google's Android operating system (OS). The "chatter" refers to online complaints by Samsung phone owners. There were plenty of complaints, ranging from snarky:

To informative:

And:

Some persons shared their (understandable) anger:

One person reminded consumers of bigger issues with Android OS phones:

And, that privacy concern still exists. Sophos Labs reported:

"Advocacy group Privacy International announced the findings in a presentation at the 35th Chaos Computer Congress late last month. The organization tested 34 apps and documented the results, as part of a downloadable report... 61% of the apps tested automatically tell Facebook that a user has opened them. This accompanies other basic event data such as an app being closed, along with information about their device and suspected location based on language and time settings. Apps have been doing this even when users don’t have a Facebook account, the report said. Some apps went far beyond basic event information, sending highly detailed data. For example, the travel app Kayak routinely sends search information including departure and arrival dates and cities, and numbers of tickets (including tickets for children)."

After multiple data breaches and privacy snafus, some Facebook users have decided to either quit the Facebook mobile app or quit the service entirely. Now, some Samsung phone users have learned that quitting can be more difficult, and they don't have as much control over their devices as they thought.

How did this happen? Bloomberg explained:

"Samsung, the world’s largest smartphone maker, said it provides a pre-installed Facebook app on selected models with options to disable it, and once it’s disabled, the app is no longer running. Facebook declined to provide a list of the partners with which it has deals for permanent apps, saying that those agreements vary by region and type... consumers may not know if Facebook is pre-loaded unless they specifically ask a customer service representative when they purchase a phone."

Not good. So, now we know that there are two classes of mobile apps: 1) pre-installed and 2) permanent. Pre-installed apps come on new devices. Some pre-installed apps can be deleted by users. Permanent mobile apps are pre-installed apps which cannot be removed/deleted by users. Users can only disable permanent apps.

Sadly, there's more and it's not only Facebook. Bloomberg cited other agreements:

"A T-Mobile US Inc. list of apps built into its version of the Samsung Galaxy S9, for example, includes the social network as well as Amazon.com Inc. The phone also comes loaded with many Google apps such as YouTube, Google Play Music and Gmail... Other phone makers and service providers, including LG Electronics Inc., Sony Corp., Verizon Communications Inc. and AT&T Inc., have made similar deals with app makers..."

This is disturbing. There seem to be several issues:

  1. Notice: consumers should be informed before purchase of any and all phone apps which can't be removed. The presence of permanent mobile apps suggests either a lack of notice, notice buried within legal language of phone manufacturers' user agreements, or both.
  2. Privacy: just because a mobile app isn't running doesn't mean it isn't operating. Stealth apps can still collect GPS location and device information while running in the background; and then transmit it to manufacturers. Hopefully, some enterprising technicians or testing labs will verify independently whether "disabled" permanent mobile apps have truly stopped working.
  3. Transparency: phone manufacturers should explain and publish their lists of partners with both pre-installed and permanent app agreements -- for each device model. Otherwise, consumers cannot make informed purchase decisions about phones.
  4. Scope: the Samsung-Facebook pre-installed apps raises questions about other devices with permanent apps: phones, tablets, laptops, smart televisions, and automotive vehicles. Perhaps, some independent testing by Consumer Reports can determine a full list of devices with permanent apps.
  5. Nothing is free. Pre-installed app agreements indicate another method which device manufacturers use to make money, by collecting and sharing consumers' data with other tech companies.

The bottom line is trust. Consumers have more valid reasons to distrust some device manufacturers and OS developers. What issues do you see? What are your thoughts about permanent mobile apps?


To Estimate The Value Of Facebook, A Study Asked How Much Money Users Would Demand As Payment To Quit The Service

Facebook logo What is the value of Facebook to its users? In a recent study, researchers explored answers to that question:

"Because [Facebook] users do not pay for the service, its benefits are hard to measure. We report the results of a series of three non-hypothetical auction experiments where winners are paid to deactivate their Facebook accounts for up to one year..."

The study was published in PLOS One, a peer-reviewed journal by the Public Library of Science. The study is important and of interest to economists because:

"... If Facebook were a country, it would be the world’s largest in terms of population with over 2.20 billion monthly active users, 1.45 billion of whom are active on a daily basis, spending an average of 50 minutes each day on Facebook-owned platforms (e.g., Facebook, Messenger, Instagram)... Despite concerns about loss of relevance due to declining personal posts by users, diminished interest in adoption and use by teens and young adults, claims about potential manipulation of its content for political purposes, and leaks that question the company’s handling of private user data, Facebook remains the top social networking site in the world and the third most visited site on the Internet after Google and YouTube...  Since its launch in 2004, Facebook has redefined how we communicate... Facebook had 23,165 employees as of September 30, 2017. This is less than 1% the number employed by Walmart, the world’s largest private employer... Because Facebook’s users pay nothing for the service, Facebook does not contribute directly to gross domestic product (GDP), economists’ standard metric of a nation’s output. In this context, it may seem surprising then that Facebook is the world’s fifth most valuable company with a market capitalization of $541.56 billion in May 2018... In 2017, the company had $40.65 billion in revenues, primarily from advertising, and $20.20 billion in net income..."

The detailed methodology of the study included:

"... a Vickrey second-price approach. In a typical experimental auction, participants bid to purchase a good or service. The highest bidder wins the auction and pays a price equal to the second-highest bid. This approach is designed such that participants’ best strategy is to bid their true willingness-to-pay... Because our study participants already had free access to Facebook, we could not ask people how much they would be willing to pay for access to the service. Instead, people bid for how much they would need in compensation to give up using Facebook. Economists have used these “willingness-to-accept” (WTA) auctions to assess the value of mundane items such as pens and chocolate bars, but also more abstract or novel items such as food safety, goods free of genetically modified ingredients, the stigma associated with HIV, battery life in smartphones, and the payment people require to endure an unpleasant experience... In this study, each bid can be interpreted as the minimum dollar amount a person would be willing to accept in exchange for not using Facebook for a given time period. The three auctions differ in the amount of time winners would have to go without using Facebook..."

The authors also discussed "consumer surplus," an economics term defined as:

"... a measure of value equal to the difference between the most a consumer would be willing to pay for a service and the price she actually pays to use it. When considering all consumers, Figure 1 below shows consumer surplus is the area under the demand curve, which shows consumers’ willingness to pay, and above the price; it is generally interpreted as consumers’ net benefit from being able to access a good or service in the marketplace. GDP, by contrast, is the market value of all final goods and services produced domestically in a given year..."

Journal.pone.0207101.g001

For comparison, the researchers cited related studies:

"... Bapna, Jank, and Shmueli [24] found that eBay users received a median of $4 in consumer surplus per transaction in 2003, or $7 billion in total. Ghose, Smith, and Telang [25] found that Amazon’s used-book market generated $67 million in annual consumer surplus. Brynjolfsson, Hu, and Smith [26] found that the increased variety of books available on Amazon created $1 billion in consumer surplus in 2000. Widening the lens to focus on the entire Internet, Greenstein and McDevitt [27] found that high-speed Internet access (as opposed to dial-up) generated $4.8 billion to $6.7 billion of consumer surplus in total between 1999 and 2006. Dutz, Orszag, and Willig [28] estimated that high-speed internet access generated $32 billion in consumer surplus in 2008 alone..."

Across the three auctions, study participants submitted bids ranging from $1,130 to $2,076 on average. The researchers found:

"... across all three samples, the mean bid to deactivate Facebook for a year exceeded $1,000. Even the most conservative of these mean WTA estimates, if applied to Facebook’s 214 million U.S. users, suggests an annual value of over $240 billion to users... Facebook reached a market capitalization of $542 billion in May 2018. At 2.20 billion active users in March 2018, this suggests a value to investors of almost $250 per user, which is less than one fourth of the annual value of [payments demanded by study participants to quit the service]. This reinforces the idea that the vast majority of benefits of new inventions go not to the inventors but to users."

To summarize, users in the study demanded at least $1,000 yearly each to quit the service. That's a measure of the value of Facebook to users. And, that value far exceeds the $250 value of each user to investors. The authors concluded:

"Concerns about data privacy, such as Cambridge Analytica’s alleged problematic handling of users’ private information, which are thought to have been used to influence the 2016 United States presidential election, only underscore the value Facebook’s users must derive from the service. Despite the parade of negative publicity surrounding the Cambridge Analytica revelations in mid-March 2018, Facebook added 70 million users between the end of 2017 and March 31, 2018. This implies the value users derive from the social network more than offsets the privacy concerns."

The conclusion suggests that the risk of a mass exodus of users is unlikely. I guess Facebook executives will find some comfort in that. However, more research is needed. Different sub-groups of users might demand different values. For example, a sub-group of users who have had their accounts hacked or cloned might demand a different -- perhaps lower -- annual payment amount to quit Facebook.

Another sub-group of users who have been identity theft and fraud victims might demand a higher annual payment to cover the costs of credit monitoring services and/or fraud resolution fees. A third sub-group -- parents and grandparents -- might demand a different payment amount due to the loss of access to family, children and grandchildren.

A one-size-fits-all approach to a WTA value doesn't seem very relevant. Follow-up studies could explore values by these sub-groups and by users with different types of behaviors (e.g., dissatisfaction levels):

  1. Quit the service's mobile apps and use only its browser interface,
  2. Reduced their time on the site (e.g., fewer posts, not using quizzes, not posting photos, not using Facebook Messenger, etc.),
  3. Daily usage ranges (e.g., less than 30 minutes, 31 to 59 minutes,, 60 to 79 minutes, 80 to 99 minutes, 100 minutes or more, etc.),
  4. Disabled the API interface with their accounts (e.g., don't user Facebook credentials to sign into other sites), and
  5. Tightened their privacy settings to display less (e.g., don't display Friends list, suppress personal newsfeed, don't display personal data, don't allow friends to post to their personal newsfeed page, etc.).

Clearly, more research is needed. Would you quit Facebook? If so, how much money would you demand as payment? What follow-up studies are you interested in?