Facebook and Google Privacy

Systems

ESSENTIALS OF
Management Information Systems 14e
KENNETH C. LAUDON AND JANE P. LAUDON

CHAPTER 4 ETHICAL, SOCIAL, AND POLITICAL ISSUES IN E-COMMERCE

CASE 2 Facebook and Google Privacy

SUMMARY The business model of many tech companies like Facebook and Google is to collect as much
personal information on its users as is technically possible, and socially acceptable, and then
to sell that information to advertisers in the form of targeted advertising on Web sites and
mobile apps, and on partner Web sites, who use the information to personalize ads. These
videos provide some suggestions for how users can gain greater control over their personal
information that they have placed online.

(a) Setting Facebook privacy controls
URL https://www.youtube.com/watch?v=IWlyut4zsko; L=4:21

(b) Google, Privacy and What It Means For You
URL https://www.youtube.com/watch?v=V7M_FOhXXKM; L=3:18

CASE In a 2010 interview, Mark Zuckerberg, the founder of Facebook, proclaimed that the “age
of privacy” had to come to an end. According to Zuckerberg, social norms had changed
and people were no longer worried about sharing their personal information with friends,
friends of friends, or even the entire Web. This view is in accordance with Facebook’s
broader goal, which is, according to Zuckerberg, to make the world a more open and
connected place. Supporters of Zuckerberg’s viewpoint, including fellow tech titan Google,
believe the 21st century is an age of “information exhibitionism,” a new era of openness and
transparency.

continued

CHAPTER 4, CASE 2 FACEBOOK AND GOOGLE PRIVACY 2

continued

Facebook has a long history of invading the personal privacy of its users. In fact, the very
foundation of Facebook’s business model is to sell the personal private information of its
users to advertisers. In essence, Facebook is like any broadcast or cable television service
that uses entertainment to attract large audiences, and then once those audiences are in
place, to sell air time to advertisers in 30 to 60 second blocks. Of course, television broad-
casters do not have much if any personal information on their users, and in that sense are
much less of a privacy threat. Facebook, with 1.71 billion users worldwide, clearly attracts a
huge audience.

Although Facebook started out at Harvard and other campuses with a simple privacy
policy of not giving anyone except friends access to your profle, this quickly changed as its
founder Mark Zuckerberg realized the revenue-generating potential of a social networking
site open to the public.

In 2007 Facebook introduced the Beacon program, which was designed to broadcast users’
activities on participating Web sites to their friends. Class-action suits followed. Facebook
initially tried to mollify members by making the program “opt in” but this policy change
was discovered to be a sham, as personal information continued to fow from Facebook to
various Web sites. Facebook fnally terminated the Beacon program in 2009, and paid $9.5
million to settle the class-action suits.

In 2009, undeterred by the Beacon fasco, Facebook unilaterally decided that it would
publish users’ basic personal information on the public Internet, and announced that what-
ever content users had contributed belonged to Facebook, and that its ownership of that
information never terminated. However, as with the Beacon program, Facebook’s eforts
to take permanent control of user information resulted in users joining online resistance
groups and it was ultimately forced to withdraw this policy as well. The widespread user
unrest prompted Facebook to propose a new Facebook Principles and Statement of Rights
and Responsibilities, which was approved by 75 percent of its members, who voted in an
online survey. However, the resulting privacy policy was so complicated that many users
preferred the default “share” setting to working through over 170 privacy options.

In 2009, Facebook also introduced the Like button, and in 2010 extended it to third-party
Web sites to alert Facebook users to their friends’ browsing and purchases. In 2011, it began
publicizing users’ “likes” of various advertisers’ products in Sponsored Stories (i.e., advertise-
ments) that included the users’ names and profle pictures without their explicit consent,
without paying them, and without giving them a way to opt out. This resulted in yet another
class-action lawsuit, which Facebook settled for $20 million in June 2012. As part of the
settlement, Facebook agreed to make it clear to users that information like their names
and profle pictures might be used in Sponsored Stories, and also give users and parents of
minor children greater control over how that personal information is used.

CHAPTER 4, CASE 2 FACEBOOK AND GOOGLE PRIVACY 3

continued

VIDEO CASE
Q U E S T I O N S

In 2011, Facebook enrolled all Facebook subscribers into its facial recognition program
without asking anyone. When a user uploads photos, the software recognizes the faces,
tags them, and creates a record of that person/photo. Later, users can retrieve all photos
containing an image of a specifc friend. Any existing friend can be tagged, and the soft-
ware suggests the names of friends to tag when you upload the photos. This too raised the
privacy alarm, forcing Facebook to make it easier for users to opt out. But concerns remain.

In May 2012, Facebook went public, creating more pressure on it to increase revenues and
profts to justify its stock market value. Shortly thereafter, Facebook announced that it was
launching a new mobile advertising product that will push ads to the mobile news feeds of
users based on the apps they use through the Facebook Connect feature, without explicit
permission from the user to do so. Facebook reportedly may also decide to track what
people do on their apps. It also announced Facebook Exchange, a new program that will
allow advertisers to serve ads to Facebook users based on their browsing activity while not
on Facebook.

In 2013 and 2014, Facebook actions continued to raise alarms about privacy, with a CNBC
survey fnding that Facebook is the technology company that consumers fear most when
it comes to privacy. Although Facebook continues to come under scrutiny from the Federal
Trade Commission and privacy watchdog groups, Facebook’s stock price has climbed
steadily from 2013 to 2017, and it’s unlikely the company will stop pushing the envelope
anytime soon.

Not to be outdone, Google has also taken liberties with user information, with services like
Google Street View taking pictures of your neighborhood without consent, advertisements
served using the content of your Gmail messages (though Google claims the content is
anonymized), and pervasive tracking cookies following you across the Internet. Echoing
Mark Zuckerberg, Google CEO Eric Schmidt has stated that “true transparency and no
anonymity” is the best policy for Internet users.

1. Do people who use Facebook have a legitimate claim to privacy when they themselves are
posting information about themselves?

2. How can using the sharing privacy controls help preserve your privacy on Facebook? In
what ways is the sharing control inefective?

3. Why would Google combining information from separate accounts across its services
and sites have privacy implications for its users?

4. Look up your address on Google Street View. Do you believe Google Street View consti-
tutes a breach of privacy? Why or why not?

4 CHAPTER 4, CASE 2 FACEBOOK AND GOOGLE PRIVACY

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