Zuckerberg was in the EU this week to answer legislators’ questions, the first GDPR cases were filed against Facebook (FB - Free Report) and the company launched a labeling system for political ads and news in the U.S.
Zuckerberg Show in Europe Looks Like a Sham
Zuckerberg is getting really good at skirting around relevant questions and avoiding showdowns (such as with the UK). The Facebook CEO spent an hour and a half with EU regulators wherein he first delivered an apology speech, after which parliamentarians questioned him and then there was a final session during which he made an attempt at answering the questions by mostly repeating what he had already said in his introductory statement. The meeting format, facilitated by the EU parliament's president Antonio Tajani, was an interesting choice given the way it prevented any back and forth between legislators and Facebook.
The 2.7 million users, whose data was shared improperly with Cambridge Analytica just because they were using Facebook, aren’t going to get any compensation. That’s because “no bank account details, credit card information or national ID numbers were shared,” reads a Facebook statement in response to the EU’s concerns. The only things shared were relatively public information like the users’ public profile, their page likes, friends list and birthday. Zuckerberg & Co. figure that the company doesn’t owe anything for what it admits was a breach of trust.
On sharing data between Facebook and WhatsApp, it piously claimed that it was necessary to help fight abusive content or spam on its services.
Meanwhile, users in Amsterdam formed what they called a 'Datavakbond' or "data labor union," to negotiate directly with Facebook and Google on data usage matters and also perhaps push for the creation of a paid service that wouldn’t collect data. The group demands “reasonable compensation, or at least better working conditions” for the data supplied. Although based in the Netherlands, the union is looking to rope in users from across the world.
First GDPR Complaints
Long-time Facebook critic Max Schrems wasted no time in filing complaints under GDPR against Facebook, Facebook-owned Instagram, Facebook-owned WhatsApp and Google's Android on behalf of unnamed individual users. The complaints were filed through his not for profit organization called noyb (none of your business) with data protection agencies in Austria, Belgium, France and Hamburg in Germany since these countries already have data protection agencies with a strong record of defending privacy rights.
The bone of contention is forced consent, i.e. Facebook blocking users that don’t consent to data collection. Since the law requires that compulsory consent can only be obtained where it is necessary for the provision of the service, courts will now be required to clarify whether targeted advertising is a strictly necessary part of providing a social networking service. If guilty, it may be liable for a fine of up to 4% of its global revenue.
The Facebook response, through chief privacy officer, Erin Egan was: "We have prepared for the past 18 months to ensure we meet the requirements of the GDPR. We have made our policies clearer, our privacy settings easier to find and introduced better tools for people to access, download, and delete their information. Our work to improve people's privacy doesn't stop on May 25th. For example, we're building Clear History: a way for everyone to see the websites and apps that send us information when you use them, clear this information from your account, and turn off our ability to store it associated with your account going forward."
So in a way, Facebook admitted that everything required to be GDPR compliant wasn’t completed by May 25 but it was promising compliance sometime soon. Lawmakers may consider its approach given that the scope and scale of the new law doesn’t have any precedent.
This is just the beginning of a new era as promised by noyb, which was set up with the sole purpose of “strategic litigation” around the EU’s GDPR policy.
Labeling Political Ads/News
Facebook has launched an initiative in the U.S. that will see all political ads and content, including from reputed news publishers containing the “paid for by” label. Clicking on the label takes users to an archive of records about who paid for the content as well as the location, age and gender of people that saw it. Facebook is including not just political content but also around 20 “issues” that play a role in elections such as abortion, guns, immigration and foreign policy.
The News Media Alliance, representing about 2,000 publishers including the Washington Post and the Wall Street Journal isn’t thrilled because its members don’t appreciate being lumped with “lesser” organizations that might however be reporting the truth.
“Your plan to group quality publishers alongside political advocacy, which the ad archive will do, dangerously blurs the lines between real reporting and propaganda,” the group’s CEO David Chavern said in a letter to Zuckerberg. “This treatment of quality news as political, even in the context of marketing, is deeply problematic.” One might wonder what the problem is with labelling political news as such, but there’s a reason for this approach: the group wants the creation of an elite club that will admit them to hide their funding sources but not others’.
Facebook representatives initially said that they would deal with news publishers separately and not through News Media Alliance and also that they had made good progress with them. But Bloomberg reported that within hours of its publishing the news along with the opposition from the News Media Alliance, Facebook decided to rethink the plan. Talk about politics!
Facebook Home Services
Facebook added home services to its marketplaces through partnerships with Handy, HomeAdvisor and Porch. The service lists home service professionals (along with reviews, locations and credentials) who can also be contacted through Facebook Messenger.
Deb Liu, vice president of Facebook’s Marketplace says that “More people ask for recommendations related to home services on Facebook in the US than any other topic. Since the beginning of the year, millions of people have asked their friends for suggestions related to home services, such as house cleaners, plumbers and contractors.” Facebook must be listening closely.
Russia to Investigate Facebook, WhatsApp
The TASS news agency reports that Russia’s telecommunications watchdog Roskomnadzor is investigating Facebook and WhatsApp to see if the companies are in compliance with a Russian law that requires the location of user data on Russian servers. The investigation is expected to be completed by December.
Facebook has a Zacks Rank #3 (Hold). Other Internet service stocks worth buying instead include Autohome (ATHM - Free Report) , Baidu (BIDU - Free Report) , Match Group (MTCH - Free Report) , The Trade Desk (TTD - Free Report) , 21Vianet (VNET - Free Report) and Akamai (AKAM - Free Report) . You can also see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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