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Facebook Roundup: Regulatory Matters a Constant Headache
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The list of governments and their lists of concerns about Facebook continue to grow even as the company does everything possible to remain dominant and generate solid results quarter upon quarter.
Investors love the solid results part while remaining wary of government actions and user reactions. With that being the background, let’s see what recent regulatory challenges have been thrown up.
But first, some good news. Facebook has won an appeal at a Dusseldorf court that overturns an order by the Bundeskartellamt, which is Germany’s federal cartel office (FCO). The order sought to use existing law to restrain Facebook from combining data it was collecting across its Facebook, Instagram and WhatsApp platforms and change its terms and conditions accordingly.
The existing law provides separately for privacy-related violations and abuse of dominant position. The FCO was trying to combine the provisions to make the privacy violation a part of the antitrust complaint.
However, it failed because the Dusseldorf court didn’t agree that privacy violations by a dominant platform automatically led to antitrust issues. It also found that users agreed of their own volition to Facebook’s terms and conditions and that because they weren’t barred from sharing that same data with other companies, the anti-competitive complaint didn’t hold water.
This was for once a timely intervention, because once Facebook combines the data pools it will become more difficult to split the company. But now the case will be stuck in appeals for years. Governments have had a hard time taking big technology companies to task because the legal process is lengthy. And like other big technology companies, Facebook spends considerably on lobbying ($12.6 million in 2018, up 45% from 2016 and up 60X from 2009, CNBC reports).
Here are the other stories-
Cambridge Analytica Update
According to a string of emails that were recently brought into the public domain, it appears that Facebook staff suspected improper/illegal data scraping by Cambridge Analytica in September 2015, two months before the Guardian published its article exposing the data breach.
The company maintains that it and Mark Zuckerberg were unaware of these “unconfirmed rumors” until the Guardian article, standing by the company’s statement to legal prosecutors.
It’s significant that the so-called scraping was common among the “sketchy apps” referred to in the emails. It didn’t arouse excitement at Facebook because it was more or less business as usual.
2018 Data Breach Update
In a recent filing in the San Francisco District Court, Facebook users say that the company was aware of the access token vulnerability that led to the massive breach of 29 million user accounts in September last year. But while the company took measures to protect its own employees, it left user accounts to fate.
As a result, hackers stole profile information like birth dates, employers, education history, religious preference, types of devices used, pages followed and recent searches and location check-ins from 14 million users. The remaining 15 million users were luckier, they had just their name and contact details stolen although around 400,000 of them had posts and friends lists exposed.
Unashamed Eavesdropping
Bloomberg recently broke a story about how Facebook uses humans to transcribe some conversations between its Messenger users. Once caught, Facebook said it is a system widely used by technology companies like Apple (AAPL - Free Report) , Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) and Microsoft (MSFT - Free Report) to improve their artificial intelligence systems.
The company said it has now stopped the practice, as did Google and some others. Amazon said it has given users the right to opt out. Moreover, Facebook said it made sure that conversations were anonymized and user permissions taken before it acted.
Although the company said this affected U.S. users and not those in the EU, Ireland's Data Protection Commission, its lead regulator in the region, is seeking information on the matter. "Further to our ongoing engagement with Google, Apple and Microsoft in relation to the processing of personal data in the context of the manual transcription of audio recordings, we are now seeking detailed information from Facebook on the processing in question and how Facebook believes that such processing of data is compliant with their GDPR obligations," it said.
EU Regulators Investigating Libra
Reuters and Bloomberg have reported that the European Commission appears to be laying the ground for a full-blown formal investigation into the Facebook-led digital currency called Libra.
According to people familiar with the matter, the EC has sent out a questionnaire to parties involved in Libra that they have two-to-three weeks to return.
Most investigations of technology companies start out these days with privacy or competition-related concerns, and this one doesn’t appear to be any different. In this particular case, there are the additional fears of money laundering and terrorist financing.
The questionnaire included the line "The Commission is in particular concerned about the possible competition restrictions that may result from the Association, especially with regard to information that will be exchanged and the use of consumer data." So the scheme's governance structure and its ability/willingness to accept offerings that compete with Facebook appear to be some of the things being studied.
The integration of Libra-backed applications into Facebook services such as WhatsApp and Messenger are also on the radar.
The EU can fine companies up to 10% of their global turnover for breaching its antitrust rules while also ordering them to change their business practices.
The Libra initiative was started with 28 partners through a Geneva-based organization called the Libra Association, in charge of governing the new digital coin slated to launch in the first half of 2020.
FTC Not Averse to Breaking Up Tech Companies
Federal Trade Commission (FTC) chief Joe Simons has said that he isn’t averse to splitting up large technology companies by withdrawing approval to mergers that were earlier approved.
The FTC along with the Justice department are investigating large technology companies to see if they have been abusing their dominant positions as widely believed.
In Facebook’s case, the FTC is particularly focused on understanding if the company acquired photo sharing app Instagram and messaging app WhatsApp for the purpose of eliminating competition (the main argument against those acquisitions), in addition to privacy violations by combining data from the three platforms.
Facebook co-founder Chris Hughes is one of the people speaking against Facebook. But such moves are easier said than done as Simons himself said: “It’s not ideal because it’s very messy. But if you have to, you have to.” But an FTC decision itself won’t be binding. The decision will require court approval, when Facebook will have the chance to make its favorite defense that its size helps it devote resources for security and privacy of consumers.
Ending On A Positive Note
Associated Press reports that Facebook is all set to launch its “clear history” tool that it promised a year ago although it has been rechristened as “off-Facebook activity.” The feature will allow users to delete the information Facebook collects on the things they read or share on apps outside Facebook.
This means that the ads that you see on Facebook could be less relevant to your needs. What it doesn’t mean is that you will see fewer ads or that there will be a change in the way it shares information with advertisers. Because all the tool promises is that Facebook will know less about you, which is what all the hue and cry is about.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Facebook Roundup: Regulatory Matters a Constant Headache
The list of governments and their lists of concerns about Facebook continue to grow even as the company does everything possible to remain dominant and generate solid results quarter upon quarter.
Investors love the solid results part while remaining wary of government actions and user reactions. With that being the background, let’s see what recent regulatory challenges have been thrown up.
But first, some good news. Facebook has won an appeal at a Dusseldorf court that overturns an order by the Bundeskartellamt, which is Germany’s federal cartel office (FCO). The order sought to use existing law to restrain Facebook from combining data it was collecting across its Facebook, Instagram and WhatsApp platforms and change its terms and conditions accordingly.
The existing law provides separately for privacy-related violations and abuse of dominant position. The FCO was trying to combine the provisions to make the privacy violation a part of the antitrust complaint.
However, it failed because the Dusseldorf court didn’t agree that privacy violations by a dominant platform automatically led to antitrust issues. It also found that users agreed of their own volition to Facebook’s terms and conditions and that because they weren’t barred from sharing that same data with other companies, the anti-competitive complaint didn’t hold water.
This was for once a timely intervention, because once Facebook combines the data pools it will become more difficult to split the company. But now the case will be stuck in appeals for years. Governments have had a hard time taking big technology companies to task because the legal process is lengthy. And like other big technology companies, Facebook spends considerably on lobbying ($12.6 million in 2018, up 45% from 2016 and up 60X from 2009, CNBC reports).
Here are the other stories-
Cambridge Analytica Update
According to a string of emails that were recently brought into the public domain, it appears that Facebook staff suspected improper/illegal data scraping by Cambridge Analytica in September 2015, two months before the Guardian published its article exposing the data breach.
The company maintains that it and Mark Zuckerberg were unaware of these “unconfirmed rumors” until the Guardian article, standing by the company’s statement to legal prosecutors.
It’s significant that the so-called scraping was common among the “sketchy apps” referred to in the emails. It didn’t arouse excitement at Facebook because it was more or less business as usual.
2018 Data Breach Update
In a recent filing in the San Francisco District Court, Facebook users say that the company was aware of the access token vulnerability that led to the massive breach of 29 million user accounts in September last year. But while the company took measures to protect its own employees, it left user accounts to fate.
As a result, hackers stole profile information like birth dates, employers, education history, religious preference, types of devices used, pages followed and recent searches and location check-ins from 14 million users. The remaining 15 million users were luckier, they had just their name and contact details stolen although around 400,000 of them had posts and friends lists exposed.
Unashamed Eavesdropping
Bloomberg recently broke a story about how Facebook uses humans to transcribe some conversations between its Messenger users. Once caught, Facebook said it is a system widely used by technology companies like Apple (AAPL - Free Report) , Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) and Microsoft (MSFT - Free Report) to improve their artificial intelligence systems.
The company said it has now stopped the practice, as did Google and some others. Amazon said it has given users the right to opt out. Moreover, Facebook said it made sure that conversations were anonymized and user permissions taken before it acted.
Although the company said this affected U.S. users and not those in the EU, Ireland's Data Protection Commission, its lead regulator in the region, is seeking information on the matter. "Further to our ongoing engagement with Google, Apple and Microsoft in relation to the processing of personal data in the context of the manual transcription of audio recordings, we are now seeking detailed information from Facebook on the processing in question and how Facebook believes that such processing of data is compliant with their GDPR obligations," it said.
EU Regulators Investigating Libra
Reuters and Bloomberg have reported that the European Commission appears to be laying the ground for a full-blown formal investigation into the Facebook-led digital currency called Libra.
According to people familiar with the matter, the EC has sent out a questionnaire to parties involved in Libra that they have two-to-three weeks to return.
Most investigations of technology companies start out these days with privacy or competition-related concerns, and this one doesn’t appear to be any different. In this particular case, there are the additional fears of money laundering and terrorist financing.
The questionnaire included the line "The Commission is in particular concerned about the possible competition restrictions that may result from the Association, especially with regard to information that will be exchanged and the use of consumer data." So the scheme's governance structure and its ability/willingness to accept offerings that compete with Facebook appear to be some of the things being studied.
The integration of Libra-backed applications into Facebook services such as WhatsApp and Messenger are also on the radar.
The EU can fine companies up to 10% of their global turnover for breaching its antitrust rules while also ordering them to change their business practices.
The Libra initiative was started with 28 partners through a Geneva-based organization called the Libra Association, in charge of governing the new digital coin slated to launch in the first half of 2020.
FTC Not Averse to Breaking Up Tech Companies
Federal Trade Commission (FTC) chief Joe Simons has said that he isn’t averse to splitting up large technology companies by withdrawing approval to mergers that were earlier approved.
The FTC along with the Justice department are investigating large technology companies to see if they have been abusing their dominant positions as widely believed.
In Facebook’s case, the FTC is particularly focused on understanding if the company acquired photo sharing app Instagram and messaging app WhatsApp for the purpose of eliminating competition (the main argument against those acquisitions), in addition to privacy violations by combining data from the three platforms.
Facebook co-founder Chris Hughes is one of the people speaking against Facebook. But such moves are easier said than done as Simons himself said: “It’s not ideal because it’s very messy. But if you have to, you have to.” But an FTC decision itself won’t be binding. The decision will require court approval, when Facebook will have the chance to make its favorite defense that its size helps it devote resources for security and privacy of consumers.
Ending On A Positive Note
Associated Press reports that Facebook is all set to launch its “clear history” tool that it promised a year ago although it has been rechristened as “off-Facebook activity.” The feature will allow users to delete the information Facebook collects on the things they read or share on apps outside Facebook.
This means that the ads that you see on Facebook could be less relevant to your needs. What it doesn’t mean is that you will see fewer ads or that there will be a change in the way it shares information with advertisers. Because all the tool promises is that Facebook will know less about you, which is what all the hue and cry is about.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>