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Spain slaps Facebook with €1.2 million fine for breaking privacy laws

September 12, 2017

Spain’s data protection watchdog has fined Facebook €1.2 million euros (roughly $1.44 million), after it found three instances when it collected personal data on its Spanish users without informing them of how it was to be used.

The judgement is the latest in a series of legal issues that have befallen the social media giant. According to Mark Scott, Politico’s Chief Politics correspondent, the French, German, and Dutch governments are also looking into how Facebook holds and uses data pertaining to their citizens.

The Spanish data protection authority said that Facebook’s privacy policy contains “generic and unclear terms,” and doesn’t go far enough to collect the consent of its users.

Facebook will likely appeal this ruling. It previously overturned a similar judgement in Belgium, having successfully argued that its base in Ireland means that it’s only subject to Irish law.

€1.2 million euros barely constitutes a slap on the wrist for a company that has Q2 revenues of $9.32 billion. That said, it’s probably relieved the ruling came before the introduction of the tough new GDPR rules, which could have seen the company fined a percentage of its global annual turnover.

We’ve reached out to Facebook, and will update this post if we hear back from it.

“We take note of the DPA’s decision with which we respectfully disagree. Whilst we value the opportunities we’ve had to engage with the DPA to reinforce how seriously we take the privacy of people who use Facebook, we intend to appeal this decision.

“As we made clear to the DPA, users choose which information they want to add to their profile and share with others, such as their religion. However, we do not use this information to target adverts to people.”

“Facebook has long complied with EU data protection law through our establishment in Ireland. We remain open to continuing to discuss these issues with the DPA, whilst we work with our lead regulator the Irish Data Protection Commissioner as we prepare for the EU’s new data protection regulation in 2018.”

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Facebook’s ads just keep creeping into new apps

July 27, 2017

Scrolling through an ad-free Instagram is now a distant memory, much like the once ad-free Facebook itself. Soon, users of its Messenger app will begin to see advertisements, too — and WhatsApp may not be too far behind.

Welcome to the Facebook ad creep.

The world’s biggest social media company has squeezed about as many ads onto its main platform as it can. The fancy term for this is “ad load,” and Facebook warned investors back in 2016 that it has pretty much maxed it out . Put any more ads in front of users and they might start complaining — or worse, just leave.

As such, Facebook, a free service that relies almost completely on ads to make money, has to keep finding new and creative ways to let businesses hawk their stuff on its properties.

One solution is to spread ads beyond Facebook itself, onto the other popular messaging and photo-sharing apps it owns.

So far, it’s working. On Wednesday, Facebook posted a 71 percent increase in net income to $3.89 billion, or $1.32 per share, from $2.28 billion, or 78 cents a share, a year ago.

Revenue for the three months that ended on June 30 rose 45 percent to $9.32 billion from $6.44 billion. The Menlo Park, California-based company’s monthly active user base grew 17 percent to 2.01 billion.

INSTAGRAM

Ads began arriving on Instagram, which Facebook bought in 2012 for $1 billion, in 2013. It was a slow and careful rollout, and tells us a lot about Facebook’s subsequent ad strategy.

The company didn’t want to upset Instagram’s loyal fans, who were used to scrolling through beautiful landscapes, stylized breakfast shots and well-groomed kittens in their feed. An ad for headache pills would have interrupted the flow. So Instagram started off with just a few ads it considered “beautiful,” selected from hand-picked businesses. For a while, CEO Kevin Systrom reviewed every ad before it went live.

Four years later, things have changed a bit, although to Instagram’s credit, not so much as to alienate significant numbers of its 700 million users (up from 100 million in 2013). There are more ads now, Systrom no longer inspects them before publication, and while many could still be called “beautiful,” users are also likely to see generic ads not specifically created for Instagram.

By this point, though, people seem to have gotten used to them.

MESSENGER

Facebook has already been testing ads on its primary chat app, and earlier this month it announced it will expand this test globally. Paralleling its experience with Instagram, Facebook told developers and businesses they can start showing ads — specifically for brands that people “love” or that offer an “opportunity to discover experiences” — to Messenger’s 1.2 billion users.

A tsunami it won’t be. Facebook product manager Ted Helwick wrote in a blog post that a “small percentage” of Messenger users will start seeing ads by the end of July. The company will then study that limited rollout to ensure that it’s delivering “the best experience.”

Of course, even a small percentage of 1.2 billion users could be tens of millions of people. But this gives Facebook a chance to see what works and what doesn’t without mass revolt.

And it highlights the importance of Facebook’s decision to spin out the Messenger app from its main Facebook app (and to start pressuring people to use it ). While Facebook billed its decision as a way to make Messenger easier to use, it also essentially doubled the available real estate for its mobile ads.

In a conference call with analysts on Wednesday, CEO Mark Zuckerberg said he wants to see the company “move a little faster” when it comes to ads on Messenger, but added that he is “confident that we’re going to get this right over the long term.”

WHATSAPP AND MORE

With its popularity outside the U.S. and in developing countries, WhatsApp might be a harder nut to crack when it comes to ads. But there are signs it’s coming. It’s true that WhatsApp’s CEO Jan Koum promised users they can count on ” absolutely no ads interrupting your communication” when Facebook bought the company in 2014 for $19 billion.

But last August, WhatsApp updated its privacy policy to reflect that the service would be sharing user data with Facebook so that it could “offer better friend suggestions” and “show you more relevant ads” on Facebook and its other properties.

That doesn’t mean that ads will appear on WhatsApp right away. But in the same post, the company also said it wants people to be able to communicate with businesses, not just people. That’s exactly how Messenger began dabbling in the advertising business.

What else can Facebook do?

“One, they will raise their rates on ads,” said Matt Britton, CEO of social media marketing company CrowdTap. “Because they can. The value is tremendous for advertisers right now, including for video ads.”

For eMarketer analyst Debra Aho Williamson, Facebook video presents the biggest opportunity for ad-business growth. How people will respond to Messenger ads remains uncertain, she said. But with video, Facebook is doing what people already know, taking short and long-form programs and inserting ads in the middle.

That lets Facebook attract money from “traditional video advertisers,” she said — meaning the folks who honed their talents inserting ads into prime-time shows.

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SAN FRANCISCO - OCTOBER 24:  Dustin Moskovitz, co-founder of Facebook, delivers his keynote address at the CTIA WIRELESS I.T. & Entertainment 2007 conference October 24, 2007 in San Francisco, California. The confernence is showcasing the lastest in mobile technology and will run through October 25.  (Photo by Kimberly White/Getty Images)

Get Ready for the Next Big Privacy Backlash Against Facebook

May 22, 2017

DATA MINING IS such a prosaic part of our online lives that it’s hard to sustain consumer interest in it, much less outrage. The modern condition means constantly clicking against our better judgement. We go to bed anxious about the surveillance apparatus lurking just beneath our social media feeds, then wake up to mindlessly scroll, Like, Heart, Wow, and Fave another day.

But earlier this month, The Australian uncovered something that felt like a breach in the social contract: a leaked confidential document prepared by Facebook that revealed the company had offered advertisers the opportunity to target 6.4 million younger users, some only 14 years old, during moments of psychological vulnerability, such as when they felt “worthless,” “insecure,” “stressed,” “defeated,” “anxious,” and like a “failure.”

The 23-page document had been prepared for a potential advertiser and highlighted Facebook’s ability to micro-target ads down to “moments when young people need a confidence boost.” According to The Australian’s report, Facebook had been monitoring posts, photos, interactions, and internet activity in real time to track these emotional lows. (Facebook confirmed the existence of the report, but declined to respond to questions from WIRED about which types of posts were used to discern emotion.)

The day the story broke, Facebook quickly issued a public statement arguing that the premise of the article was “misleading” because “Facebook does not offer tools to target people based on their emotional state.” The social network also promised that the research on younger users “was never used to target ads.” The analysis on minors did not follow Facebook’s research review protocols, the company wrote, so Facebook would be “reviewing the details to correct the oversight,” implying that the analysis had not been sanctioned by headquarters in Menlo Park.

A spokesperson for Facebook tells WIRED that the research had been commissioned by an advertiser. But Facebook’s public statement did not make that clear or explain how the research on minors ended up in a presentation to potential advertisers.

The statement said only that the analysis had been conducted by “an Australian researcher.” But the leaked presentation obtained by The Australian was prepared by two Australian Facebook employees, both managers who connect Facebook to ad agencies.

Privacy advocates and social media researchers, some of whom signed a public letter to Mark Zuckerberg about the ethical implications of tracking minors, tell WIRED the leak arrived at a crucial time in their campaign for stricter guidelines around consumer surveillance. Between the political fallout of psychographic profiling on Facebook and recent fines against the social network for breaking European laws about data collection, they hope this controversy could have lasting implications on the way the $400 billion behemoth tracks sensitive data.

Welcome to the next phase of Facebook privacy backlash, where the big fear isn’t just what Facebook knows about its users but whether that knowledge can be weaponized in ways those users cannot see, and would never knowingly allow.

Dear Mark Zuckerberg
Five years ago, Facebook conducted a mass experiment in manipulating emotions on nearly 700,000 unsuspecting users. The company tweaked News Feeds to show random users more positive or negative content, to see if it made those users happy or sad. In that case, there was no leaked document, no smoking gun: The results were published openly in an academic journal in 2014. In response, there was an outcry over what seemed like social engineering; the company said it had been “unprepared for the reaction” and strengthened its research review process accordingly.

A spokesperson for Facebook tells WIRED that the research referenced in the newly surfaced document complied with Facebook’s privacy and data policies, such as anonymizing the data by removing any personally identifiable information, but it did not meet those enhanced research protocols, which are supposed to require additional review for studies of “sensitive groups,” like minors.

A week after the document was leaked, more than two dozen nonprofits from the US, Europe, Brazil, and Mexico wrote a blistering public letter to Zuckerberg arguing that Facebook should release the document because the health and ethical implications were “far too concerning to keep concealed.” Facebook has become a “powerful cultural and social force in the lives of young people,” they wrote, and the mega-corporation could not just chalk up the mistake to a deviation from its research protocols. Marketers “and others” could use this research to “take advantage of young people by tapping into unique developmental vulnerabilities for profit,” the letter warned. (WIRED reached out to The Australian’s media editor, Darren Davidson, who obtained the leaked document, to see if the paper has plans to publish it in full, but did not receive an immediate response.)

“We take the concerns raised by these organizations seriously,” a Facebook spokesperson said in response to questions from WIRED. “Last week we reached out to several of these groups to discuss the research, and together agreed to set a meeting. We look forward to working with them.”

Jeff Chester, executive director of the Center for Digital Democracy, one of the nonprofits that signed the letter, will be present at the Facebook meeting. “I’ll be interested to see how honest they are,” he tells WIRED. “Are they going to acknowledge all of the similar research that they already do? Or what it means for Facebook and Instagram users worldwide? Are they going to talk about the fact that they are continually expanding the ability of their platform to identify and track consumers on behalf of powerful advertisers?”

Chester keeps close tabs on Facebook’s increasingly sophisticated marketing capabilities, a toolkit that includes neuro-marketing and biometric research techniques that can be used to test bodily reactions to ads, like responses in the brain, heart, eye movement, or memory recall. Chester pointed to a recent report from Facebook IQ—a research division within the social network designed to help marketers—that used an EEG headset to measure social connections and feelings in virtual reality.

“When Facebook said this was aberration, we knew that was not true, because it squarely fits into what Facebook does all the time in terms of analyzing the emotional reactions of individuals,” including vulnerable groups like young people, black people, and Latinos, Chester says. “Facebook is one big sentiment-mining apparatus.”

If the users in question weren’t teenagers—or if the emotion wasn’t insecurity—Facebook’s public statement might have been sufficient; the uproar from privacy advocates may have been duly noted, then promptly forgotten.

Instead, as Kathryn Montgomery, a professor at American University and the director of the school’s communications studies division—who is married to Chester—tells WIRED, The Australian’s report served as “a flashpoint that enables you to glimpse Facebook’s inner workings, which in many ways is about monetization of moods.”

A New Advertising Age
This may sound like a lot of sturm und drang for making money off of teenage insecurity, a mass market practice that has been around since at least World War II. The entire advertising industry is, after all, premised on the ability to leverage a consumer’s emotional state. But it’s one thing to show makeup ads to people who follow Kylie Jenner on Instagram; it’s another to use computational advertising techniques to sell flat-tummy tea to 14 year olds at the exact moment they’re feeling their worst.

In fact, Montgomery and Chester have been fighting to protect young people’s digital privacy for decades. The couple helped pass the Children’s Online Privacy Protection Act (COPPA) in 1998, which restricts data collection and online marketing from targeting children under 13 years old. The legislation was created to prevent the first wave of dotcom companies from engaging in deceptive practices, such as using games and contests to collect information about children without parental permission. The same year COPPA passed, the FTC filed its first internet privacy complaint against GeoCities, for misleading both child and adult consumers about how it was using their personal information. Since then, companies big, small, and fictional have racked up fines.

For its part, Facebook has been open and cooperative in responding to concerns about minors in the past. After The Wall Street Journal reported in 2012 that Facebook was considering allowing children younger than 13 to open accounts, the company met with privacy advocates who helped convince the platform to continue barring children from the platform.

Facebook also understands that minors require additional protections. By default, it turns off location sharing for minors, and offers warnings before young people share a post publicly. Indeed, Facebook sometimes uses its tracking capabilities to safeguard users, such as newly released artificially intelligent suicide prevention tools that “help people in real time.”

“We do, of course, want to try to help people in our community who are at risk, including if their friends report to us that they may be considering self-harm, but that’s not related to the incorrect allegations that were made in The Australian’s piece,” a Facebook spokesperson tells WIRED.

Regardless, advances in ad targeting may require more default protections. Marketers want to pinpoint people in an “intimate, ongoing, interactive way,” says Chester. As people use more and more devices across different networks, companies that collect this information have amassed bank vaults of data on users’ locations, recent life events, affinity groups, or, theoretically, emotional states.

“This is the holy grail of advertising,” says Saleem Alhabash, an assistant professor at Michigan State University. A consumer has “a particular need or motivation at this particular moment in time, and you are giving them messages that feed exactly to what they’re feeling. The return on investment is huge.”

To that end, Alhabash believes companies should, for the most part, have the freedom to conduct business. “I do not think that advertising in general is manipulative.” he says. “Where it becomes manipulative is when certain parts of our personal information gets used against us to makes us crave and want things that we do not want.” (Alhabash worked on a study about how Facebook ads for alcohol can increase the desire to drink.)

Amid a swirl of recent concerns over how Facebook can influence our actions in the real world and the ways that micro-targeting can be weaponized—such as voter-suppression campaigns targeting African Americans—the leaked document seems like another sign that fears about the company have taken on a different shape.

“We’ve entered a new phase because of the controversy in promoting fake news, in disseminating hate speech, in Facebook’s outsized influence in campaigns that resulted in Brexit, the election of Trump, and other political developments,” Chester explains.

Europe Plays Hardball
Unfortunately for Facebook, the Australian ad targeting controversy cropped up just as European regulators have been cracking down on social networks, charging that they “aren’t taking complaints from their users seriously enough.” That’s the reason Germany’s justice minister cited in March when he proposed a law that would fine social media companies up to €50 million if they don’t respond quickly enough to reports of illegal content or hate speech.

This week, the focus has shifted to Facebook’s privacy violations. On Tuesday, data protection authorities (DPAs) from France, the Netherlands, Spain, Germany, and Belgium issued a joint statement detailing the results of national investigations into Facebook for privacy issues, including processing personal data for advertising purposes.

France and the Netherlands handed down what amounted to a slap on the wrist and a small fine, but this is just the preview. Europe’s strict privacy laws are about to get even stricter. It’s all part of a growing sense in the EU that it’s time to throw a bridle on Silicon Valley.

In 368 days (regulators have posted a handy countdown clock) the General Data Protection Regulation will go into effect for the European Union. Once the new rules are in place, companies will be forced to take privacy more seriously, if only because of the fines, David Martin, senior legal officer at the European Consumer Organization, tells WIRED by email. France fined Facebook €150,000 for unlawfully tracking internet users to display targeted advertising, the maximum it can currently impose. But once the new rules are in place, the fines could be as high as €20 million, or 4 percent of the company’s global revenue, whichever is higher, Martin says.

For companies like Google and Facebook, with market capitalizations in the hundreds of billions, compliance might be a bigger issue than fines. But American advocates hope that some of that momentum will be contagious, pressuring Silicon Valley’s oligarchy into creating stronger safeguards for sensitive data. Says Chester, “The feedback I got from my colleagues in Europe was, ‘Look, you guys have that letter. We have laws and rules that need to be enforced.’”

In the joint statement on Tuesday, the Dutch authorities reported that Facebook violated data protection laws for its 9.6 million users in the Netherlands by using sensitive personal data without the users’ explicit consent, including serving targeted ads based on users’ sexual preferences. Facebook changed its practices to comply, and the Dutch DPA said it will issue a sanction if it finds out the violations have not stopped.

In response to questions from WIRED about the sanctions, a different Facebook spokesman says that the company respectfully disagrees with the findings by the French and Dutch authorities. Facebook maintains that its practices have been compliant, but the spokesperson says that Facebook welcomes the dialogue.

“At Facebook, putting people in control of their privacy is at the heart of everything we do,” the spokesperson tells WIRED. “Over recent years, we’ve simplified our policies further to help people understand how we use information to make Facebook better. We’ve built teams of people who focus on the protection of privacy—from engineers to designers—and tools that give people choice and control.”

And yet the findings from the investigations don’t sound that far off from the leaked Australian document, which is partly what made the specter of preying on teen insecurity so unsettling.

It’s not a dystopian nightmare. It’s just a few clicks away from the status quo.

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SAN FRANCISCO - OCTOBER 24:  Dustin Moskovitz, co-founder of Facebook, delivers his keynote address at the CTIA WIRELESS I.T. & Entertainment 2007 conference October 24, 2007 in San Francisco, California. The confernence is showcasing the lastest in mobile technology and will run through October 25.  (Photo by Kimberly White/Getty Images)

Facebook tightens privacy, bans developers from harnessing data for surveillance

March 15, 2017

Facebook, saying it is “committed to building a community where people can feel safe making their voices heard,” updated its privacy policies on Monday to state unambiguously that developers are forbidden from using its data to create surveillance tools.

“Today we are adding language to our Facebook and Instagram platform policies to more clearly explain that developers cannot ‘use data obtained from us to provide tools that are used for surveillance,’ ” Rob Sherman, Facebook’s deputy chief privacy officer, posted on the company’s privacy page.
The policy clarification followed an ACLU report last October that Facebook, Twitter and Instagram “provided user data access to Geofeedia, a developer of a social media monitoring product that we have seen marketed to law enforcement as a tool to monitor activists and protesters.”

The Geofeedia tool, which monitors the locations and other personal information of social media users, was made available to 500 law enforcement and safety agencies, the ACLU said.
“Using Geofeedia’s analytics and search capabilities and following the recommendations in their marketing materials, law enforcement in places like Oakland, Denver, and Seattle could easily target neighborhoods where people of color live, monitor hashtags used by activists and allies, or target activist groups as ‘overt threats,’” the ACLU wrote. “We know for a fact that in Oakland and Baltimore, law enforcement has used Geofeedia to monitor protests.”

After the ACLU report, all three companies terminated Geofeedia’s data access, according to The Verge. Twitter updated its privacy policy in November, posting that “Using Twitter’s Public APIs or data products to track or profile protesters and activists is absolutely unacceptable and prohibited.”
“Our goal is to make our policy explicit,” Sherman wrote. “Over the past several months we have taken enforcement action against developers who created and marketed tools meant for surveillance, in violation of our existing policies; we want to be sure everyone understands the underlying policy and how to comply.”

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US court may snatch privacy rights on Facebook, Google data

February 16, 2017

BERLIN: A Philadelphia court has made the unfortunate decision to reopen the legal debate on whether the US has the right to access e-mails stored on foreign servers if they belong to US companies. If Magistrate Thomas Rueter’s ruling stands, anyone using US based internet companies will have to live with the knowledge that, as far as the US government is concerned, it’s America wherever they operate.

That’s a dangerous approach that hurts the international expansion of US tech companies. Privacy-minded customers in Europe are already suspicious of the US government’s cooperation with the tech giants, revealed by National Security Agency leaker Edward Snowden. Nationalist politicians in some countries want to ban cross-border personal data transfers.

Last July, Microsoft won a landmark case against the US government, in which it argued it didn’t have to hand over e-mails stored on a server in Dublin to investigators working on a drug case. The US Court of Appeals for the Second Circuit agreed with the corporation, ruling that the US Congress never meant the Stored Communications Act to apply extra territorially.

Just two weeks ago, the court allowed the ruling to stand. US internet companies have assumed that if communications are stored abroad, they are out of the US authorities’ reach.

Acting on that understanding, Google refused to disclose two users’ data to the Federal Bureau of Investigation, and the FBI went to court in Philadelphia. Unlike Microsoft, Google doesn’t even know the physical location of a file: its artificial intelligencebased system constantly optimises storage.

Judge Rueter refused to be bound by the Microsoft precedent. In his ruling, he said : “When Google produces the electronic data in accordance with the search warrants and the Government views it, the actual invasion of the account holders’ privacy -the searches -will occur in the United States.“ Within that logic, any information, public or private, that the US government can locate using computers on US territory is fair game. And if the logic applies, the European Union wasted its time last year as it tried to establish an acceptable privacy standard for US companies operating in Europe.

A new framework for these companies became necessary after the European Court of Justice struck down the EU’s so-called safe harbour agreement with the US, which allowed internet companies to shuttle personal data back and forth between the two jurisdictions based on an understanding that the US provided adequate protection for users’ privacy.

The so-called Privacy Shield is still pretty permissive, allowing companies to self-certify their commitment to user privacy, but it simplifies redress and gives European data privacy authorities more power over cross-border communication.

US court may snatch privacy rights on Facebook, Google data

If, however, the US decides that it can just take the data from foreign servers, the new agreement will be rendered meaningless. For US companies, this will mean a need to invent new private arrangements. It appointed Deutsche Telekom “data trustee“ for two data centres in Germany, making it impossible for anyone to obtain any information from the servers without the permission of the trustee and, ultimately, the client.Such tricks, however, may not stand up in US courts, if other judges agree with Rueter.

The US Supreme Court will probably have to take a stand on the issue.

Waiting for a decision, millions of foreigners must decide whether to cut their losses in this front of the online privacy wars: It may no longer be OK to expose their lives to US corporations.

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