The Loss of Privacy – Part 2

Last week’s column dealt with Facebook’s negligence in protecting the information provided by its subscribers and concluded with a novel idea proposed by Heidi Vogt in a front page article in the Wall Street Journal that subscribers simply lie to Facebook – creating and distorting phony backgrounds, travel, friends, etc. By doing so, the extraordinarily valuable private information that Facebook gathers from its subscribers, manipulates with algorithms, and sells ($39.9 Billion in 2017) becomes corrupted, unreliable and commercially less valuable – hit them where it hurts.

But that’s not the end of the story. Sheryl Sandberg, the Chief Operating Officer and the actual brains behind Facebook was all over the media following disclosure that Facebook breached the security of some 89 million subscribers. Ms. Sandberg, who has a reputation for telling the truth – purposefully, or unwittingly– regardless of the consequences, laid bare the cold hard truth about Facebook. It is not a social media platform; it is a commercial enterprise that gathers information and data from users and makes it commercially valuable to advertisers and retailers.

The New York Post in an article published on April 6, commenting on an NBC interview with Ms. Sandberg noted:

“Want privacy on Facebook? Cough up some cash.

“The social-media site plans to extort users who want to keep their personal data away from advertisers — by demanding they pay for the privilege, the company’s second in command, Sheryl Sandberg, revealed on Friday.

“’We have different forms of opt-out. We don’t have an opt-out at the highest level,’” the Facebook chief operating officer said in an interview on NBC’s “Today.”

“’That would be a paid product.’”

Ms. Sandberg doubled down in a news item from FOXNews:

“Facebook’s second in command Sheryl Sandberg said Friday that users wanting to opt out of having their data used by advertisers will have to pay for that assurance.

“The comments came in the wake of revelations that the personal information of 87 million users had been inappropriately used by the data firm Cambridge Analytica in the 2016 election campaign, the New York Post reported.

“While different forms of opt-out are already available on Facebook, an opt-out at the highest level ‘would be a paid product,’ Sandberg said during an interview on NBC’s “Today” show, the Post reported.

“Furthermore, Sandberg suggested that the public has not seen the last of Facebook’s privacy scandal.

“’I’m not going to sit here and say that we’re not going to find more,” she said, “because we are.’”

This could be viewed as a warning to Facebook users to quit protesting or face a fee for using the Facebook’s social media platform. Or it could be a realistic assessment of what a free market should look like.

Twenty years ago if the United States Postal Service said that it would deliver your mail for free and then was discovered to be opening your mail, cataloging everything you wrote and then selling that information to retailers – any retailer – you would have been justifiably enraged. Heads would have rolled. The entire senior staff of the Postal Service would have been fired and most of them would have faced serious monetary and even criminal penalties for invasion of privacy. Or if your bank provided you free checking service and then collected, analyzed and sold your transactional information to third parties. The idea that someone was making a profit by invading your privacy would have been unthinkable. But that is precisely what propels Facebook and most other social media websites – they take your information, dissect it, and apply algorithms to identify users susceptibility to particular product advertising. The result is that the user is inundated with targeted advertising for a whole variety of products. It has gone further in that politicians use the same service to identify voters who are susceptible to particular issue or political messages.

This is extraordinarily valuable information and Facebook acquires it for free. Users of Facebook give that information up for free to Facebook with every stroke of the computer, tablet or smartphone key. Steve Wozniak, co-founder of Apple, and no slouch at understanding computers, software and the internet hit the nail on the head when interviewed recently by the Washington Post:

“Tech entrepreneur Steve Wozniak says he’s quitting Facebook.

“Wozniak, who co-founded Apple with Steve Jobs, told USA Today that he is abandoning the social media giant, joining the #DeleteFacebook movement in which Facebook users are shutting down their accounts over concerns about the use of their personal information.

“’Users provide every detail of their life to Facebook,’ Wozniak told the newspaper in an interview published Sunday.

“In turn, he added, ‘Facebook makes a lot of advertising money off this. The profits are all based on the user’s info, but the users get none of the profits back.’”

Just think about it. Here is an enterprise whose product is information and which acquires that product for nothing. This is not a social media enterprise; this is an information retailer. The value of that information is defined by the nearly $40 Billion dollar that Facebook receives for manipulating and selling that information to third parties. (The long run incremental cost of manipulating the information is probably measured in tenths of a cent.) A whole generation out of ignorance, inattention or myopia has released its privacy to a smug geek in a gray tee shirt who has used it to become one of the richest men in the world.

So what is the solution. Well it sure as heck isn’t inviting that smug geek in a gray tee shirt to appear before Congress. (Congress would have been better served to seek testimony from Ms. Sandberg because she is the one who actually knows what is going on and who has a realistic assessment of market place.)

But the solution is pretty simple and it follows pretty much what Mr. Wozniak stated to the Washington Post:

“Wozniak told USA Today that he would be willing to pay for the service that Facebook provides, rather than allow a free service to make money at his expense.”

Ms. Sandberg alluded to the same thing when she said that Facebook users would have to pay for assurance of privacy. And the solution does not involve regulating Facebook, other social media providers or the internet. We have already seen how the federal government treats private information – President Richard Nixon’s abuse of Internal Revenue Service (IRS) information, President Bill Clinton and the missing Federal Bureau of Investigation files (Filegate), President Barack Obama’s IRS scandal involving discrimination against conservative 501(c) organizations. The last thing you would want to do is turn over control of social media to the Washington “swamp creatures” who would use it to control speech.

The solution is simply a federal law that would ban the collection, manipulation and sale of information without the annual, informed consent of the subscriber. Informed consent necessarily implies that it is an “opt in” consent rather than “opt out” – silence does not constitute consent. Subscribers who declined to provide the consent could be charged for their subscription and Facebook and other social media providers would suffer the fate of those who chose to abandon their platform rather than pay. The consent requirement would not apply to retailers who collect data from their subscribers and use it solely- to market other products they sell and do not provide the information to third parties.

But in the end, nothing is going to come of this. This is Congress after all and they have demonstrated repeatedly that they cannot fix anything.