Facebook has a problem with transparency, but it’s not yet time for regulators act

Facebook has a problem with transparency, but it’s not yet time for regulators act
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Toward the end of the film “There Will Be Blood,” Daniel Day-Lewis, playing a ruthless oil baron who started out a lone prospector, explains slant drilling technology to a rival. By angling his drill horizontally, he can tap the petroleum reserves underneath his rival’s property. He compares it to having a long straw to reach across a table and dip into the other’s beverage. “I drink your milkshake!” he crows triumphantly in the film’s signature line.

Did Cambridge Analytica pull off the digital age equivalent against Facebook? Although the exact details are still being sorted out, in 2015 the U.K.-based data firm, which was briefly hired by the Trump campaign, ended up with personal data from some 50 million Facebook accounts through a personality polling app software application. Although only 270,000 users responded to the app, Cambridge Analytica designed it to scrape data from the profiles and feeds of all the Facebook friends of those original 270,000, according to Christopher Wylie, the whistleblower in the case. As a result, Cambridge Analytica harvested a motherlode of information proprietary to the social media giant. It drank Facebook’s milkshake.

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But while oil was hijacked in the movie, in this case it was individual personal information — information that Facebook not only was obliged to protect, but had significant business interests in doing so. That’s why the company’s stock is falling. Washington and Wall Street are openly wondering what’s going on. Massachusetts Attorney General Maura Healy promised an investigation. The Federal Trade Commission reportedly believes Facebook violated terms of a 2011 consent decree on user privacy and may face a fine of $40,000 per violation.

 

When it comes to regulation and fines, I always prefer a cautious approach. Investors already are punishing the company, as is appropriate in a market economy. On a basic level, Facebook was extremely careless. Although some are characterizing Cambridge Analytica’s data harvest as a criminal breach, that charge is debatable. Consumer bank accounts, passwords, health and financial records were not exposed.

According to the Washington Post, Cambridge Analytica’s harvesting was in line with Facebook’s terms of use at the time. Popular apps such as FarmVille and Tinder used similar wide-scale collection tools. The Obama campaign also used data harvested from social media, including Facebook, to target voters.

So perhaps we should turn down the volume of moral outrage and see this for the business issue it is. If there was a breach of contract, civil law should apply. If Cambridge broke the law, it should be held accountable. Facebook should not have waited two years before disclosing the loss, but we until we understand the scope of any violation, Washington should avoid creating regulations or imposing penalties out of an emotional reaction.

Most of that emotion stems from the case being framed within the controversy over “fake news” and whether it improperly affected the outcome of the 2016 election. As of now, it’s not clear whether the Cambridge Analytica used the data it collected and if so, if it got any measurable results.  

But before we get carried away, let’s recall that audience manipulation is not a crime. On the contrary, it’s the whole point of advertising, politics not excepted. To this day we argue whether images of a nuclear bomb detonation juxtaposed with a little girl picking flowers or an African-American man in a revolving prison door were outside the rules of political engagement. They had an undeniable influence on the elections held those years, but no ad agencies or television networks were investigated or fined.

But Facebook’s not off the hook. If the company wants a hand in policy direction it first needs to take responsibility for what it’s become. It seems pathologically reluctant to admit that it has become a major media company that brings to market unique algorithms that advertisers can use, with amazing accuracy, to target, profile and manipulate individuals.

Consequently, third parties like Cambridge Analytica are becoming more adept at understanding and exploiting the value of Facebook’s own resources than Facebook itself. It doesn’t help that CEO Mark ZuckerbergMark Elliot ZuckerbergThe free-market case for a clean slate Facebook takes down anti-NATO pages linked to Russia Congress needs to address consumer data privacy in a responsible and modern manner MORE, through his silence and no-shows, gives the impression that he’s being pushed along by events rather than taking direct control of them. If he doesn’t step up with a clearer vision of Facebook’s direction, in the end it won’t be Cambridge Analytica but the government itself that drinks Facebook’s milkshake. That will be the detriment to everyone.

Steven Titch is a policy adviser to the nonprofit Heartland Institute focusing on telecommunications, the internet and information technology.