- Facebook CEO Mark Zuckerberg once considered 100 deals with app developers to potentially sell user data in an attempt to learn the “real market value” of the information, according to an NBC News report.
- The report cites around 4,000 pages of leaked internal Facebook documents that show that the company instead opted to use the data as a bargaining chip to reward apps that purchased ads, were close friends of executives, or shared data with them in return.
Facebook CEO Mark Zuckerberg once considered selling the company’s user data to third-party app developers to find out just how much the user’s data is worth, all while publically claiming to be protecting that same data.
NBC News released a report Tuesday, saying it had obtained around 4,000 pages of leaked company documents spanning from 2011 to 2015. The documents contained emails, web chats, presentations, spreadsheets, and meeting summaries which reportedly showed that Zuckerberg and his team found ways to leverage Facebook user data to companies it partnered with.
It’s not uncommon for companies to work together to share information about customers, however, Facebook has access to sensitive data that many other companies don’t have access to, like information about friends, relationships, photos, and more.
In some cases, NBC News said that Facebook would reward favored companies by giving them access to the data of its users. It would then deny that same data to rival companies or apps that were not considered “strategic partners.”
For instance, Facebook gave Amazon extended access to user data because Amazon had invested heavily in Facebook advertising and partnered with the company for the launch of the Fire smartphone.
By contrast, Facebook reportedly discussed cutting the app, MessageMe, off from user data access. Facebook’s reasoning was that the app had grown too popular and was now a competitor.
Protecting User Data
All the while, Facebook was publically creating a narrative around its concern for user trust, promising to prioritizer data protections.
Private communication between users is “increasingly important,” Zuckerberg said in a 2014 New York Times interview. “Anything we can do that makes people feel more comfortable is really good.”
However, the documents show that behind the scenes, the company was formulating ways to require third-party applications to compensate them for access to user data, through direct payment, spending on advertising, or data sharing agreements.
Facebook Wants to Maintain Its Dominance
Zuckerberg reportedly talked about pursuing 100 deals to sell data access to developers, “as a path to figuring out the real market value” of Facebook user data and then “setting a public rate” for developers, NBC reported.
“The goal here wouldn’t be the deals themselves, but that through the process of negotiating with them we’d learn what developers would actually pay (which might be different from what they’d say if we just asked them about the value), and then we’d be better informed on our path to set a public rate,” Zuckerberg wrote in a message.
In the end, Facebook decided against selling data directly and instead opted to share it with app developers who were considered “friends” of Zuckerberg, or who invested heavily on Facebook and shared their own valuable data in return.
According to NBC, Zuckerberg “noted that though Facebook could charge developers to access user data, the company stood to benefit more from requiring developers to compensate Facebook in kind — with their own data — and by pushing those developers to pay for advertising on Facebook’s platform.”
The companies ultimate goal was to ensure that Facebook held onto its dominant position in the market.
Facebook Calls Documents Cherry-Picked
Facebook has denied giving any developers or partners preferential treatment because of their spending or personal relationships with executives. Instead, the company told NBC News that its focus on “full reciprocity” was to enable users to share their experiences within outside apps with their Facebook friends.
The company also did not question the authenticity of the documents, which stem from a California court case between Facebook and Six4Three.
Six4Three developed an app called Pikinis, which let people pay to find pictures of users in swimsuits. Six4Three’s app was shut down in 2015 after Facebook changed its policies around the sharing of user data with third-party app developers.
Facebook said the documents are “cherry-picked” and misleading.
“As we’ve said many times, Six4Three — creators of the Pikinis app — cherry picked these documents from years ago as part of a lawsuit to force Facebook to share information on friends of the app’s users,” Paul Grewal, vice president and deputy general counsel at Facebook, said in a statement released by the company.
“The set of documents, by design, tells only one side of the story and omits important context. We still stand by the platform changes we made in 2014/2015 to prevent people from sharing their friends’ information with developers like the creators of Pikinis. The documents were selectively leaked as part of what the court found was evidence of a crime or fraud to publish some, but not all, of the internal discussions at Facebook at the time of our platform changes. But the facts are clear: we’ve never sold people’s data.”
See what others are saying (NBC News) (CNBC) (The Street)
NFL Reaches Agreement to End Race-Norming, New Testing Formula Remains Unclear
The practice, which was adopted by the league in the ’90s, assumes that Black players operate with a lower cognitive function than players of other races.
NFL Ends Race-Norming
The U.S. District Court of Philadelphia uploaded a confidential proposed settlement between the NFL and former players on Wednesday that confirms the league’s plans to abolish race norming.
The NFL previously halted the use of race-norming in June as part of a$1 billion settlement with retirees Kevin Henry and Najeh Davenport, but details of the deal weren’t supposed to be released until it underwent review from a federal judge.
In fact, it currently seems as if someone in the court accidentally uploaded the document, as it was deleted hours later.
Among the details reaped from the settlement, it was revealed that the league plans to modify cognitive tests over the next year as part of a short-term change regarding how it verifies dementia-related brain injury claims. Previously, it used race-norming — the practice of assuming Black players have a lower cognitive function than players of other races — to test whether retirees seeking financial compensation had sustained brain injuries from the sport.
Black retirees who were denied access to compensation originally will also have their tests automatically re-evaluated over the course of the next year, if the settlement pushes through.
The NFL has additionally agreed to develop a long-term replacement system with the help of experts and players’ lawyers.
Still, the exact formula behind these new testing metrics, which will be designed as race-neutral per the agreement, is unknown. For example, retirees don’t know how the new changes will affect their scores or if they might potentially need to take additional tests before becoming eligible for compensation.
The Issue With Race-Norming
Race-norming was first adopted by the league back in the ’90s, and in theory, it was meant to help offer better treatment to Black retirees who had developed dementia from brain injuries related to football.
Essentially, the thought process was to take socioeconomic factors into account since Black people come from disadvantaged communities at higher rates; however, that quickly became a major issue since Black players were held to a higher standard of proof than players of other races.
For example, since the tests assumed Black people have less cognitive skill, Black retirees seeking claims needed to score lower to be granted compensation. That then led to many having their claims denied because they tested too high — even if they would have tested within the range to receive compensation had they been white.
See what others are saying: (Associated Press) (The Washington Post) (ABC News)
Facebook Plans Name Change as Part of Rebrand
News of the alleged rebrand came the same day Facebook was fined nearly $70 million for breaching U.K. orders related to the company’s 2020 acquisition of Giphy, as well as the same day it reached a $14 million discrimination settlement with the U.S. Justice Department.
Facebook Allegedly Plans To Debut New Name
Facebook, Inc. is planning to announce a new company name next week, according to a Tuesday report from The Verge.
The rebrand would reportedly align with CEO Mark Zuckerberg’s vision to shape the company into a full-fledged “metaverse” — AKA a virtual reality space where users can interact with one another in real-time.
The new name is currently unknown, but it would likely not affect the social media platform Facebook. Instead, the change would target its parent company, Facebook, Inc. — similar to how Alphabet became the parent company of Google following a 2015 restructure.
On Monday, Facebook said it is currently planning to hire 10,000 people in the European Union to help make its metaverse goal a reality.
Still, plans for the metaverse have not gone uncriticized, especially given the recent weeks of increased scrutiny regarding Facebook’s dominance over people’s daily lives. “Metaverse” was first coined in 1992 by American author Neal Stephenson in his novel “Snow Crash,” which depicts a corporate-owned virtual world.
Twitter CEO Jack Dorsey even cited one user who referenced the novel, agreeing that Stephenson was right in his prediction of “a dystopian corporate dictatorship.”
Facebook To Pay Fine and Settlement
Also on Tuesday, regulators in the United Kingdom fined Facebook nearly $70 million for breaching orders related to its 2020 acquisition of Giphy.
While that’s only a fraction of the $400 million it paid to purchase Giphy, UK regulators warned that they could eventually order Facebook to sell off Giphy if they find proof the acquisition has damaged competition.
In the U.S., the Justice Department said the same day that Facebook has agreed to pay up to $14.25 million to settle discrimination allegations brought by the agency under the Trump administration.
In December, the department accused the company of favoring foreign workers with temporary work visas over what it described as thousands of qualified U.S. workers.
“Facebook is not above the law and must comply with our nation’s federal civil rights laws, which prohibit discriminatory recruitment and hiring practices,” Kristen Clarke, an assistant attorney general at the department, said.
Notably, this settlement is the largest ever collected by the department’s Civil Rights Division.
See what others are saying: (The Verge) (Engadget) (The New York Times)
SEC Releases Long-Awaited Report on January Memestock Frenzy, Pokes Hole in “Short Squeeze” Narrative
Among other findings, the SEC said hedge funds weren’t broadly damaged by January’s unprecedented trading event.
SEC Publishes Findings
The Securities and Exchange Commission released a long-awaited, 44-page report on Monday detailing its findings regarding this year’s “Memestock Frenzy,” which involved companies such as GameStop and AMC.
During the frenzy in late January, the share prices of those companies soared exponentially. According to one of the key narratives of the situation, smaller investors piled onto GameStop as a way to directly attack hedge funds that were actively betting against GameStop’s success and future. As CNBC reported at the time, those “hedge funds and other players had to rush in to cover their bets against the stock.”
What followed were reports that hedge funds had lost billions of dollars all at once. In fact, one notable hedge fund, Melvin Capital, received what many described as a nearly $3 billion bailout. Meanwhile, in June, it was reported that the London-based White Square Capital had shut down its main fund due to the losses it suffered in January.
However, now, the SEC has said there is no real evidence to support some of the key pillars of this narrative, including that hedge funds were substantially hurt in the long run.
“Staff believes that hedge funds broadly were not significantly affected by investments in GME and other meme stocks,” the agency said in its report. “Staff did not observe that any advisers to private funds and registered funds experienced liquidity issues or difficulties with counterparties.”
On the whole, hedge funds even saw a 1.2% increase in profits in January, according to data from the HFRI Fund Weighted Composite index.
The agency also noted that GameStop purchases to cover bets were just “a small fraction of overall buy volume,” adding that “GME share prices continued to be high after the direct effects of covering short positions would have waned.”
“The underlying motivation of such buy volume cannot be determined,” the agency concluded. “Perhaps it was motivated by the desire to maintain a short squeeze. Whether driven by [that] desire… or by belief in the fundamentals of GameStop, it was the positive sentiment, not the buying-to-cover, that sustained the weeks-long price appreciation of GameStop stock.”
SEC Not Currently Issuing Any Recommendation
The agency did not offer any policy recommendations with this report, though it did stress that a number of small-time investors who either initially bet against GameStop’s success or tried to ride the wave of gains saw significant losses.
Given that the number of investors trading GameStop rapidly jumped from 10,000 at the beginning of January to 900,000 by the end of the month, it’s not surprising that the FTC confirmed heavy losses for many.
With that in mind, the SEC aligned its next focus on commission-free trading apps and the way in which they promote potentially excessive trading. Notably, that includes apps such as Robinhood and Webull, both of which faced controversy during the frenzy for severely restricting users’ ability to trade so-called memestocks.
“Consideration should be given to whether game-like features and celebratory animations that are likely intended to create positive feedback from trading lead investors to trade more than they would otherwise,” the SEC said in its report.
SEC Chair Gary Gensler said Tuesday that by April, the agency could propose rules limiting how those apps make money from each trade, which is known as “payment for order flow.”