Slide 1 - Introduction

Facebook Privacy: What Privacy?

Slide 2 - 4

Facebook is one of the world’s largest tech companies and has become a prominent leader
amongst social networking sites. It allows its users to not only connect with friends, family and
colleagues but to provide a platform where anyone can contribute opinions, promote new ideas
and share information with billions of people around the world. Through its ability to collect,
interpret and share user data with marketers, Facebook has also created a whole new way for
companies to advertise an array of products and services targeted precisely at their intended
audience.
Slide 5-6

[The case shows the ethical analysis and the dilemma faced by Facebook in its business model.
Facebook heavily relies on its users’ data and the connections of people around the world. It
sells the user data to generate revenue through advertising. The data is used for research to
cater specific advertisement to individual customer. This forms the primary revenue of
Facebook which is predominantly from advertisement. By analyzing the ethical dilemma, the
company faces when it comes to an individual’s right to privacy, it becomes obvious that
unintended consequences can arise as the result of the unclear regulations surrounding data
collection. A growing number of bodies has started investigating in Facebook’s privacy control
and showed their concern about the data Facebook tracks in their online activities even outside
Facebook.

Facebook will need to re-examine their current business model if they want to remain a
successful and profitable business in the future. If they are unable to keep generating revenue
through advertising, they essentially have no other means of creating income. They will need
to either come up with new ways to make money, or hope that laws don’t become stricter or
that individuals will be willing to give up privacy for convenience.]
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Questions:

 Perform an ethical analysis of Facebook. What is the ethical dilemma presented by this
case?

 What is the relationship of privacy to Facebook’s business model?

 Describe the weaknesses of Facebook’s privacy policies and features. What people,
organization and technology factors have contributed to those weaknesses?

 Will Facebook be able to have a successful business model without invading privacy?
Explain your answer. Could Facebook take any measures to make this possible?
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1. Perform an ethical analysis of Facebook. What is the ethical dilemma

presented by this case?

Slide 9

Facebook CEO Mark Zuckerberg often says that people want to be more open and
connected. It's unclear whether that is truly the case, but it is certainly true that Facebook
wants the world to be more open and connected because it stands to make more money in that
world.
Facebook have more user’s privacy data and the more Facebook knows about people the more
relevant advertisement they can target. Facebook servers would keep user information
permanently whenever the user has deleted their account.
What the company actually does is to share tons of information about users with large
multinational advertisers to bring the benefit for it. Advertisers can engage with users based
upon the information shared by users such as age, gender, location, education, work history or
specific interests.
Ethical Dilemma
Some Facts:
 Facebook can serve ads using highly specific details. For example, an Atlanta woman
who posts that she has become engaged might be offered an ad for a wedding
photographer on her Facebook page.

 In 2011, Facebook made $3.2 billion in advertising revenue, which constituted 85% of
its total revenue. That was good for Facebook, which launched its Initial Public Stock
Offering (IPO) in May 2012. However, this is not good news for Facebook user.

2. 13 million users have never adjusted Facebook’s privacy controls, which allow friends
using Facebook applications to unwittingly transfer user data to a third party without
user’s knowledge.
Facebook uses highly specific details such as relationship status, location, employment status
and other demographic information, as well as user’s online activity to develop an incredibly
accurate picture of your life.
However, the personal information gathered by Facebook can also be used against the users in
other ways both with and without the consent of the users.
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Ethical dilemma in this case study is Facebook monitors its subscribers and then sells the
information to advertisers and app developers. The only option that user have is that Internet
companies should be forced to ask for permission before using user’s personal information and
want the ability to opt out of online tracking.
Therefore, Facebook’s critics are concerned that the repository of personal data of the size that
Facebook has amassed requires protections and privacy controls that extend far beyond those
that Facebook currently offers.
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2. What is the relationship of privacy to Facebook’s business model?

66% of monthly Facebook users use it daily and on an average Americans spend 58 minutes
per day on Facebook. An average Facebook user clicks on 8 ads per month. The relation
between user’s privacy and Facebook business model is, therefore, important because
Advertising is the mainly revenue of Facebook.

They give people a free social media platform to use and in turn sell advertising and insights
based on what they learn about user. Facebook has massive capabilities to collect, store and
analyze data. This allows Facebook to sell very targeted advertising. Therefore, privacy is the
Facebook business model.

The less privacy Facebook offers to its users, the more valuable and useful its business model
becomes. By providing more privacy to its users, the less data it collects, stores, and provides
to advertisers. That makes its business model less valuable because advertisements cannot be
as fully developed for individual users hence talking about privacy to Facebook is a bit ironic.

Over 90% of Facebook’s advertising revenue now comes from mobile. Facebook reported
$11.97 billion in revenue and $4.98 billion in profit for the last quarter of 2018, with 91 percent
of its advertising revenue coming from mobile which means Facebook’s entire business model
is based on aggregation and sharing user information.

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3. Describe the weaknesses of Facebook’s privacy policies and features.

What people, organization and technology factors have contributed to
those weaknesses?

The company has encountered more than its fair share of controversy along its path to success,
mostly concerning its handling and usage of the extensive information it collects from its users.
The weakness behind Facebook’s privacy issues was a lack of communication between
Facebook and its users. Users were not aware that they were able to control what information
was being shared with external parties.

The ‘News Feed’ feature is another example of fb using their user’s information incorrectly.
Instead of only sharing status updates the news feed shared additional information such as
profile updates, adding new friends, and adding new applications.

In addition, FB’s incorrectly handling user information when deleting their accounts also
caused a backlash for Facebook. Fb servers would keep user information permanently, with
the reasoning that it would be easier for the users to reactivate their accounts if they chose to.

Weaknesses of privacy policies and features:

 Poor protection and privacy control
 User’s activities are trespassed by other parties
 Allows third parties to collect user’s private information without permission
 Exposure of user’s biometric database without user’s acceptance
 Unequal privacy protection standards in different countries

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What the People, Organization and Technology factors have contributed to those
weaknesses are discussed below.

People:

The company utterly failed to grasp the extent to which the service violated its users’ privacy
as well as the uproar such a service was likely to cause. The same thing occurred when
Facebook introduced its News Feed feature.

Organization:

The personal information collected on the site represents a mother lode to advertisers, but one
that will remain largely untapped if Facebook users do not feel comfortable enough or have
sufficient incentive to share it. Users that attempted to delete their accounts were met with
resistance and often required outside assistance from watchdog groups.

FB wants the world to be more open and connected because it stands to make more money.
However, the privacy controls over the personal data are far from what FB currently offers.
Moreover, most of the users are not really aware of the privacy setting in their FB’s account.
Technology:

An FB user’s friends are not notified if information about them is collected by that user’s
application. Many of FB’s features and services are enabled by default when they are launched
without notifying users.

4. Will Facebook be able to have a successful business model without

invading privacy? Explain your answer. Could Facebook take any
measures to make this possible?

Will Facebook be able to have a successful business model without invading

privacy? – the answer will vary on this question. Let’s see some indicators.

Positive indicators:

 It’s one of the largest social networking sites in the world and is growing.

 Facebook’s interface is simplistic and clean and tends to attract those looking for a
crisp, more structured social networking environment.

 It represents a unique opportunity for advertisers to reach highly targeted audiences

based on their demographic information and narrowly specified criteria.

 It represents a gold mine of opportunity because of the information the site has gathered
and because of the richness of the social networking environment.

 Part of its status as a first-mover in the social networking marketplace helps attract more
users

Negative indicators:

 It has created large numbers of hostile users because of its privacy violations

 Facebook’s own popularity will injure its chances to attract advertisers to its site,
claiming that the engaging and immersive environment that draws visitors to the site
makes users less likely to click on ads.

 Skeptics also believe that the current application system, where applications tend to
support one another via advertising through other applications without the aid of
extensive outside advertising, is an unsustainable model over the long term. So far, only
 200 Facebook applications have attracted more than 10,000 users per day and 60
percent failed to attract even 100 daily users.

 It remains to be seen whether or not the company can turn its heavy site traffic and trove
of personal information into new revenue streams.

Considering the above-mentioned indicators, Facebook will be able to have a successful model
without invading privacy because Facebook is currently serving as much to advertise and reach
people as it earns from those advertisements.

Could Facebook take any measures to make this possible? - Yes, by making
active changes to improve users’ privacy. It is a critical challenge for FB to avoid offends
user’s privacy but yes measures can be taken by making active changes to improve users’
privacy such as:
 To alert all the members of FB with an electronic detailed letter stating that for
advertising purpose information that is submitted to your information pages will be
used by Fb company.
 To give the users the options to either accepts or reject this offer in order to install a
legal standing that with the users of the site as well as protect the integrity of the
company.
 To offer applications that could be put on their pages in terms of interactive games
and trivia, in return for allowing FB to access users account for advertising purposes.
Once the Facebook management can do this then a broader, more organized and more
successful advertising campaigns can be launched.