Data sharing is at the heart of Facebook's latest scandal – that's how Facebook does business

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The Facebook business model has always been simple: get as much personal information from users as possible, then find a way to make money from it.

For over a decade, it has been a very successful strategy, bringing 2 billion monthly users to the social platform to a friend, feud and play Farmville.

But as the year ends, Facebook has two major legal exercises and falls from a series of public relations disasters. The company's stock lost more than 25% of its value since January and a further 7% took place on Wednesday after reporting that it shared the power of private users to read and delete users with companies such as Netflix and Spotify.

Great, this fall from grace through departure from the practices that made it was not defined as one of the most precious companies in the world. The company 's pumping scandals in 2018 have largely kept pace with the basic principles of the Facebook business model.

“For many companies, including but not limited to Facebook, there is a business model to extract as much personal information from technology users and it can be evaluated, without the utmost consent. get from the users, ”said Adam Schwartz, senior staff attorney at the privacy advocacy group of the Electronic Frontier Foundation.

To introduce more users, keep them spending more time on the platform, and encourage them to share more information, Facebook opened their platform for other companies interested in accessing their base users.

He gave access to third-party app developers, such as the political consultancy firm Cambridge Analytica, who created a Facebook personality quiz app for Facebook users as a way to access private information to all Facebook friends, and then d & # 39; They used that data to serve political clients like Donald Trump's 2016 campaign, and the campaign in favor of British leaving the European Union.

And it took integration with companies like Spotify and Netflix to keep tabs on users everywhere they went.

Then, as always, he used the more reach and deeper trough of data to sell more ads to more people.

The problem is that users are not coming to what Facebook and other technical companies are doing to understand their data.

Google used its Gmail email service in a similar way, which provided it free of charge, which brought a huge user base into. By tracking users' email content and linking them to Google searches made on the same browser, the company received personal data streams, which she then used to improve her profitable ad-targeted business.

Google finished tracking email content in 2017, but the third-party app developers can still read the millions of Gmail users.

As the internal growth and funding strategies underpinning the largest companies emerge, more users are deciding that they do not like them.

“When I agree to be friends with Facebook on Facebook,” Schwartz said, “I don't think it's the result of all my information being sucked in an app that one of my friends is using. ”

This issue of consent is at the heart of Facebook's legal troubles.

On Wednesday, Washington's solicitor sent D.C. general suit against the company because of failing to inform users that Cambridge Analytica was finding their data and full friend list details when they put the personality quiz app on a Facebook platform .

Facebook is also taking action on a class action on the use of facial recognition software to identify people uploaded to the platform, which the complainants claim to infringe Illinois law against collecting biometric information in the absence of denied consent.

An investigation published by the New York Times on Tuesday found that the social media giant gave corporate partners such as Netflix, Spotify and Royal Bank of Canada the ability to read and delete private messages from users as part of integration. which kept users into the Facebook Ecosystem. Facebook also allowed Microsoft, Sony, and Amazon to receive user friends email addresses, according to the investigation.

The lack of clear user consent could be a problem for a company that was facing an order of consent from the Federal Trade Commission 2011 requiring Facebook to obtain user consent before sharing data with other companies.

A bigger problem, however, could be a slowness of consumer confidence in their basic relationship with Facebook.

A study in October at Baker Center at Georgetown University asked respondents of companies and American institutions to rank as they trusted them. Facebook was last third, but only before “Political Parties” and “Congress”.

Alex Stamos, a former chief security officer for Facebook, said that some of the data sharing arrangements detailed in the report could be good for consumers.

“Users must have the right to take their accounts to different devices and services – we do not need Facebook, Microsoft, Google, and other giants building walls that cannot be promoted so that users have no choice. ”

But he said the company had failed to adapt to its own success.

“Many of these things are from a different era, when Facebook was a different product,” said Stamos, who came into Facebook in 2015 and left earlier this year. “When people were using it for fun, and then suddenly it was the most important communication platform in the world, the security and privacy decisions you made are no longer valid.”

Some of the data sharing arrangements date back to 2010, according to the New York Times; Cambridge Analytica began collecting data in 2014.

In a blog post, Facebook said that it dealt with the data-sharing relationships by law, citing an exception in the consent agreement to move data to service providers.

Schwartz queried this interpretation, stating that it was in cases where Facebook could be rented on other company servers for data storage.

“We think this is an abuse of the service provider's exception,” Schwartz said.

British lawmakers, who are investigating the company for anti-competitive practices, also made Wednesday's weight.

“We have to face a serious challenge to Facebook's demand that they are not selling user data,” said Parliament member Damian Collins in a statement. “They may not allow people to reach the bucket load, but they reward companies that have access to data refused to others, if they value the business highly. they do together. ”

sam.dean@latimes.com

Follow me on Twitter: @samaugustdean

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