Case 5 : Facebook: It’s About the Money

1) Perform an ethical analysis of Facebook, what is the ethical dilemma presented by this case?

Facebook serve the connection between all people around the world and Facebook wants more money and have many user’s, Facebook have more user’s privacy data and more Facebook knows about you it make Facebook serve more relevant advertisement that they are giving users data to the company as their research for the advertisement because the main revenue for Facebook it’s from advertisement and Facebook servers would keep user information permanently whenever the user has deleted their account

Figure: Ethical Analysis of Facebook

• Facebook does not have diverse array of hot new gadgets or a full inventory of software for sale; instead, it has your personal information, and the information of hundreds of millions of others with Facebook accounts.
• 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.
• Facebook is using users online activity to develop a frighteningly accurate picture if user’s life.
• Facebook’s partnership with the Department of Labor helps to connect job seekers and employers as well as helped families find lost pets after natural disasters and allow active duty soldiers to stay in touch with their families.
• These are the reasons why so many people are on Facebook.
• However, Facebook’s goal is to get it users to share as much data as possible, because the more Facebook knows about user, the more accurately it can serve relevant advertisement to users.
• 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.
• 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.
• Ethical dilemma in this case study is Facebook monitors its subscribers and then sells the information to advertisers and app developers.

2.What is the relationship of privacy to Facebook business model?

The relation between user’s privacy and Facebook business model is important because Advertising is the mainly revenue of Facebook. 70% of its five million users log in every day and they all between 18 and 24 that advertisers want to collaborate with Facebook to make profits for both.Talking privacy to Facebook is a bit ironic. Facebook’s entire business model is based on aggregation and sharing user information. 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 much targeted advertising. Therefore, privacy is the Facebook business model. Facebook states its regulations concerning to the rights and responsibilities derive from the Facebook Principles, and govern the relationship with users and others who interact with Facebook. The relevant statements include Privacy Policy, Payment Terms, Platform Policies, Ads Guidelines, Promotion Guidelines, Claims of Intellectual Property Infringement, Claims of Copyright Infringement, etc.

All Facebook parties must comply with this policy.

1. Individual Privacy

Privacy is defined as the state of being private or the condition of being concealed or hidden. In terms of Facebook, the privacy of the individual is how much information, personal or not is seen but other users than the creator or provider of that information. Facebook share information about the user over the internet, where it can be freely accessed by anyone. This is where issues of privacy to the individual arise.

    2. Security of Data & Information.

The security of data and information refers to how private the information on a Facebook page can be and if it can be accessed by others and the extent they can edit the information on that page.

3. Accuracy of Data & Information.

With the internet being a free environment, there are no set rules about who you can be or act as whilst on it. 

4. Data Quality.

Data quality refers to the level of trustworthiness that information is susceptible to. For example data quality affects the large amount of games and applications on Facebook, where the level of trust for the game or application is not known. For all the user could know it may be misleading and result in identity theft or fraud through the use of the user’s information.

5. Changing Nature of Business’

Businesses shifting in the way they operate as they have now come to embrace technology such as the internet and are embracing its advances and innovations. Social networking sites such as Facebook which see more than 350 million people using the site proves to businesses that this can be seen as a great opportunity for marketing over the internet through ads to be displayed on Facebook. This hence changes the way market advertisers work, having to also adapt to using the internet as their tool.

6. Appropriate Information Use.

Appropriate information use refers to the correct usage of information and the adherence to privacy policy if any. Appropriate use of information on Facebook can refer to applications accessing the user’s information and correctly using it without distributing it to any external sources or companies.

7. Health & Safety.

Health and safety on the internet applies to the mental health of an individual rather than the physical. For example the use of social networking site Facebook is associated with issues of cyber bullying and peer pressure. 

8. Copyright Laws.

Copyright laws on Facebook refer to the copying of original pieces of music or art, just as MySpace music works, where bands can post their tracks and pieces online, arises the issue of copyright and how much of the available information can be reproduced.

9. Advertising Policies

Facebook’s policies restrict app makers from using any ad companies that haven’t signed an agreement with Facebook—an agreement that prevents the advertiser from collecting personal information. However some apps are also letting unapproved advertising companies track users, according to data collected from Privacy Choice, a start-up that offers privacy services. This could be a violation of Facebook’s advertising policies.

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

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. In the introduction of the “news feed” was met with opposition from users because they felt it was too invasive. Instead of only sharing status updates the news feed shared additional information such as profile updates, adding new friends, and adding new applications.  FB incorrectly handling user information when deleting their accounts also caused a backlash for Facebook. Facebook 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.

Facebook states its regulations concerning to the rights and responsibilities derive from the Facebook Principles, and govern the relationship with users and others who interact with Facebook. The relevant statements include Privacy Policy, Payment Terms, Platform Policies, Ads Guidelines, Promotion Guidelines, Claims of Intellectual Property Infringement, Claims of Copyright Infringement, etc. All Facebook parties must comply with this policy.

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.

Management:

Facebook assumed it had the consent of users to share information about them that it collected through the Beacon advertising service if they did not use the opt-out feature. Facebook changed Beacon to be an “opt-in” service and gave users the ability to disable it completely. 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.

Technology:

Privacy and user controls over the information granted to Facebook are the biggest concerns most users have with the site. Facebook grossly miscalculated user privacy demands when it launched the company’s Beacon advertising service because it shared information about users that they had not explicitly intended or agreed to share. The service originally began as an “opt-out” feature. Even after users opted-out, the service continued to send information to Facebook regardless of whether or not the user was logged into Facebook at the time. The company’s servers maintain copies of information indefinitely in accounts that have been deactivated.

4.Will Facebook be able to have a successful business model without invading privacy? Explain your answer. Are they any measure Facebook could take to make this possible?

Yes, by make active changes to improve users’ privacy. So If Facebook continues to wish to use the information that people post on their accounts a clear distinction must be made to the users about what they are using the information for and what information they will be using in order to reduce the legal risks and solidify the legality of their advertising. Once the Facebook management can do this then a broader, more organized and more successful advertising campaigns can be launched.

Positive indicators:

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

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

iii) It represents a unique opportunity for advertisers to reach highly targeted audiences based on their demographic information and narrowly specified criteria.

iv) 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.

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

Negative indicators:

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

ii) 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.

iii) 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.

iv) 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.

Therefore, in my opinion, I don’t think Facebook will be able to have a successful model without invading privacy.