Having adding "widowed" as a status to Facebook's aging demographic profile Mark Zuckerberg brought his road show to Brazil recently to drum up young members. With security and PR support befitting the leader of a 200 million strong online nation the shy, 23-year old billionaire spoke with future entrepreneurs at Sao Paulo's Getulio Vargas Foundation, telling stories about Harvard life and Facebook's interest in local software developers. But he didn't talk about the CIA's $40 million investment in his company or Facebook's exploitation of member data that violates privacy laws around the globe.
In Canada, law students at the University of Ottawa conducted a review of Facebook's personal data policy and found 22 violations of national privacy law. When Canada's Privacy Commission launched an official investigation, Facebook dismissed the charges as lacking in legal basis.
But privacy commissioner Jennifer Stoddart continued to prosecute Facebook for giving members confusing and misleading information in its end user agreement. The Privacy Commission also has major issues with how Facebook handles member data that is mined by nearly one million third party software developers in over 170 countries. Developers use Facebook member data to create games and other entertainment content that help make the site so successful.
"The notion that some teenager working in a basement halfway around the globe could have access to all of this information was unsettling, to say the least." Elizabeth Denham, Canada's assistant privacy commissioner said, as reported by a Wall Street Journal blog.
Caught with its hands in the cookie jar Facebook caved in and is now attempting to position its corrective action strategy as a global win-win.
Facebook has agreed to make language in its end user agreement less confusing and also says it plans to stop sharing member personal data with developers. But the arrangement does not stop developers and others from using and remodeling the data that has already been mined.
Canada has given Facebook a year to correct the violations, which may result in helping users gain the essence of control over the personal information they signed away when they agreed to the end user agreement.
The Obama administration isn't likely to fight for data privacy the way Canada has because it practices clientist politics that assign a higher importance to campaign contributors whose dollars drive the new digital economy than the interests of the 'one person, one vote' working Americans who are the traditional base of the Democratic party. With Monday's Rasmussen Report tracking Obama's disapproval rating at 51% the White House will need all the help it can get from friends at Facebook and other e-business giants as it develops the issue scripting, opinion modeling and predictive analytics strategies needed for a competitive reelection bid.
Facebook is not the first digital economy powerhouse to push the privacy envelope and take the legal hits. AOL exploited member private data, bought clever public relations help and became the darling of the first dot com bubble a decade ago. But the legal baggage associated with Facebook founder Zuckerberg's settlements with competitor ConnectU raises the question of whether Facebook's business culture will find more subtle methods of putting its hands in the privacy cookie jar.
Just as they challenged the competence of Canada's privacy law team Facebook responded to charges by ConectU that then-consultant Zuckerberg ripped off their concept not so much in substance, but by attacking the influential law firm representing the plaintiffs, Quinn Emanuel. But Facebook's strategy of deflecting fraud charges by attacking the plaintiff law firm became problematic when ConnectU hired lawyer David Boies, who represented Democratic presidential candidate Al Gore in the famous Supreme Court case Gore v Bush.
To its credit, CIA has been more transparent about their stake in Facebook than Zuckerberg has. The intelligence agency acknowledges that it uses Facebook to recruit, and like other government agencies, it can obtain member data in areas where it establishes authority or has other interest in the subject matter. Gilman Louie, the Silicon Valley game developer who ran the CIA venture capital proprietary that backed Facebook has had no qualms about discussing one of his more profitable deals on the internet. Facebook was one of several entertainment outlets that got support consistent with Karl Rove's campaign to Americanize global opinion in the early phase of the Iraq war.
But while the CIA investment came down on the Bush-Cheney watch the $200 million the Russians pumped into Facebook in May with help from Goldman Sachs reinforces the Obama administration laissez faire approach to the free market in private personal data that is needed to monetize the internet as the cornerstone of the global information economy.
Facebook didn't invent the Internet. The Pentagon did. And to avoid the Internet truly becoming 1984 2.0, consumers need to become less docile and take a proactive approach to managing personal data. That considered, the American Psychiatric Association announced recently that internet addiction will be a new entry in the forthcoming DMS-V, the industry bible that defines and categorizes mental illness.
Bill Gates, a big Facebook investor, pioneered Microsoft's Net Passport and has a strong interest in promoting a national smart identity card in the US that could go global. Facebook's big Russian investor, Yuri Milner of Digital Sky, controls 70 percent of all internet page views in his homeland and has access to fund pools that could benefit from being recycled through western markets. And since nothing is free forever, Facebook's model of being a TV-style internet network inside the internet powered by all the data that's fit to mine will likely yield to a pay subscription model as the emerging cartel of bandwidth providers offer cable-TV style packages that feature social networks and other forms of online entertainment.
Mark Zuckerberg told his audience in Sao Paulo that he's a big Green Day fan. But the music that preceded his entrance to the speaking venue was the classic "Hotel California" by the Eagles with its lyric "You can check out but you can never leave." Considering the Faustian bargain we all make when signing end user agreements that's what Facebook privacy policy seems to be all about for now.