Tech Brew Ride Home - Monday, Mar. 19, 2018 - The Facebook Bombshell Fallout

Episode Date: March 19, 2018

The fallout from the Facebook/Cambridge Analytica story summarized, Facebook launches a Patreon, a self-driving car kills a pedestrian and Apple might be making its own screens. Credits: Produced by @brianmcc and the @techmeme staff Music by @jpschwinghamer Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the TechMeme ride home for Monday, March 19, 2018. Today, the fallout from the Facebook Cambridge Analytica story summarized. Facebook launches a Patreon, a self-driving car kills a pedestrian, and Apple might be making its own screens.

Let's get you caught up. So by this point, you've probably heard the news. About four hours after posting our Friday show, Facebook may be able to be. some news. Now, when someone does a Friday 9 p.m. Eastern news dump, the hope is that the story will be forgotten by Monday. Well, that didn't happen in this case, and instead the story seemed to metastasize over the weekend, only seemed to grow in prominence. So instead of being a 24-hour story, this has become a 72-hour one and more. And though I'm sure you've heard something about this story, I thought what might be useful to do at this point is a summary of where we are now and what we know.

On Friday night, Facebook announced it was suspending the political data analytics firm, Cambridge Analytica, from its platform, banning the company from buying ads or running on its Facebook pages. Who is Cambridge Analytica? They're a voter profiling company that has received a $15 million investment from billionaire Republican donor, Robert, Mercer, and which at one time was advised by political strategist Steve Bannon, who reportedly came up with the name of the company. Cambridge Analytica has been hired by various political groups to help do data mining on voting blocks, and it has been credited in some circles, not the least by Cambridge Analytica itself, for helping to win the Brexit vote as well as the Trump

presidential campaign. Okay, so from here we need to cut back in time. In 2015, a Cambridge University professor named Dr. Alexander Cogan created an app to run on Facebook called This Is Your Digital Life. It seemed like one of those personality tests that you see pop up on Facebook all the time. You know, you agree to let the app access your Facebook data, you answer a bunch of questions, then you get back in an amusing report that you can share with.

your friends. It seems that 270,000 people use this app in this manner and the app harvested data on those users to create a profile on them based on their like history on Facebook. But, and here's the kicker, because Facebook's policies around apps and harvesting user data allowed it at the time, the app also harvested data about everyone on those people's friends lists. So, even if you never took this quiz, if one of your friends did, your like profile would have been harvested as well. Thus, it is estimated that this one quiz allowed the good professor to build a psychological profile of more than 50 million users. Please note that there is some fluidity in these numbers. Some are reporting 50 million Facebook users were profiled. Some are reporting

30 million. Now, here's the key thing to keep in mind. This was completely kosher under Facebook's terms of service. Facebook has subsequently changed its TOS, so it is no longer possible to harvest data about your friends to such a large degree. You can sign up for sharing whatever data you want, but my data is no longer roped in, as much, we think. What was against Facebook's rules, apparently was that Dr. Cogan then shared the data he collected from his app with Cambridge Analytica. And this is what people are alleging. It was this data which allowed Cambridge Analytica to build a profile of voters, allowing it to target those voters based on who they felt could be persuadable on behalf of their clients, which again counted among them the people campaigning in favor of Brexit and the Trump campaign.

But again, it was this passing on of the harvested data to a third party that was the only thing that was against Facebook's rules at the time. One more important thing to take note of here. Facebook discovered that Dr. Kogan's company was selling the harvested data against its terms of service back in 2015. It only banned Cambridge Analytica from its platform last Friday night. Why? Because two blockbuster articles about all of this were, going to be published this weekend by the New York Times and The Guardian. According to the New York Times, quote,

during a week of inquiries from the Times, Facebook downplayed the scope of the leak and questioned whether any of the data still remained out of its control, end quote. But that tune was changed on Friday when Facebook announced the Cambridge Analytica ban, and Paul Grewell, a vice president and deputy general counsel at Facebook, told the Times, quote, this was a scam and a fraud. We will take whatever steps are required to see that all the data in question is deleted once and for all, and take action against all offending parties, end quote.

The Guardian in Times pieces included interviews with a Cambridge Analytica, quote, whistleblower, named Christopher Wiley. In The Guardian, Wiley expressed regrets about helping to create, quote, Steve Bannon's psychological warfare mind-effing tool. In another quote, he said, we broke Facebook. Wiley provided documentation, email, and data to the Times and the Guardian to back up many of his assertions. And most troubling among the data was a copy of a letter Facebook's own lawyers sent to Cambridge Analytica that seems to suggest that Facebook knew that Cambridge Analytica had acquired the data illegitimately.

Here's another quote from Wiley, from the Guardian piece, and really that's the piece you want to read if you want to understand everything, it's the most detailed. Quote, Facebook could see it was happening. Their security protocols were triggered because Kogan's apps were pooling this enormous amount of data,

but apparently Kogan told them it was for academic use, so they were like, fine, end quote. One more detail from the Guardian piece in an email that Wiley shared with the Guardian in July 2014, Luke Oil, Russia's second largest oil company, contacted Cambridge Analytica and wanted to know how it could use the company's profile data to target U.S. consumers. Here's a quote from Wiley.

It didn't make any sense to me. I didn't understand either the email or the pitch presentation we did. Why would a Russian oil company want to target information on American voters? Okay, so I felt like we needed to catch our breath there. So that basically sums up the story as it broke, and now for how the story evolved over the weekend. First, of course, everyone went ape about this news on Twitter, on every news outlet you can imagine, on all the Sunday news shows as well. Then the news came out that Facebook had also suspended the personal Facebook account,

as well as the personal WhatsApp and Instagram accounts of the whistleblower, Christopher Wiley. And then as I said, all day Sunday, U.S. and U.K. government and elected officials began giving endless statements and interviews expressing outrage and making demands for answers from Facebook. Then yesterday, Sunday, the Washington Post reported that two former FTC officials told it that Facebook might have violated a 2011 privacy consent decree with the U.S. government. The Washington Post emailed with Jessica Rich, a former deputy director for the Bureau of Consumer Protection. This is quoting from the Washington Post piece, quote, Rich said the consent degree specifically prohibited deceptive statements, required users to affirmatively agree to the sharing of their data with outside parties,

and required that Facebook report any unauthorized access to data to the FTC, end quote. and now quoting from Rich's email to the post, quote, depending on how all the facts shake out, Facebook's actions could violate any or all of those provisions to the tune of many millions of dollars and penalties. Facebook can look forward to multiple investigations and potentially a whole lot of liability here, end quote.

After Facebook made its original announcement saying it was banning Cambridge Analytica, it updated the statement on its website by saying, quote, the claim that this is a data breach is completely false. Alexander Kogan requested and gained access to information from users who chose to sign up to his app, and everyone involved gave their consent. People knowingly provided their information, no systems were infiltrated, and no passwords or sensitive pieces of information were stolen or hacked, end quote. And in all of the Twitter back and forth this weekend, a lot of Facebook executives

were unusually vocal and were parroting this line, stressing that, again, this is not a data breach, but essentially what amounted to theft and fraud. In a sense, they were suggesting that Facebook was one of the victims here, if not maybe the primary victim. Some of those tweets have since been deleted. But a lot of people push back on that, and I'll let the New York Times' Zeynep Tufekchi

sum up the counter argument more succinctly than I ever could. Quote, Facebook's defense that Cambridge Analytica's harvesting of Facebook user data for millions is not technically a breach, is a more profound and damning statement of what's wrong with Facebook's business model than a breach. In Turkish, there's a saying, when the apology is more revealing of a wrong. This is pretty much that. Sure, no security measures. were bypassed, of course that would be another huge wrong.

Maybe there's something wrong with all this enormous data surveillance machinery, huh? If your business is building a massive surveillance machinery, the data will eventually be used and misused, hacked, breached, leaked, pilfered, conned, targeted, engaged, profiled, sold. There's no informed consent because it's not possible to reasonably inform or consent. Facebook and Google too have great security teams, some of the best in the business, no doubt, full of conscientious people. But they can't mitigate the business model, shrug-shoulders emoji. Late this afternoon, Facebook announced that it has hired the digital forensic firm Strauss Friedberg to conduct a comprehensive audit of Cambridge Analytica. According to Facebook, Cambridge Analytica has agreed to comply and give

Strauss Friedberg complete access to their servers and systems. Facebook says it has approached other parties involved in this story, including Christopher Wiley and Alexander Cogan, and asked them to submit to an audit as well. According to Facebook, Mr. Cogan gave his verbal agreement to do so, but Mr. Wiley thus far has declined. In a related note, Channel 4 in Britain will reportedly be airing an undercover investigative report on Cambridge Analytica at 7 p.

tonight, GMT. I won't be able to give you full analysis on this at the time of recording because it hasn't come out. I haven't been able to view it and I haven't been able to read any analysis of it. But check Techmeme.com over the next several hours for a rundown and complete context if the report indeed airs. That's not the only Facebook news today because the company announced a new subscription feature this morning that will allow users to subscribe to content. creators for $4.99 a month. This Patreon-style service would allow you to send money to creators for things like exclusive content or badges and stickers.

Many are calling this an attempt to lure video creators especially away from platforms like YouTube. Facebook is also rolling out a tool that will allow creators to set up a portfolio of their work in order to attract sponsorship and branded content deals. This would put it in competition with niche, the sponsor deal broker owned by Twitter. Interestingly, Facebook will not currently take a cut for any advertising on this new platform, although if fans sign up for the subscription via iOS or Android, Apple and Google Play will take their usual 30% cuts. This shows that Facebook is eager to grab those Vine Stars,

who have now moved over to become YouTube stars, some of whom earn millions of dollars a year from their cut of advertising. But it also shows a willingness to go after Patreon's model of fans funding creators directly. Patreon takes a 5% cut of fan subscriptions currently. Facebook says the new subscription feature will go live next month with 10 creators signed up to participate. This is the second time in as many months that Facebook has rolled out a feature to help content creators get paid by their fans. In January, Facebook added a digital tipping feature inside its Facebook Live, live streaming

product. KNXV, ABC 15 in Arizona, reported this morning that police in Tempe, Arizona, are investigating a deadly crash involving a self-driving Uber vehicle overnight. According to the report, a woman was crossing the street outside of the crosswalk when she was struck by the vehicle. The woman was taken to the hospital. and later died of her injuries. Tempe police reported that the vehicle was in autonomous mode when the incident occurred,

but a vehicle operator was also behind the wheel at the time. Uber told Business Insider in a statement, quote, Our hearts go out to the victim's family. We are fully cooperating with local authorities in their investigation of this incident, end quote. There are also reports that Uber has paused all of its autonomous vehicle tests pending further investigation. The pause would occur in all cities that Uber tests autonomous vehicles currently, including Pittsburgh, Toronto, San Francisco, and Phoenix.

This appears to be the first time a pedestrian has been killed by an autonomous vehicle. A driver was previously killed while using Tesla's semi-autonomous autopilot mode, though he reportedly ignored safety warnings in that incident. This afternoon, TechCrunch reported that the National Transportation Safety Board was opening up an investigation into the Tempe crash. On Twitter, Northeastern University Urban Planning Professor Jeff Boeing noted, quote, among the reasons that companies test self-driving cars in Arizona are its wide roads and few pedestrians. Low-complexity environments make easier navigation tests, but that does not lead to well-trained models. There are higher complexity tests done elsewhere.

Today in Bloomberg, Mark German reported that, for the first time, Apple is designing and producing device displays completely on its own. Using a secret manufacturing facility in California, Apple is apparently developing next-generation micro-LED screens. Micro-Led LEDs are reportedly in many ways superior to the current OLED displays, and hopefully we'll make future gadgets. slimmer, brighter, and drain less battery power. At the moment, smartphone manufacturers tend to use off-the-shelf displays

sourced from manufacturers like Samsung, Sharp, and LG. Samsung, for example, produced the OLED screens used in Apple's iPhone 10. German said that the Micro-L-D Initiative is at a, quote, advanced stage and is taking place in a 62,000 square foot manufacturing facility about a 15-minute drive from Apple headquarters in Cupertino. But he also noted that it would still be several years before the new screens would make it into production models of Apple products and that the new screens would likely first appear in Apple watches.

Micro-L-ED would help Apple stand out from the current crop of OLED screens increasingly favored by smartphone manufacturers. An analyst told German in the piece that bringing the design in-house is a golden opportunity for Apple. Quote, everyone can buy OLED or LCD screens, but Apple could own micro-LED. Such a big strategic move might go a long way to explaining something pointed out last week by Neil Seibart at Apple Watchdog website above Avalon. Cybart tweeted, quote, The $14 billion that Apple will spend on R&D in fiscal year 18 is more than the amount Apple spent on R&D from 1998 to 2011.

This is also double the amount that Apple spent on research and development just four years ago. That's it for today. I've been your host, Brian McCullough, at Brian MCC on Twitter. If late-night news dumps happen again, you can find out about them any time day or night on techmeme.com. Thanks for listening.