Commentary: Higher stakes in data privacy crisis yet Facebook’s response is business as usual

Commentary: Higher stakes in data privacy crisis yet Facebook’s response is business as usual

The US company’s response is a classic example of how companies deal with calls for more regulation, says one observer at the Financial Times.

SAN FRANCISCO: It is hard to claim the moral high ground when you are stumbling around in an ethical fog.

Privacy has always been a relative issue for the companies that dominate the consumer internet economy. It is not about aspiring to some absolute standard for protecting user data. Instead, what matters are the generally accepted standards of the time.

Being able to compare yourself favourably to a competitor who sets the bar lower helps. When things go wrong there is always a mea culpa to deliver and a new, higher ideal to commit to.

This has become a tried and true formula for defending one of the most profitable advertising businesses ever invented. But for how much longer?

FACEBOOK'S RESPONSE A 'TEXTBOOK EXAMPLE'

Facebook’s response to the crisis over the alleged leak of 50 million users’ personal data has been a textbook example of how to deal with calls for more outside regulation of a tech company.

First, concede you did not live up to the trust of users — without being too specific about how you failed. Point out that the problems are historic and you have already changed your policies to deal with them.

Then promise some extra protections to raise the privacy bar — while not doing anything that will hamper a business model that relies on the collection and use of unprecedented amounts of personal information.

READ: A commentary on Facebook's floundering response to the data scandal.

A PATTERN

A refusal to look to its own shortcomings squarely in the eye has been an essential part of this pattern. Even by the standards of Silicon Valley, where the past is another country, Facebook’s ability to disown its own earlier practices can seem remarkable.

Take a company blog post from late last year that brushed off prior failures to prevent users’ data from leaking through third-party apps — the very issue at the heart of the scandal that has shaken the company this week.

At the time, Facebook conceded it was “fair to criticise” its earlier shortcomings. But it also claimed credit for always having cared about privacy, along with the fact that “in the past five years we’ve significantly improved”. 

It was as though past mistakes did not deserve a further thought — no matter that, five years before, the company was already public and had just topped 1 billion users.

It has promised to take a harder look — for the first time — at weaknesses in the past that might have led to other instances of wholesale mishandling of personal data. Given the intense political pressure this week, it could hardly not.

But in all other respects, Wednesday’s response to the Cambridge Analytica scandal looked like business as usual: Insist that you take the issue seriously, tighten some rules about the sharing of data, but do not do anything that might threaten the Golden Goose.

This has worked with other privacy snafus. But will this time be different?

INVESTORS SHOULD BE WORRIED

The signals from Wall Street suggest it may. Investors have been worrying for some time about new regulations on consumer tech platforms, without anything specific to pin their fears to. Now they have it.

All the big tech stocks were caught in a downdraft on Monday, but a bifurcation has been evident. Companies that rely on collecting data to support online advertising businesses — Facebook, Google, Twitter — have been hit the hardest.

In one sign of the shift, Amazon’s stock market value jumped past that of Alphabet, making it second only to Apple. For its part, the iPhone maker, with no advertising business to defend, decided to make its own, heightened commitment to user privacy a differentiator some time ago. 

Like Microsoft, the company has fought a high-profile case against the US government to defend user data against unwarranted intrusion by law enforcement — a badge of honour at a time when other platforms are coming to be seen as promoters of private sector surveillance.

ESCAPE AGAIN?

The cynical view is that Facebook will escape, once again, with a ticking off and a promise to do better. 

Unlike Brussels, Washington has shown no taste for privacy legislation. The Federal Trade Commission put the social networking company on a short leash seven years ago after a previous failure, but has done nothing to clamp down on it subsequently. 

And while many users have expressed outrage this week, there is no evidence of large-scale user defection.

History suggests that this storm, like the others, will eventually blow over. But with so much user data at stake — and claims that the inviolability of democracy itself may be on the line — the stakes have just got a lot higher.

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Source: Financial Times/sl

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