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Facebook’s data-sharing practices are called into question, again

An NBC News report reveals the company shared user data with “friends” while withholding it from competitors.

Mark Zuckerberg Addresses F8 Facebook Developer Conference
Facebook CEO Mark Zuckerberg speaks during the F8 Facebook Developers conference on May 1, 2018 in San Jose, California.
Photo by Justin Sullivan/Getty Images
Li Zhou is a politics reporter at Vox, where she covers Congress and elections. Previously, she was a tech policy reporter at Politico and an editorial fellow at the Atlantic.

Facebook was hit with yet another damning story about its treatment of user data on Tuesday. And it’s one that could have potential regulatory implications.

According to a report from NBC News’s Olivia Solon and Cyrus Farivar, Facebook and its founder Mark Zuckerberg had considered selling user data to app developers, even as it publicly highlighted its efforts to protect user privacy:

But the documents show that behind the scenes, in contrast with Facebook’s public statements, the company came up with several ways to require third-party applications to compensate Facebook for access to its users’ data, including direct payment, advertising spending and data-sharing arrangements. While it’s not unusual for businesses that are working together to share information about their customers, Facebook has access to sensitive data that many other companies don’t possess.

As part of these discussions in 2012, Zuckerberg indicated that he was open as many as a hundred deals with developers, partly as a means to identify the “real market value” of the company’s user data.

While the social media giant stopped short of ultimately doing so, it did wind up using this data as a cudgel against competitors, sharing it with partners that it sought to collaborate with and with other businesses that had positive relationships with Facebook execs — all while withholding it from those it viewed as a threat.

In short: Facebook treated user data not as something to be protected, but as a tool to be exploited for maximum profit.

Facebook told NBC News that it did not give “preferential treatment to developers or partners because of their ad spending or relationship with executives.”

Although plenty of companies profit from the collection and sale of user data, Facebook’s attempts to capitalize on it in this way — efforts discovered in a trove of 4,000 documents obtained by NBC News after they were disclosed as part of a lawsuit — are troubling for a few reasons.

For one, Zuckerberg had previously claimed in 2009 that Facebook would never sell user data. For another, it’s just the latest development in a recurring struggle the company has had navigating privacy protections on its platform.

Facebook’s relationship with user data has been a rocky one. And its attitude toward privacy has caused tension with Instagram and WhatsApp.

This is far from the first time Facebook has run into major questions about how it handles user data. One of the biggest scandals the company experienced took place in the spring of 2018 and centered on this very issue, when the New York Times and the Guardian published pieces revealing that political consulting firm Cambridge Analytica had accessed the data of up to 87 million users without their knowledge.

Not only was that revelation contentious because users didn’t realize the extent to which their information was available even to Facebook apps they hadn’t approved, but also because of how the data was potentially used: Cambridge Analytica, a firm hired by the Trump campaign in 2016, was known for leveraging data to build voter profiles and directly target people.

Facebook ultimately changed its rules for app developers, including the academic who disclosed the data to Cambridge Analytica, but it’s just one of multiple incidents that underscore how privacy hasn’t exactly been prioritized by the Silicon Valley giant in the past.

In fact, privacy was a relative footnote in conversations Facebook had about the way it shared data, Solon and Farivar write. Although Facebook didn’t ultimately sell user data to product developers, its value for the company’s growth and the advertising that fuels it has always been apparent.

Leveraging user data to bolster its rise was such a central piece of Facebook’s approach that it led to a series of clashes between Zuckerberg and the heads of two key companies that the tech giant had acquired. WhatsApp founders Brian Acton and Jan Koum, frequently clashed with Zuckerberg’s views on privacy, according to a Wired piece from Nicholas Thompson and Fred Vogelstein also published Tuesday. And Instagram founders Kevin Systrom and Mike Krieger, had their share of conflicts as well.

One such disagreement: Facebook used Instagram to test a location-tracking feature, something the image-sharing app’s management had pushed back on.

Things got so contentious between the two, Thompson and Vogelstein report, that Instagram’s Systrom likened himself to an especially beleaguered Cabinet official, who was previously bullied by President Donald Trump:

According to someone who heard the conversation, Systrom openly wondered whether Zuckerberg was treating him the way Donald Trump was treating Jeff Sessions: making life miserable in hopes that he’d quit without having to be fired.

Why putting “value” on user data could be an antitrust issue

One of the key implications of this report, as Solon and Farivar point out, is that Facebook’s attempts to put specific monetary value on its user data, could make it more vulnerable to antitrust regulation.

The reason for this? Facebook has long claimed that its services to users are “free” since people don’t pay for the product specifically, even though they do share their own data with it. Historically, it’s been tough for regulators to try to nail down antitrust cases against “free” offerings put forth by tech companies.

In 2007, for example, a US court ultimately rejected a suit brought against Google, which argued that it was using its search engine in an anti-competitive way. The court, at the time, said that “competition in the provision of free services” was beyond the purview of the law.

That could be the case this time around as well, Rutgers University law professor Michael Carrier told Vox. “Even though users are providing information that is valuable to Facebook, they are not paying money for access to the platform,” he said. “And according to longstanding antitrust law, this is not enough for an antitrust violation.”

However, if Facebook is designating discrete value to the user data that it gathers, it could indicate that the product isn’t so much free, but directly paid for via this data, making the company more susceptible to antitrust scrutiny, one expert told NBC News.

“These emails clearly establish the value of consumer data to Facebook,” Jason Kint, CEO of Digital Content Next, said. “It shows that it is not free.”