Zuckerberg Details Mistakes; Legislation Floated on Capitol Hill

During a hearing with the Senate Judiciary Committee, Commerce Committee ranking member Bill Nelson, D-Fla., asked Zuckerberg if Facebook had an ethical obligation to alert the estimated 87 million users whose data was allegedly sold by Cambridge University researcher Aleksandr Kogan to Cambridge Analytica for $800,000. Zuckerberg said when Cambridge Analytica verified the data was deleted, as directed by Facebook, the platform considered it a closed case, which “was a mistake.” It’s impossible to start a company in a dorm room, as Zuckerberg did in 2004, and expand it into a company with $40 billion in annual revenue without making mistakes, the chief said.

Blumenthal called Facebook’s actions “willful blindness,” drawing attention to language in an agreement between Facebook and Cambridge Analytica showing Facebook was aware the developer could sell the data. That's a violation of Facebook’s 2011 consent decree with the FTC, Blumenthal said, which Zuckerberg denied.

Markey told reporters his legislation includes the right to know about information-gathering practices, the right to know if data could be reused for unintended purposes and the right to opt out of data-gathering activity. That’s in line with the GDPR, rules that Facebook is already “going to live under,” Markey said. Asked about the appetite for such regulation in the U.S., Markey said, “Very high. Thousands cheered. … The day of reckoning for American privacy has arrived. Facebook now has to deal with how much people understand how vulnerable all their information is, how few protections are on the books, so I do think this is a legislating moment.”

Blumenthal told reporters separately he already introduced data privacy and security legislation through the My Data Act (S-964). This effort with Markey will better define rules and standards so platforms put “privacy above profits,” Blumenthal said. Rules could be imposed through outside oversight by an agency like the FTC, mandating specifically informed consent, minimization of data collection through tracking or data broker sales and other protections found in the European law, Blumenthal said. Regulating the tech industry can be a bipartisan effort, he said, citing recently passed anti-sex trafficking legislation with bill author Sen. Rob Portman, R-Ohio (see 1803210064). Facebook initially opposed but eventually supported that bill. “Accountability should be important to the tech sector because they ought to respect rights of consumers and users to privacy,” Blumenthal told reporters. “It is a moment of reckoning for Facebook. It is high noon for Mark Zuckerberg and the company. It is a moment comparable to” the automobile industry’s response to Ralph Nader’s book, Unsafe at Any Speed.

Honest Ads Act

Twitter announced Tuesday it was following Facebook’s decision to support the Honest Ads Act (see 1804090041). Sen. Mark Warner, D-Va., tweeted: “I hope @Google will soon join @Facebook and @Twitter in supporting this bipartisan bill to bring accountability and transparency to online political ads.” Google didn’t comment.

Warner told reporters Monday he welcomes endorsements of Honest Ads Act measures, but this isn't an issue that can be addressed on an ad-hoc basis. “You’re going to need legislation so that Americans are aware of the source of the political paid advertising that we’re seeing,” Warner said. This isn’t just about political ads, he said: There are real questions surrounding fake accounts, where a lot of the “damage was done” in the 2016 election.

Information Technology and Innovation Foundation Vice President Daniel Castro warned Congress against “blindly” following Europe’s model on comprehensive data protection regulation. Strict rules like the GDPR “would kneecap the U.S. Internet economy," he wrote.

Technology Policy Institute Senior Fellow and President EmeritusThomas Lenard also warned: “Proposed policy responses involve limitations on the ways data can be shared or used rather than mitigating harm to users. In fact, nobody has identified harms due to the Facebook-[Cambridge Analytica] incident. Without some identified harms to remedy, regulation will not have any benefits.”

'American Dream' or 'Privacy Nightmare'?

The Facebook story represents the American dream, and it’s up to Zuckerberg to make sure that dream doesn't become a “privacy nightmare,” Senate Commerce Committee Chairman John Thune, R-S.D., told Zuckerberg. Sen. Orrin Hatch, R-Utah, said the company has garnered the most scrutiny for a tech company since Microsoft in the early 2000s. Senate Judiciary Chairman Chuck Grassley, R-Iowa, said there clearly was a breach of consumer trust and improper transfer of data.

Sen. Lindsey Graham, R-S.C., suggested the platform has a social media monopoly. If Facebook is Chevy, what is the Ford, Graham asked. “It certainly doesn’t feel like” Facebook has a monopoly, Zuckerberg said, saying he bought Instagram because it was a promising platform created by talented developers.

In addition to suspending Cubeyou, another developer suspected of improper data collection, Facebook is investigating tens of thousands of applications to see if there has been any “sketchy” activity, Zuckerberg said. Thune and Nelson plan to schedule a separate hearing with Cambridge Analytica in “the near future,” Nelson said in opening remarks.

Asked how this controversy could affect Facebook’s business model, Zuckerberg said a free version of the platform will always be available. Sen. Dick Durbin, D-Ill., elicited laughter when he asked if Zuckerberg would be comfortable sharing where he stayed Monday night in Washington. Zuckerberg said no. Durbin said the Cambridge Analytica case is about privacy.

Zuckerberg said consumers have different expectations for ISPs and edge companies like his, so regulation should vary accordingly. USTelecom CEO Jonathan Spalter in an emailed statement said Zuckerberg is calling for “different internet rules” for the two: “Broadband providers have ‘leaned in’ on providing strong consumer privacy protections for two decades,” and it’s in the best interest of consumers for platforms to “get on board.”