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Facebook Staffers Once Brainstormed Ways to Sell User Data: Report

By Richard Adhikari
Nov 30, 2018 5:00 AM PT
facebook at one time considered selling access to its user data

Facebook at one time considered charging companies for access to its user data, according to a Wall Street Journal report based on three pages of unredacted material from an 18-page document showing portions of some internal Facebook emails, mainly from about 2012 to 2014.

The documents are linked to a lawsuit, Six4Three LLC v. Facebook Inc., filed in California Superior Court, San Mateo County (Redwood City).

Six4Three, the developer of Pikini, a now-defunct app for locating photos of users' friends in swimsuits, filed a complaint in 2015 alleging that Facebook's data policies were anticompetitive and favored certain companies over others.

The app failed because Facebook restricted developers' access to friends' data in 2015, a move that doomed Six4Three's business plan, according to the complaint. Facebook has denied the allegations and accused Six4Three of making sensational claims and mischaracterizing its internal records to get attention from the media.

"When the app came out, the press [reports] noted it was quite creepy," Facebook spokesperson Katy Dormer pointed out.

"The whole objective of this lawsuit is to get Facebook to reverse platform changes we made in 2014 and 2015 giving access to all developers to information about friends and friends of friends information," Dormer told TechNewsWorld. [Six4Three] want us to enable those same sharing abilities that Cambridge Analytica exploited, and that's not something we're going to do."

The Documents' Circuitous Path

The sensitive documents were supposed to remain sealed in the California court case.

However, Ted Kramer, one of Six4Three's principals, apparently handed them over to Damian Collins, head of the UK Parliament's Digital, Culture, Media and Sport Select Committee when Kramer made a business trip to London.

Kramer reportedly had refused to provide the documents at first, but acceded after Collins suggested he could go to prison for defying an order from the UK parliament. Kramer then found some files in his laptop that he claimed not to have read, and copied them onto a flash drive for Collins.

Collins said over the weekend that he was free under UK law to disclose the Facebook documents.

What the Emails Reveal

The emails Collins released show that Facebook discussed ways to monetize its user data the way some other tech firms have done. One Facebook employee suggested shutting down data access across the board to all apps that did not spend at least US$250,000 a year to maintain access to that data.

In one email exchange, Facebook employees reportedly offered to extend the Tinder dating app's access to user data at no charge, in return for the use of Tinder's "Moments" trademark.

The trademark dispute with Facebook over "Moments" was resolved years ago, Tinder said, adding that it did not receive special treatment, data or access related to the dispute or its resolution.

Another set of emails dealt with Facebook negotiating a special agreement with Amazon in 2013. One Facebook employee said it would result in Amazon getting less access to data, and another responded that Facebook either would have "a disappointing conversation with Amazon or a strategic conversation in the context of the broader deal discussions," the Journal reported.

Another set of emails dealt with the Royal Bank of Canada's access to Facebook user data. One Facebook employee asked whether the bank had an agreement requiring it to spend a certain amount on advertising each year. Another responded that the bank would run one of the biggest mobile app-install ad campaigns ever run in Canada.

The bank maintained that it never had a minimum marketing spend or target agreement with Facebook.

Taking Care of Business

The documents at the center of the WSJ story "reflect internal conversations where we were trying to build a sustainable business with the developers of apps," Facebook's Dormer pointed out.

"Like any organization, we were discussing what we should do and, instead of charging developers, we ultimately decided to give them APIs for free."

Facebook had just emerged from its IPO in May 2012 -- then the largest technology IPO in United States history. The company offered more than 421 million shares at $38 each and raised more than $16 billion.

The company's performance immediately following the IPO was disappointing, however. Facebook had not yet developed a strategy to generate revenue from its mobile product, and it was struggling with a data sharing policy that gave tens of thousands of outside app developers access to private information about its users through its developer platform, while the company got nothing back in return.

The emails Wall Street Journal reporters saw lacked context and in some cases were truncated, the paper reported.

Facebook had said in other court filings that the excerpts subsequently were redacted because they contained sensitive discussions of its internal strategic analysis of third-party applications, releasing information that could damage Facebook's relationships with developers.

Further, the documents "are only part of the story, and the way they were presented was misleading," Facebook's Dormer maintained.

San Mateo County Superior Judge V. Raymond Swope, who is hearing the Six4Three suit, apparently thinks so as well. He has written that the company has not convinced him that the documents in question are relevant to the case. He reportedly said that Six4Three's lawyers were engaging in "brute litigation overkill."

Groping for an Identity

Facebook "has been conflicted since its founding," noted Michael Jude, program manager at Stratecast/Frost & Sullivan.

"Is it a common carrier, or is it a service provider that delivers a service in exchange for access to subscriber data?" he asked.

If it's a common carrier, "it has to abide by common carriage rules with equal access, and must provide protections for subscriber personal data," Jude told TechNewsWorld.

If, on the other hand, Facebook is a service provider, then "it can do anything it wants as long as it has the explicit agreement from its subscribers that it can," he said.

Six4Three's Chances

Facebook "wants the best of both worlds, so it has to monetize access somehow, and this involves selling access to subscriber data for fun and profit," Jude noted.

This "generates dissonance in what it does over time," he said. Currently the argument is "between the privacy hawks and Facebook's business customers. I suspect they'll weigh the penalties of offending each and pick the least painful financially."

Given that, said Jude, "I think Six4Three is out of luck."


Richard Adhikari has been an ECT News Network reporter since 2008. His areas of focus include cybersecurity, mobile technologies, CRM, databases, software development, mainframe and mid-range computing, and application development. He has written and edited for numerous publications, including Information Week and Computerworld. He is the author of two books on client/server technology. Email Richard.


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