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Jan 29, 2019

Analysis | The Technology 202: Facebook's messaging plans spark privacy, antitrust concerns around the world

By Cat Zakrzewski Cat Zakrzewski 





Facebook CEO Mark Zuckerberg arrives to testify before a joint hearing of the Commerce and Judiciary Committees on Capitol Hill in Washington. (AP Photo/Pablo Martinez Monsivais, File)
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Facebook’s plans to stitch together its three main messaging services have put the social network back in the glare of regulators around the world.
Ireland’s top data protection watchdog on Monday called Facebook Ireland for an urgent briefing on the company’s plans to unify the infrastructure of its Instagram, WhatsApp and Facebook Messenger services and to encrypt messages on all of those channels end-to-end. The move could make it easier to message friends across services and enable new features -- while likely expanding the power of Facebook's already massive ecosystem. The Irish Data Protection Commission said in the wake of other data privacy concerns involving the company, it needed to closely monitor the social network’s plans, even though they are in the early stages.
“The Irish DPC will be very closely scrutinising Facebook’s plans as they develop, particularly insofar as they involve the sharing and merging of personal data between different Facebook companies,” the commission said in a statement.
The Irish commission's scrutiny of Facebook is likely just the first of several probes regulators could bring against the social network about this plan. Their concerns won’t just be limited to privacy — the plans to more closely tie together three of the top social network services have also created antitrust questions. 
The New York Times report about Facebook’s plans highlights a major shift in the company’s strategy. Since acquiring WhatsApp and Instagram, Facebook has largely allowed the companies to operate independently, but it’s now indicating the walls that have existed between the subsidiaries and the parent company may be easing. Regulators are concerned about how data will be shared among the services, especially because WhatsApp has long offered stronger privacy protections to users than Facebook, which relies on targeted ads.  
Consumer advocates hope both the European Union’s top antitrust cop Margrethe Vestager and the U.S. Federal Trade Commission will also take a look at whether a merger of the technology behind these three companies harms competition and violates statements the social network made when it was acquiring WhatsApp in 2014.  
“Regulators need to show that they’re up to the task of protecting the public’s interests,” said Marc Rotenberg, the president and executive director of the Electronic Privacy Information Center.
History suggests Facebook could be in trouble — at least in the European Union where regulators are taking a tougher stance when it comes to reining in the technology giants. The European Commission already fined Facebook $122 million in 2017 for presenting misleading information about its plans to merge its existing social network with WhatsApp. The fine was a response to the company's decision in 2016 to begin combining WhatsApp data with Facebook's primary service, potentially giving the company advertising advantages. Vestager said that Facebook had told E.U. regulators when they reviewed the acquisition that it wouldn't combine the companies' data. 
The new integration plan — still in early stages — appears to be much more extensive than Facebook’s actions that resulted in the fine, which involved matching the phone numbers of WhatsApp users with their Facebook accounts. That could prompt Vestager, who has become known as Silicon Valley’s nemesis for her tough scrutiny of American technology companies, to take further action.
Juan Ortiz Freuler, a policy fellow at the international non-profit the World Wide Web Foundation, said on Twitter he was curious to see if Vestager would act:
Also curious to see EU reactions, since this seems to be out of line with the conditions upon which they allowed FB to take over whatsapp?
https://t.co/zroqCRmDeW cc @vestager ?
— Juan Ortiz Freuler (@juanof9) January 25, 2019
The Federal Trade Commission did not scrutinize Facebook’s acquisition of WhatsApp as closely as its European peers, but consumer advocates are still hopeful that the agency could crackdown on Facebook now. Rotenberg says the plans to knit together the messaging services could violate assurances that Facebook and WhatsApp made at the time of the acquisition that they would keep the services separate.
“I don’t see how the FTC can ignore this,” Rotenberg said. “This is Facebook thumbing their nose at the FTC.”
The FTC’s credibility is on the line. Already, the FTC has an investigation open into Facebook’s Cambridge Analytica scandal, in which a political consultancy firm tied to the Trump campaign obtained users’ data without their permission. But many consumer advocates think the commission hasn’t gone far enough in scrutinizing technology companies’ acquisitions or privacy violations. Some Democrats are pushing for national privacy legislation that would grant the agency more resources to tackle these issues.
Rep. Ro Khanna (D-Calif.) said Facebook’s acquisitions of Instagram and WhatsApp should have drawn far more antitrust scrutiny:
1/2 -- This is why there should have been far more scrutiny during Facebook’s acquisitions of Instagram and WhatsApp which now clearly seem like horizontal mergers that should have triggered antitrust scrutiny. https://t.co/Ekbu0dBxCW
— Rep. Ro Khanna (@RepRoKhanna) January 25, 2019
Though Facebook's integration plans are prompting more regulatory scrutiny in the short-term, it's possible they could actually bolster the company's antitrust defense long-term. As many on Twitter pointed out, if Facebook is successful in melding these services, it could actually strengthen its guards against potential efforts to break the company up down the line. Some experts have previously said the only way to rein in the social network is to break up Facebook and Instagram.
Antonio García Martínez, author of "Chaos Monkeys" and a former Facebook product manager, said:
Can't split them up if you tie them into a Gordian knot.
I'm sure it makes sense from a technical perspective. I'm also sure the strategic value of the ensnarement was also discussed.https://t.co/IfNY43y83D
— Antonio García Martínez (@antoniogm) January 25, 2019
Facebook is slated to have a major earning’s call on its fourth quarter tomorrow — a quarter in which it was battered with privacy and policy scandals. Investors will be watching for more details about the company's plans to knit together the messaging services.
You are reading The Technology 202, our guide to the intersection of technology and politics.
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BITS, NIBBLES AND BYTES
BITS: The United States escalated its crackdown on Huawei Technologies with a 13-count indictment in New York charging the Chinese telecommunications giant, two affiliates and Meng Wanzhou, Huawei's chief financial officerThe Washington Post's Ellen Nakashima and Devlin Barrett reported. The indictment contains allegations of bank and wire fraud, and the company is also accused of violating U.S. sanctions on Iran and conspiring to obstruct justice, according to my colleagues. Another 10-count indictment in Washington state alleged that Huawei conspired to steal technical details about a phone-testing robot from T-Mobile.
Sen. Roger Wicker (R-Miss.), the chairman of the Senate Commerce Committee, said in a statement that the “indictments of Huawei officials confirm the risk of China’s involvement in transformational, next generation technology.” Sen. Mark R. Warner (D-Va.), the Senate Intelligence Committee's vice chairman, praised the Trump administration for the move but also said in a statement that the indictments are “a reminder that we need to take seriously the risks of doing business with companies like Huawei and allowing them access to our markets.”

A sign at Facebook's headquarters in Menlo Park, Calif., on Oct. 10, 2018. (Elijah Nouvelage/Reuters)
NIBBLES: Facebook is increasing its efforts to combat election interference abroad as the company announced plans to expand a searchable database of political ads, according to the Wall Street Journal's Sam Schechner and Kimberly Chin. The changes will apply to India next month and to the European Union in March, where the E.U. parliamentary election is scheduled for May.
For instance, advertisers will need to be authorized to buy political and issue ads on the platform. The company will also expand a searchable library of those types of ads to the E.U. and later across the world. “The library will include details about individual advertisements that include the amount spent and the number of people reached, as well as demographic data on those people,” according to the Journal. “It will be searchable for as long as seven years.”
Separately, Motherboard's Joseph Cox reported that internal documents show that Facebook trains content moderators to look for posts that could lead to “PR fires” in the periods preceding elections. “Sources told Motherboard how this sort of preparation has become a norm for Facebook, with the company trying to educate its moderators about hot button political issues that are particular to different democracies around the world during an election season, but with varying results,” Cox reported.

A man on his phone at the Eastern Market Metro station in Washington. (Michael S. Williamson/The Washington Post)
BYTES: Replica, an urban planning tool by Alphabet subsidiary Sidewalk Labs, uses real-time mobile location data but it's unclear where exactly that data comes fromAva Kofman reported in the Intercept. The program obtains the location data from unspecified third-party companies. The tool, which transportation authorities in Kansas City, Portland and the Chicago area have signed up for, aims to give planning officials the possibility to model patterns of travel in a city.
However, Replica de-identifies the location of cellphone users and Sidewalk Labs has enacted “significant protections to safeguard privacy” according to the Intercept. Nick Bowden of Sidewalk Labs said the program creates a synthetic model that “obscures the real-world travel habits of individual people.”
But several tech companies and wireless carriers have faced mounting scrutiny over their data collection practices. Ben Green, an urban technology expert, expressed worries about Replica's use of cellphone location data. “The privacy concerns are pretty extreme,” Green told Kofman in an email. “Mobile phone location data is extremely sensitive.”
PRIVATE CLOUD

Apple's campus in Austin on Dec. 13, 2018. (Suzanne Cordeiro/AFP/Getty Images)

Elizabeth Holmes, founder of Theranos, in San Francisco on Nov. 2, 2015. (Jeff Chiu/AP)
— Researchers warned that the opacity among health-care start-ups could lead to another scandal like the fall of the blood-testing company Theranos, TechCrunch's Jonathan Shieber reported. In a paper, researchers associated with the Meta-Research Innovation Center at Stanford are “warning investors in life sciences startups that a systemic lack of transparency exists in their portfolio companies,” Shieber wrote.
The study found that most of the highest-valued heath-care start-ups haven't published important scientific papers. “According to the study’s findings, more than half of the healthcare startups that are worth more than $1 billion have published no highly cited papers at all,” TechCrunch reported. “For companies that were acquired or are publicly traded that number is around 40 percent.”
— Facebook inserted code on its website that blocks ProPublica’s ad transparency tool, Jeremy B. Merrill and Ariana Tobin reported for ProPublica. The social network had previously told ProPublica to close its ad transparency initiative, which aims to show users how advertisers target them. Tools developed by others including Mozilla and Who Targets Me have also stopped working. “Facebook has made minor tweaks before that broke our tool,” ProPublica reported. “But this time, Facebook blocked the ability to automatically pull ad targeting information.”
— More technology news from the private sector:
The UK's former deputy PM issued strong words today. The company's critics would prefer strong action.
BBC News
Apple decided several years ago to produce a high-end Mac in Texas. The problems that surfaced illustrate the challenges of domestic manufacturing.
New York Times
Snap Inc is considering changes to its Snapchat app, known for disappearing photos and videos, that could make users’ public posts longer lasting or even permanent, people familiar with the matter said.
Reuters
As companies including Microsoft and Verizon explore cloud-based gaming, players and businesses alike are nearing the achievement of a longtime dream.
Brian Fung
PUBLIC CLOUD

Rep. Alexandria Ocasio-Cortez (D-N.Y.), third from right, on Capitol Hill in Washington on Jan. 24. (Andrew Harnik/AP)
— Reps. Chellie Pingree (D-Maine) and Alexandria Ocasio-Cortez (D-N.Y.) chided the chief executives of Facebook, Microsoft and Google for their companies' “implicit” support of a session “denying established science on climate change” at the recent LibertyCon conference in Washington, according to CNBC's Sara Salinas. Pingree and Ocasio-Cortez said in a letter to the tech executives that they were “deeply disappointed to see that your companies were high-level sponsors” of LibertyCon.
— T-Mobile chief executive John Legere and Sprint Executive Chairman Marcelo Claure will testify on Feb. 13 before Congress about the T-Mobile-Sprint merger, according to a news release from the House Energy and Commerce Committee. Legere and Claure will appear before a joint subcommittee hearing of the House Energy and Commerce and House Judiciary committees.
— Asked whether the Federal Communications Commission would investigate the sale by AT&T, T-Mobile and Sprint of their cellphone users' location data to third-party companies, the agency said it is “going where the facts lead us” and added that it would not “comment publicly in the middle of an investigation,” according to a tweet from Motherboard's Joseph Cox.
— More technology news from the public sector:
An undersea cable designed to serve hedge funds and made possible by climate change is bringing speedier internet access for isolated schools in Alaska.
Wired
#TRENDING
— Tech news generating buzz around the Web:
Too much tech can be bad for you. Here’s what happens when people are left to fighting their own devices.
Recode
@MENTIONS
— Bryan Palma will become president and chief operating officer of BlackBerry, Bloomberg News's Nate Lanxon reported.
404 ERROR

Noreen Yap, 42, of Washington, D.C., center, shows her husband, Clint Yap, on FaceTime, Tesla's new Model 3 car on Friday, January 26, 2018, at the Tesla store in Washington, D.C. (Photo by Salwan Georges/The Washington Post)
— Apple disabled Facetime group chat after a bug was discovered that allowed callers to remotely activate the microphone in another person's phone, according to the Associated Press. "Reports said the bug in the video chat app could allow an iPhone user calling another iPhone through Group Facetime to hear the audio from the other handset — even if the receiver did not accept the call," the AP reported.
The incident has prompted a warning from New York Governor Andrew Cuomo, urging people to disable the app.
— News about tech incidents and blunders:
Male impotence, substance abuse, right-wing politics, left-wing politics, sexually transmitted diseases, cancer, mental health. Those are just a few of the advertising labels that Google’s adtech infrastructure routinely sticks to Internet users as it watches and tracks what they do online in order to target them with behavioral ads.
TechCrunch
BURN RATE
— Today in funding news:
Data sharing and storage company Dropbox Inc said on Monday it would buy electronic signature company HelloSign for $230 million in cash, which will expand its portfolio of workflow-related products.
Reuters
CHECK-INS
Today:
Coming soon:
  • Upfront Summit in Malibu, Calif., tomorrow through Thursday.
  • ITEXPO in Fort Lauderdale, Fla., tomorrow through Friday.
WIRED IN
Trump never caves. Until he does.
How some conservative media reacted to Trump ending the shutdown:

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