On This Episode…

Facebook faces a fine potential greater than all the CASH in the world combined!  Why? Craig, Ken and Matt talk about a 2011 FTC Consent Decree along with an entirely New Investigation that was just opened on Facebook.

Also, This week Craig is holding a FREE Briefing webinar on The Seven Greatest Cyber Threats Small Businesses Face and what they can do about it at 4 PM Thursday April 12.  Reserve your Seat at https://craigpeterson.com/briefing

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Below is a rush transcript of this segment, it might contain errors.

Airing date: 04/11/2018


FTC Is Already Monitoring Facebook – Biggest Fine In History – New Privacy Regulation



Craig Peterson: [00:00:00] Hey, a quick reminder to everybody. Make sure you sign up for the webinar. We are putting so much work into this thing. It’s absolutely nuts. It will be good. We are going to be reviewing the seven deadliest things for small business. And this is according to some of the information the FBI has put online. And of course gone through some of that. It’s going to be interesting. So go to https://craigpeterson.com/webinar. You’ll find all the information there. You’ll be able to sign up for. It is free. All right https://craigpeterson.com/webinar. Today and this morning I was on in Maine and I guess parts of Canada to the Gaspé Peninsula I think can and Nova Scotia, New Brunswick. Kind of interesting. But you really have to kind of tweak your ears to hear it from there. Anyhow we talked exclusively about Facebook and took a couple of really interesting twists on it. Different than when I was talking to Jim yesterday as well. So here we go with our friends over WGAN Ken and Matt. 7:38 on the WGAN Morning News.


Matt Gagnon: [00:01:11] It is 7:38 on the WGAN Morning News and Craig Peterson is next. He’s joining us right now as he does every Wednesday. Craig how are you this morning?


Craig: [00:01:18] Hey good morning. Doing well.


Matt: [00:01:18] Doing better than Mark Zuckerberg perhaps?


Ken Altshuler: [00:01:24] I was going to say I saw you up on Capitol Hill testifying yesterday.


Craig: [00:01:26] Yeah. Yeah. Well I was right after Mark but he went late so I didn’t make it on.


Ken: [00:01:31] Oh, I’m sorry. So before we get to like the other topics, your take on the testimony and Facebook and all those kind of issues?


Craig: [00:01:40] So I hope you guys sitting down here.


Ken: [00:01:43] Yeah, I am.


Craig: [00:01:44] Here’s the big deal and this will give you a chance, Ken, to finally eat that sandwich you got.


Ken: [00:01:50] OK. Thank you.


Craig: [00:01:52] But here’s the thing. Remember back in November 2011? We had Zuckerberg in a much the same position. Zuckerberg has been under investigation, not just Zuckerberg right, Facebook for sharing user data. For not telling people what kind of data was being collected on them. And he came up with the FTC, the Federal Trade Commission, with an agreement a consent decree back in 2011 saying that not only would he not do this anymore, because he had been a bad boy, but that he would ultimately for 20 years submit to audits, external audits of houses book was handling user data how it was complying with the court order. OK. So he was supposed to be telling people exactly what it was that he was doing, what data was being collected, and what was being shared. So let’s look into the numbers here. The FTC has now opened an investigation, it’s been about a month that has been running and they are looking into what Facebook has been doing this time around. But remember we’ve got a consent decree from about seven years you know, six and a half years ago, saying that they wouldn’t do this thing anymore. So when we’re talking about this whole case, we should be looking at the fine potential here as well because remember he went into this with eyes open. He’s been through this before and the FTC has been trying to assert itself in this whole digital watchdog privacy thing. And they have the ability to do all of that.


So when you look at this one particular problem that has happened. If we say that maybe half of the US-based Facebook users which is what the estimate is right now which is about 100 million people, had their data taken by Cambridge Analytica and maybe some of these other companies as well unbeknownst to some of these Facebook users involved. And then you start to get a little bit of math here. OK. We know that there were 71 million people that Cambridge Analytica says that they saw basically in conjunction with the numbers it came on from Facebook. OK. Enter in with a couple other numbers here including forty one thousand dollars per person and you’re talking about more cash and a fine from the FTC than exists in the entire world. We’re talking about a seven point five trillion dollar fine. Now the FTC is not going to go ahead and issue a fine that is going to put Facebook out of business. And there was an interesting article that came out from David Vladek, he’s a former FTC director, and he was the director of consumer protection who oversaw the consent decree with Facebook. So he is expecting this commission now to find new violations income in light of what has happened and he’s saying that Facebook is staring down a 1 billion dollar fine from the FtC for privacy violations. That would be the largest fine the Federal Trade Commission has ever levied on a business. But remember again there a consent decree sitting here too so they may well do it. But you know a billion dollars to the Zuck, what’s that?


Matt: [00:05:43] Well, I mean no offense to that argument from the FTC but that’s a pile of crap. Because Facebook didn’t violate anybody’s data at all. What happened was that the Cambridge professor collected data through an app which was entirely legal and it was also entirely within Facebook’s policies to do exactly what was done. They stopped, they change those policies in 2014 grandfathered people in until 2015 who had existing apps but that data collection was 100 percent entirely legal and there’s no question about that at all. The problem occurred when the Cambridge professor gave that data to Cambridge Analytica. If anybody is doing anything wrong here it’s that Cambridge professor that did that. Cambridge Analytica is not a good company. It is. It has plenty of ethical questions. They used that data in very problematic ways in a lot of a lot of instances. But how in the world can you fine Facebook for basically somebody else breaking their user agreement and doing something wrong against their policies. I mean their big sin in this is that they didn’t follow up with the company after they told them to destroy the data that they later discovered was given to them against those policies.


Craig: [00:06:55] Well it’s a really interesting question because when it comes to privacy here, is that the problem? Because that’s what the FTC fine would be for. Why are there not fines employees for giving all of their data and working closely with the Clinton campaign? 


Matt: [00:07:11] Or the Obama campaign in 2012 or a hundred thousand other candidates that used that same data. And the same people that are questioning him right now on Capitol Hill are the ones that made use of this and were begging people like me to help them use data from Facebook. This makes me angry because this is so B.S. I mean I don’t think Mark Zuckerberg and Facebook are somehow innocent actors. I think there’s plenty to criticize them about and they certainly deserve a comeuppance in my opinion. But the virtue signaling nonsense you’re getting out of Congress right now about the about data breaches when nothing was breached at all and users of Facebook should have been going into their usage of social media knowing this kind of thing is happening because they didn’t hide it. It was not a secret. It was written about in every tech magazine you could ever dream of. It was in the New York Times. It was in The Washington Post. They were open and bragging about it because they thought that they were the future of politics and data and big data and everything else that circulated around that and nobody should have been surprised by it. And we all went into it anyway.


Craig: [00:08:09] Eyes wide open here. But you know frankly Ken, I think we got Matt going this morning.


Ken: [00:08:16] Why, I try and do that. Thank you for doing that for me.


Matt: [00:08:20] He’s just doing a legal brief over there. Eating his egg salad sandwich.


Craig: [00:08:27] Did he get it all over the brief?


Ken: [00:08:25] I did.


Craig: [00:08:26] So here’s something else that I found too. I poked around over on Facebook’s pages and found from their chief technology officer here an update on their plans to restrict data access on Facebook. Now if you’re a programmer there are all kinds of what are called APIs, Application Programming Interfaces. So these are what you might use to get information, to share information back and forth to Facebook or other online or frankly offline systems that are out there. So looking through this list it is amazing. They are going to be dropping their events API which is all about events and calendars. And if you’re trying to set up an event you will not have access to a lot of this information anymore. Their groups API, their pages API. The Facebook log in and be able to use that for third party website is going to be restructured, restricted. The Instagram API is completely going away and it went away as of about two weeks ago. Search and recovery gone. Call or text history part of an opt in feature. But they are removing some of this stuff. Data providers partner categories. The app control. It just goes on and on.


Matt: [00:09:44] Every single one of those things, by the way, they gave you opt in ability to do. I remember when I got my new phone. What was it like a month and a half ago? I installed Facebook messenger app or whatever the first time, it pops up with a window that says hey we can access your text messages, your phone calls, your e-mails, your text, your everything and you can manage it all in one spot. You’re on messenger as a means of convenience right. Do you want to do this was the next question. And I said no. You were all asked that question. If you breezed over it. That is your fault. That is not theirs. They did a lot of things that were intended to be for your convenience that you were so interested in getting to get to use that you’ve breezed right by the yes or no question. And the one sentence that they used to explain it to you and you just clicked yes. And now you’re angry about it. Caveat emptor I’m sorry.


Craig: [00:10:37] Yeah. Is this the nanny state? Whose responsibility is it? I got one more thing for you guys. OK. So Zuckerberg is there. He’s testifying in front of Congress. There are dozens of cameramen just a couple inches away from him. It’s absolutely crazy. So what does he do? He leaves his notebook open. Did you see this?


Matt: [00:10:57] I did actually yes.


Craig: [00:10:59] I know. So the photographers are standing right there. So they took pictures of his open notebook with his notes of how to respond to Congress. What he should say. What he should not say.


Ken: [00:11:15] And they rehearsed the whole thing.


Matt: [00:11:16] Now is anybody surprised about that? I mean we’re talking about a 40 billion dollar company here. You know he wants to be a little careful.


Craig: [00:11:25] A little comeuppance I guess. It’s fascinating. Absolutely fascinating. Ultimately what’s going to happen here, I think Congress wants to feel good about itself or give itself a pat on the back by really kind of harassing him. You’re going to see the FTC doing something anyway in order for them to hang a head on the wall. And you’re absolutely right about this one Matt. You knew or should have known that some of this data was being collected. We had this discussion back in 2011 right when that first consent decree went employees because he was being investigated. His data was being shared. There is no news here other than frankly what amounts to political grandstanding.


Matt: [00:12:10] That’s exactly right. Right there is the coup de gras political grandstanding is all it is and if the FTC does anything that’s all it’s doing. It’s trying to virtue signal just how much it gets about data and how concerned we are that our data is being stolen. That nobody wants to say the hard truth in the room which is that we all knew and we should have known if we didn’t and we did it anyway. And Facebook, you know I almost feel bad for Zuckerberg because for the first you know like 10 years of this company’s existence, it’s sitting there and getting patted on the back and cheered by everyone in the world including its users for using this data and suddenly because a couple of people made a political stink out of Cambridge Analytica suddenly now are also very, very concerned about it. So I find this grandstanding to be nauseating but that’s just me. Craig Peterson our tech guru I appreciate you joining us today and giving me an opportunity to get up on the soapbox. We will talk to you again next week sir.


Craig: [00:13:05] Take care. Bye-bye.


Ken: [00:13:07] Thanks Craig. Bye-bye.

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