Answer The Case questions and expand the response to include:
To examine the definitions of ethics, values and study how our perceptions
influence our ability to work with people from different cultures who may have different
ethical views.
2. To identify and understand some of the main ethical concerns in business organizations.
3. To recognize the factors and reasons that give rise to ethical concerns.
4. To examine how the prevailing ethical behavior and decision- making is influenced by
organizational culture and values.
5. To develop a sensitivity to, and awareness of, group and peer values in terms of ethical
considerations.
6. To understand how a leader understands of ethics and their personal values can affect
the organization’s overall performances.
7. To become more aware of our own ethical standards and behavior.
Case 11: Interface: More Than Just a Carpet Company Stanwick, Understanding Business Ethics, 3e Instructor Resource Case 11: Facebook and Privacy: Big Brother “likes” us Case Summary From Facebook’s inception in a Harvard University dorm room, Mark Zuckerberg’s goal was to develop software to share information. Named after the student and faculty guide at his prep school, ‘’The Facebook’’ was born, and it quickly spread to other Ivy League schools. So, 20 years after George Orwell’s future world of constant electronic monitoring of individuals was predicted to occur in his book 1984, Facebook allowed the constant electronic monitoring of ‘’friends’’ of individuals anywhere in the world. As a result, from its inception, privacy has been an issue of concern pertaining to Facebook. Zuckerberg’s casual attitude toward others’ privacy was evident from the start when he “hacked’’ into Harvard’s database to get dorm ID pictures of the women he was evaluating on his software system. Different rationales may explain the low priority that Zuckerberg gave to privacy. Privacy does not work well with sharing information. The original Facebook was a “closed” social network for college students. Facebook, whose first members were required to have a college e-mail address with an .edu suffix, kept its original strategy of being designed for college students for only a year. The first step to opening up Facebook was to allow high school students to join on September 2, 2005. By this date Facebook was in 882 colleges and approximately 85% of students in those colleges had Facebook pages. Invasion of privacy concerns started in Facebook’s infancy. In a January 2006 article in The New York Times, college students complained that campus police were checking Facebook for parties or other ‘’activities.’’ By 2006, nearly 75% of the students checked their Facebook accounts once a day, and the average user checked his account six times a day. Privacy concerns related to stalking caused the University of New Mexico to ban access to Facebook from its computer servers in 2006. Six months later, another article in the NYT also highlighted the dangers of posting “inappropriate’’ material on Facebook. On September 26, 2006, Facebook now had approximately 9 million users and allowed anyone 13 years of age or older to set up an account. However, Facebook was still slow in addressing the privacy issues related to an ‘’open’’ global social network. News Feed Feature The News Feed feature gave users instant update information on individuals’ Facebook pages by constantly monitoring the activities on every Facebook account. This was the first “tangible’’ example of Facebook infringing on the privacy of the users. When users complained to Zuckerberg about the News Feed tracking system, his famous response was “Calm down. Breathe. We hear you.’’ Facebook then allowed users an option to opt out of the News Feed feature or to shield specific information on their pages. News Feed set two precedents for Facebook. The first was that, whether consciously or not, it was FB’s first attempt to collect data on everyone. The second precedent was that it was the first in a number of occurrences where FB pushed the limits of privacy and reacted only after the users gave feedback or complained. Marketplace Feature In May 2007, Facebook started to allow free classified advertising listings for its 22 million members. Even though the classified advertising was free, it set up the opportunity to charge for ads in the future. Again, whether conscious or not, FB was now evolving into a revenue-generating company. OMG, My Mother Has a Facebook Account Employers were not the only people who realized the value of obtaining information about individuals on Facebook. By June 2007, more than 50% of the users were not college students. Parents started to join Facebook. A July 2007 article in the New York Times points out that Facebook initially did not have any monitoring system to ensure that inappropriate images and content were blocked from being shown on a Facebook account. Again, Facebook was reactive rather than proactive concerning privacy issues in the establishment of policies to protect users from “obscene, pornographic or sexually explicit” material. In October 2007, New York attorney general Andrew Cuomo settled with Facebook concerning charges that the company was not doing enough to warn children about using the site and the lack of control over inappropriate sexual messages. Facebook agreed to hire an independent company that would track Facebook’s response to complaints. Social Advertising Feature: Beacon In November 2007, Facebook decided to use blatant advertising related to the information shared on Facebook. For example, if someone rented a movie on Blockbuster.com, the user would be asked if it was okay to have this movie selection sent to all of his or her friends. By this time, Facebook had 50 million users, so “friends” could quickly be inundated by Beacon with unsolicited ads from people they barely knew. The Federal Trade Commission raised concerns about the level of information obtained about consumers online by existing and potential advertisers. New York’s privacy law states that any person whose likeness is used in advertising must give written consent before the ad is released. The Beacon feature changed the “opt in’’ rule for Facebook users. Beacon’s default was to automatically have users ‘’opt in.’’ In less than a month, 50,000 Facebook members signed a petition objecting to the Beacon program. Facebook managers did not understand the ramifications for the privacy of their users and again became reactive after protests started coming from users. In August 2008, a lawsuit was filed against the Beacon feature by 19 Facebook users claiming invasion of privacy by disclosing personal information for advertising without the consent of the users. On September 22, 2009, Facebook was forced to pay $9.5 million to settle the lawsuit. Facebook agreed to shut down the Beacon program, although Facebook management continued to maintain that Beacon was a good program for the users. Who Owns the Data? The underlying principle related to privacy pertaining to Facebook users is the question of ownership. Who owns the data? The revised terms of service included a statement that said that Facebook would retain the content of the user and the license to store the data after the user account is terminated. Bowing to overwhelming pressure from users, the threat of another lawsuit by consumer advocate groups, and the threat of a formal complaint with the Federal Trade Commission, Facebook restored the earlier version of the terms of service. The earlier version allowed users to remove data and did not allow Facebook to store user’s data permanently. The Price to Opt Out On April 27, 2010, four U.S. senators sent a letter to Zuckerberg raising concerns about the privacy policies at Facebook. Facebook had changed the classification of publicly available date to induce the user’s current city, the hometown, education, where the user worked and the user’s likes, interests and friends. Where previously Facebook allowed third parties to store user data for only 24 hours, that policy was changed so that third partied could store the data indefinitely. Facebook’s response was that the users were allowed to opt out of this type of data disclosure. It would take an estimated 50 clicks of privacy buttons to make the user information private. Facebook’s privacy policy at 5,830 words was longer than the US constitution at this point, whose 4,543 words have guided the US for more than 225 years. In stating that Facebook really does believe in privacy, Zuckerberg announced on May 27, 2010, that there would be changes to the privacy control at Facebook by installing a master control that would allow users to choose what information from their accounts they want to share. The App Privacy Issue In October 2010, the Wall Street Journal revealed that many of the most popular apps on Facebook had been used to transmit identifying information to numerous advertising and Internet tracking companies. The practice violated Facebook’s own privacy policy and raised the question again of Facebook’s commitment to the user to keep personal information private. The WSJ investigation discovered that the 10 most popular apps were transmitting user information to outside parties. In addition, 3 of the top 10 apps were also transmitting information pertaining to the user’s friends to outside third parties. Facebook and the Federal Trade Commission In November 2011, Facebook settled charges by the FTC for using ‘’unfair and deceptive’’ practices in relationship to privacy of Facebook users. The FTC had concluded that FB had made public information that its 800 million users had wanted to remain private. Facebook was accused of allowing advertisers to gather personal information that could be linked to individual users when the user clicked on the advertisement of the firm on the user’s Facebook page. Zuckerberg stated Facebook had made “a bunch of mistakes” but were correcting them. Privacy versus IPO In February 2012, Facebook filed for an IPO to make the company publicly traded. The value of the IPO was estimated to be between $75 and $100 billion. At the time of the announcement, Facebook had 845 million users globally. In a letter to potential stockholders, Zuckerberg stated that the goal of the IPO was not to become wealthy. The reason for the huge premium on Facebook stock was the anticipation of companies being able to customize advertising based on the specific interests of each individual user. However, to obtain that information, Facebook must transfer personal data to the firms. If Facebook’s commitment to privacy in the past is any indication of future commitment, it appears that revenue generation will prevail over protecting the privacy of its users. Because of the accountability of being a publicly traded company, Facebook can no longer ‘’hide’’ behind the ‘’oops, I did it again’’ philosophy of stepping over the line related to privacy issues. On October 15, 2013, Facebook announced that it would allow teenage users to post status updates, videos, and images that can be seen by everyone on Facebook. On November 13, 2014, FB announced it was going to simplify the privacy policy by reducing its length from more than 9,000 words to 2,700 words. The Facebook Experiment An academic study was published in which information was manipulated by the researchers and was sent to the Facebook users. The results of the study were… “Data from a large real-world social network, collected over a 20-year period, suggests that longer-lasting moods (e.g. depression, happiness) can be transferred through networks….although the results are controversial. In an experiment with people who use FB, we test whether emotional contagion (transferring from one person to another) occurs outside of in-person interaction between individuals by reducing the amount of emotional content in the News Feed.’’ After the study was published, Facebook admitted that for one week in January 2012, 689,003 randomly selected users had their news feeds manipulated by changing the number of positive and negative posts they read on their Facebook page. The