Facebook’s Data Deals Are Under Criminal Investigation
Facebook’s Data Deals Are Under Criminal Investigation
By Michael LaForgia, Matthew Rosenberg and Gabriel J.X.
Dance March 13, 2019
Federal prosecutors are conducting a criminal
investigation into data deals Facebook struck with some of the world’s largest
technology companies, intensifying scrutiny of the social media giant’s
business practices as it seeks to rebound from a year of scandal and setbacks.
A grand jury in New York has subpoenaed records from at
least two prominent makers of smartphones and other devices, according to two
people who were familiar with the requests and who insisted on anonymity to
discuss confidential legal matters. Both companies had entered into
partnerships with Facebook, gaining broad access to the personal information of
hundreds of millions of its users.
The companies were among more than 150 firms, including
Amazon, Apple, Microsoft and Sony, that had cut sharing deals with the world’s
dominant social media platform. The agreements, previously reported in The New
York Times, let the companies see users’ friends, contact information and other
data, sometimes without consent. Facebook has phased out most of the
partnerships over the past two years.
“We are cooperating with investigators and take those
probes seriously,” a Facebook spokesman said in a statement. “We’ve provided
public testimony, answered questions and pledged that we will continue to do so.”
It is not clear when the grand jury inquiry, overseen by
prosecutors with the United States attorney’s and Exchange Commission. And the
Justice Department’s securities fraud unit began investigating it after reports
that Cambridge Analytica, a political consulting firm, had improperly obtained
the Facebook data of 87 million people and used it to build tools that helped
President Trump’s election campaign.
The Justice Department and the Eastern District declined
to comment for this article.
The Cambridge investigation, still active, is being run
by prosecutors from the Northern District of California. One former Cambridge
employee said investigators questioned him as recently as late February. He and
three other witnesses in the case, speaking on the condition of anonymity so
they would not anger prosecutors, said a significant line of inquiry involved
Facebook’s claims that it was misled by Cambridge.
In public statements, Facebook executives had said that
Cambridge told the company it was gathering data only for academic purposes.
But the fine print accompanying a quiz app that collected the information said
it could also be used commercially. Selling user data would have violated
Facebook’s rules at the time, yet the social network does not appear to have
regularly checked that apps were complying. Facebook deleted the quiz app in
December 2015.
The disclosures about Cambridge last year thrust Facebook
into the worst crisis of its history. Then came news reports last June and
December that Facebook had given business partners — including makers of
smartphones, tablets and other devices — deep access to users’ personal
information, letting some companies effectively override users’ privacy
settings.
The sharing deals empowered Microsoft’s Bing search
engine to map out the friends of virtually all Facebook users without their
explicit consent, and allowed Amazon to obtain users’ names and contact
information through their friends. Apple was able to hide from Facebook users
all indicators that its devices were even asking for data.
Privacy advocates said the partnerships seemed to violate
a 2011 consent agreement between Facebook and the F.T.C., stemming from
allegations that the company had shared data in ways that deceived consumers.
The deals also appeared to contradict statements by Mark Zuckerberg and other
executives that Facebook had clamped down several years ago on sharing the data
of users’ friends with outside developers.
F.T.C. officials, who spent the past year investigating
whether Facebook violated the 2011 agreement, are now weighing the sharing
deals as they negotiate a possible multibillion-dollar fine. That would be the
largest such penalty ever imposed by the trade regulator.
Facebook has aggressively defended the partnerships,
saying they were permitted under a provision in the F.T.C. agreement that
covered service providers — companies that acted as extensions of the social
network.
The company has taken steps in the past year to tackle
data misuse and misinformation. Last week, Mr. Zuckerberg unveiled a plan that
would begin to pivot Facebook away from being a platform for public sharing and
put more emphasis on private communications.
Nicholas Confessore, Alan Feuer and Rebecca R. Ruiz
contributed reporting.
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