It’s no secret that in today’s world big data is big business. Your information gets collected, cataloged, analyzed and fed through algorithms designed to monetize your every move.
While virtually every tech giant wants to collect as much data from its users as possible, the poster child for this practice is still Facebook. Now, Facebook will have to answer some serious questions.
Facebook allegedly used its wealth of user data as leverage against other companies, treating it as a bargaining chip to control potential competitors and maintain its dominant market position, according to an in-depth report from NBC News.
NBC News said it obtained around 4,000 leaked documents showing how CEO Mark Zuckerberg orchestrated plans to strengthen Facebook’s dominance by dangling user data to companies and third-party developers. The company also used data as a trading tool despite publicly advocating for its platform’s privacy.
The trove of sensitive documents was reportedly leaked to British journalist Duncan Campbell, who later shared them with NBC News, Computer Weekly and German newspaper Süddeutsche Zeitung.
They all appear to have originated from a California court case between Facebook and the small start-up company Six4Three. In 2015, Six4Three sued Facebook after the social media giant revised its policies and announced plans to limit the data it shares with third-party apps.
See, Six4Three’s soft-launched its quite creepy app “Pikinis” back in 2013.
It was advertised as a way for users to easily find photos of their friends in bathing suits, but for it to work, it relied on specific Facebook user data to deliver its results. Obviously, denying the Pikinis app access to this data meant that it (together with around 40,000 other apps) had to shut down.
The Pikinis app may have folded after Facebook cracked down on third-party data access but of course the documents from Six4Three’s lawsuit remain, revealing the inner workings of the company as it devised ways to use its massive collection of user data to its advantage.
The documents, which include emails, chat logs, presentations, spreadsheets and meeting summaries from 2011 to 2015, showed Facebook threw around the idea of either selling access to user data to developers or trading it for the developers’ own data as compensation.
The NBC report reveals that early on, Facebook recognized the value of working with third-party app makers, so it developed its very own “Graph API,” a set of tools and interfaces that allowed app makers to access a broad range of user data.
However, after a few years, the documents showed Facebook soon realized app developers were getting more value from the data access than Facebook was getting from the app developers.
When Facebook went public in 2012 with disappointing results, the company allegedly brainstormed about ways to turn the ship around. One of these ideas? Make money from app developers by selling them access to user data.
But in late 2012, it appears that Zuckerberg scrapped that plan and decided that Facebook shouldn’t charge app developers for basic data feeds.
Instead, in exchange for user data access, the company started pushing third-party developers to compensate it with their own data or by paying for Facebook advertisements.
It’s not about user trust
Now, here’s where it gets interesting. With Facebook’s future plan for third-party app developers in place, the company reportedly started making deals with its most valued partners, including developer friends of Zuckerberg and Facebook’s chief operating officer Sheryl Sandberg.
Facebook started whitelisting user data access to dozens of companies and developers (including Amazon, Microsoft, Sony and Tinder), while limiting access to apps the social media giant viewed as potential competitors such as MessageMe, an app that would’ve challenged Facebook Messenger.
This gear shifting apparently caused confusion among partners who were used to full access to Facebook user data and caused some Facebook employees to express their unhappiness about this direction.
Adding to the confusion was Facebook’s public announcements in 2014 saying the broad changes it was implementing were all about user trust and privacy, hiding the fact that was more about competition and market dominance, the documents suggest.
Facebook says the documents were “cherry picked”
We reached out to Facebook and in an official statement sent to komando.com, Facebook’s VP and Deputy General Counsel Paul Grewald said the leaked documents are misleading and were cherry-picked to reinforce Six4Three’s 2015 lawsuit against the social media giant.
“As we’ve said many times, Six4Three – creators of the Pikinis app – cherry picked these documents from years ago as part of a lawsuit to force Facebook to share information on friends of the app’s users,” Grewal explained in the statement. “‘The set of documents, by design, tells only one side of the story and omits important context. We still stand by the platform changes we made in 2014/2015 to prevent people from sharing their friends’ information with developers like the creators of Pikinis.
‘The documents were selectively leaked as part of what the court found was evidence of a crime or fraud to publish some, but not all, of the internal discussions at Facebook at the time of our platform changes. But the facts are clear: we’ve never sold people’s data.”
What these leaked documents really mean?
Facebook may have scrapped the idea of charging developers and other companies for access to its user data, but the leaked documents show the company sees the enormous value of having control of more than 2 billion users’ data.
As NBC News noted, the documents show that while Facebook appears to be free, its users are actually paying for access with their personal data — data that is deemed valuable enough by Facebook to use it as a business and competitive leverage, which could lead to antitrust regulations down the road.