Once a student startup, Facebook has grown to be a tech giant and the most popular social media platform in the world. However, its outsize influence, especially after the acquisition of Instagram and Whatsapp, has caused the US-based company a great deal of legal trouble. Some of the biggest scandals that Facebook had to face concerned the issues of privacy. In the era when data has become a new form of currency, the social media platform was sharing user information with third parties or ignoring breaches in its security system allowing illicit data collection. The European Union has since decided to pass regulations to undercut Facebooks leverage, but the United States has not yet followed suit. This essay argues that state control of Facebook may help to defend users right to privacy and prevent misinformation but at the same time, infringe on free speech and hurt employment opportunities and business revenues.
Advantages of Facebook Regulation
Defending the Right to Privacy
The right to privacy is one of the most fundamental freedoms enjoyed by the citizens of the United States. This freedom is guaranteed by the Fourth Amendment to the US Constitution that states that the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated. On the international level, the right to privacy can be found in the 1948 Universal Declaration of Human Rights, according to which, no person should be subjected to arbitrary interference with his privacy [&] nor attacks upon his honor and reputation. Facebook has long been walking a fine line between collecting voluntarily shared information and infringing on users privacy. However, recent scandals indicate that the tech giant might have given in to its appetite for data and taken it too far.
In July 2018, Facebook was fined $5bn by the US Federal Trade Commission (FTC) for the social companys mishandling of user data. The court ruling was the result of the FTCs investigation into the now-defunct British political consulting firm Cambridge Analytica that allegedly found a breach in Facebooks security system and gained access to 87 million users information (Ward). Aside from that, the company admitted to sharing data with Amazon and Yahoo, which is an exemption from their privacy rules. What is even worse in 2015, the Google Android system allowed Facebook to collect call and text logs from phones, which contradicts the companys initial claim that it only collects data on personal interests.
In the Facebook v. Patel case, the company claimed that data sharing could only be deemed illegal if users were individually harmed (Ward). What this logic ignores is the magnitude of consequences and temporary immediacy of issues. Indeed, a data breach may not hurt a person directly or in the short term. Yet, Facebook is practically refusing to take responsibility for adverse future events, for instance, if someone has their reputation soiled due to involuntarily divulged information.
Preventing Misinformation
However, it is not only data collection for targeted advertising but also the contents of Facebook ads themselves that may pose a danger. Some of them are not marketing chic clothing apparel or a local cozy food place: instead, they are promoting potentially harmful views that may mislead the viewers. As reported by Gilbert, in 2019, Facebook was criticized for allowing ads suggesting negative health effects of Truvada PrEP, an HIV-prevention drug with clinically proven efficiency. Not only that but the advertisements also had a direct call to action: they were meant to recruit gay and bisexual men for receiving cash compensations because of allegedly adverse side effects of the drug. By doing so, the advertisers were preventing HIV prophylaxis among some of the most vulnerable demographics.
Disadvantages of Facebook Regulation
Infringement on Free Speech
The discussion about regulating Facebook in the United States cannot leave out the question of free speech. The latter is guaranteed by the First Amendment that says that no law should [abridge] the freedom of speech or the press. The amendment is not meant to protect popular opinions; it also gives the people of America the right to support fringe ideas and hold non-mainstream opinions. Probably one of the most resonant cases on this issue was Brandenburg v. Ohio in 1969 when the court ruled that a Ku Klux Klan member was not breaking the law by expressing his racist views as long as they did not lead to imminent violence (Talmy and Dobzinski). Hate speech, which has recently become a buzzword for the US media, may also be protected by the First Amendment. Apart from that, history knows examples when a controversial opinion was proven to be right after an initial ban. Between 1933 and 1939, Churchill was not allowed to speak on BBC and warn his compatriots of the threat that was Hitlers Germany. In other words, sometimes an infringement on free speech not just violates human rights but becomes a source of danger.
Facebooks formal policies regarding free speech have so far complied with the US Constitution. According to the Community Guidelines, the company removes all content that contains misinformation that could lead to physical harm. However, in practice, exercising free speech in the context of Facebook is not as straightforward. Westfall exposes the platforms inconsistency in applying their policies: while it allows Trumps racist remarks, it deletes the Brazilian Presidents opinion on the COVID-19. The same happens to advertisements that touch upon social or political issues. Likely, additional state regulations will not delineate but further complicate the case. Besides, when managed by the government, the very definition of hate speech or misinformation may become subject to change based on the current agenda.
Loss of Revenue and Employment Opportunities
What should not be ignored when analyzing the issue of Facebook regulation is that it is a business whose goal is to generate more profit. Today, about 85% of Facebooks profit comes from advertising, which amounts to around $40 billion annually (Smith). The company is one of the biggest employers globally and in the United States, and it is growing revenues that allow them to expand its operations and hire more staff. In September 2020, 56,653 people were working for Facebook, which is a 30% increase year-over-year (Smith). Providing new employment opportunities and retaining staff is especially important during an unprecedented crisis that is the COVID-19 outbreak.
Facebook not just creates jobs but also helps small and medium businesses connect with their potential customers. As pointed out by the author of The Like Economy, Carter, Facebook is a marketing tool unlike any that the world has seen. Its Like system decreases marketing costs and gives businesses control over customer conversations. Doing business on this platform is transparent and conducive to creating evangelistic customers who share content, defend products, and increase sales.
This year, the COVID-19 pandemic has pushed many businesses to the brink of bankruptcy, and during this time, they appreciate any affordable and effective channels of communication. Bartik et al. report that in their sample, 43% of businesses closed with one of the primary reasons being a reduction in demand (17656). The Mid-Atlantic region took the hardest hit where the closure rate reached 54% of firms, and employment decreased by 47%. According to Bartik et al., the most affected industries were retail, arts and entertainment, food services, and hospitality businesses that heavily rely on social media and especially visual imagery for customer leads (17661). It is possible that new regulations will cut off the oxygen for such businesses, and they will lose any visibility on Facebook.
Conclusion
Regulating Facebook is as complex as it gets and has both potentially positive and negative consequences. On the one hand, doing so will fortify US citizens right to privacy guaranteed by the US Constitution and the Universal Declaration of Human Rights. It is critical since Facebook refuses to take responsibility for delayed consequences of data leaks and sharing. Furthermore, regulations may help to stop misinformation that poses a threat to users mental and psychological health. On the other hand, government control may violate users rights to free speech by redefining what hate speech and misinformation are. Additionally, limiting advertising capacity would stifle Facebooks expansion capacity, decreasing job and business opportunities.
Works Cited
Bartik, Alexander W., et al. The Impact of COVID-19 on Small Business Outcomes and Expectations. Proceedings of the National Academy of Sciences, vol. 117, no. 30, 2020, pp. 17656-17666.
Carter, Brian. The Like Economy. Pearson Education, 2014.
Social networking has become increasingly popular in the recent years. Businesses consider social marketing as an important element of their strategic planning and invest a significant proportion of their marketing budget in this tool of marketing. All types of businesses irrespective of their sizes, locations, and products or services use social networking websites for different marketing objectives. These objectives include increasing awareness of customers, communicating with customers, promoting products or services, etc. In the last decade, several social networking websites emerged that offer interactive platforms for socialization. These social networking websites offer great opportunities to businesses to carry out their marketing activities. Amongst these social networking websites, the most successful website is Facebook.
Facebook implemented a unique networking platform that allowed developers and programmers to integrate web and mobile phone applications with the website. The company was incorporated in California, U.S. in the year 2014 and it filed an Initial Public Offering (IPO) of its shares in 2012. The companys shares were floated at a price of $38 per share, and the IPO was a complete success. It raised $104 billion for the company, which made it the largest initial public offering (Bultman, 2012). At the time of this IPO, the company reported 845 million active users. However, the recent figures reported by the company indicated that there are more than 1.2 billion users presently active on the website that makes it one of the largest social networking websites across the globe. After the IPO, the companys stock price plummeted to its lowest value of $26.81. However, since then the companys stock price has been on the rise. Presently, the companys stocks are trading at $64.29, which reflects a capital gain of $26.29 per share. The current beta value of stock is 1.08, which implies a reasonable level of riskiness associated with an investment in the companys stocks. The website has implemented a business model, which generates revenues from advertisements and other promotional activities carried out by businesses and individuals (Van-Tien Dao, Nhat Hanh Le, Ming-Sung Cheng, & Chen, 2014). The following graph indicates the stock price movement of Facebook.
Figure 1: Stock price movement (2012-2014) (Facebook, Inc. (FB), 2014).
There is no immediate threat to the websites business. It major competitors in the online marketing industry are Google, Yahoo!, Bing, and many other trade websites (Facebook Inc. Form 10-K (Annual Report), 2014). However, the website has a unique selling point as it allows marketing by businesses according to the geographical and social segmentation of its members. It makes it easier for businesses to target potential customers in a cost effective manner.
The rationale of selection is derived on the basis of the companys strong position in the social networking industry and its potential to attract new active customers. The company acquired several support businesses in different parts of the world that would assist it in developing newer technologies and applications. The prospect of the company remains positive. Therefore, possible investment in the companys stocks is considered in this report.
Investor Profile
Every investor has a different attitude towards risk associated with investment in equity. In order to develop an investors risk profile, various factors are considered. These factors include investment experience, risk tolerance, investment goals and objectives, and liquidity requirements of the investor (Thompson, Williams, & Findlay, 2009). A moderate risk profile is considered for investment in stocks of Facebook. An investor with a moderate risk profile is expected to hold his or her investment for a longer tenure. The risk tolerance of such investors is moderate. Such investor expects fluctuations in the stock price during the holding period. These fluctuations are considered temporary and short-term trading in stocks is avoided. The primary objective of the investment is to achieve capital gains from an increase in the stock price. These capital gains are only realized upon selling of stocks (Thompson, Williams, & Findlay, 2009). Moreover, a moderate risk investor does not expect to receive a regular income in the form of dividends from his or her investment. There is a moderate level of risk associated with investment in the companys stocks as the current beta value is close to one. Stocks that have a beta value close to one have less volatility and investors could expect fewer fluctuations in the stock price (Brigham & Ehrhardt, 2014).
Financial Ratio Analysis
Facebook is a new public limited company, and it filed its financial statements only for the last three years, which are used in this report for the financial ratio analysis. The companys year-end is on the last working day of the year. The company is incorporated as per the rules and regulations of the Securities Exchange Commission, US. It reports its financials in US Dollar terms. The analysis includes five important financial ratios including current ratio, asset turnover, total debt to total equity ratio, return on equity, and cash flow ratio (Tabbush et al., 2011). The justification for the selection of financial ratios was the objective to assess the performance of the company under four different categories of analysis including liquidity, efficiency, leverage, profitability, and cash flow ratios.
2013
2012
2011
Current Ratio
11.88
10.71
5.12
Current Assets
13,070,000
11,267,000
4,604,000
Current Liabilities
1,100,000
1,052,000
899,000
Asset Turnover
0.44
0.34
0.59
Sales
7,872,000
5,089,000
3,711,000
Total Assets
17,895,000
15,103,000
6,331,000
Total Debt to Total Equity Ratio
0.16
0.28
0.29
Total Debt
2,425,000
3,348,000
1,432,000
Total Equity
15,470,000
11,755,000
4,899,000
Return on Equity
9.64%
0.27%
13.64%
Net Income
1,491,000
32,000
668,000
Total Shareholders Equity
15,470,000
11,755,000
4,899,000
Cash Flow Ratio
3.84
1.53
1.72
Operating Cash Flows
4,222,000
1,612,000
1,549,000
Current Liabilities
1,100,000
1,052,000
899,000
Table 1: Key Financial Ratios. Figures are in 000s. Sources: (Facebook, Inc. (FB), 2014b).
The companys liquidity position remained very strong in the last three years. The current ratio was calculated by dividing Facebooks current assets by its current liabilities. The current ratio assists in ascertaining a companys short-term liquidity position. In the last three years, the current ratio value was well above the benchmark value of 1.00 (Tabbush et al., 2011). It suggested that the company did not face any problems related to its short-term obligations. Short-term obligations of the company included account payable, current portion of long-term debt, and other current liabilities (Facebook Inc. Form 10-K (Annual Report), 2014). An analysis of the companys current assets revealed that the company made significant short-term investments in securities of U.S. government and U.S. government agencies (Facebook Inc. Form 10-K (Annual Report), 2014). These investments were available for sale, and the companys intention to invest in such securities was to generate income from other sources for the companys shareholders. The companys cash position remained strong, which helped the company to invest in developing better technology and performing extensive marketing activities. The company has undertaken several initiatives to collaborate with other companies to increase its coverage and number of users (Facebook Inc. Form 10-K (Annual Report), 2014).
Moreover, the companys Form 10-K report for the year ending December 31, 2013 indicated that the company managed its current liabilities well. The company reduced its external debt by a significant amount in 2013 that suggested that it generated high profits and cash from its operations. It could also be noted that the companys retained earnings almost doubled in 2013, which suggested that the company held sufficient earnings for reinvestment in the company or repay its external borrowing (Facebook Inc. Form 10-K (Annual Report), 2014).
The second ratio included in this report is the asset turnover ratio. The asset turnover ratio is an important ratio that ascertains a companys ability to use its assets efficiently and generate higher sales (Brigham & Ehrhardt, 2014). The results indicated that the company improved its asset utilization in 2013. The ratio value was 0.44 in 2013 that implied that the company generated $0.44 of sales from each $1 invested in the companys assets. In 2012, the ratio value was just 0.34. The company recorded its investments in fixed assets at their historical costs and financial instruments were recorded at their fair value (Facebook Inc. Form 10-K (Annual Report), 2014). The company recorded a sharp increase in its total assets in 2012, which was due to an increase in investment of $4,846 million in marketable securities (Facebook Inc. Form 10-K (Annual Report), 2014). Overall, it could be suggested that the companys efficiency measured by the asset turnover ratio remained weak in the last three years. Facebook should strive to generate high sales from its business operations. Tough competition by new emerging social networking websites and specialized websites could challenge the companys business model and its ability to attract application developers.
The leverage ratio values suggested highly liquid long-term position of the company. The companys was least dependent on external borrowing. It generated sufficient cash flows from its operating activities. The companys total cash flow from operating activities increased by 161.91% in 2013. Moreover, the company repaid $1,891 million of its borrowed amount in 2013, which it received in 2012 and 2011 (Facebook Inc. Form 10-K (Annual Report), 2014). To assess the companys leverage position the total debt to total equity ratio was calculated. The ratio value indicated that the company had $0.16 of debt for each $1 of equity. Similarly, a declining trend in the ratio value was observed since 2011. Overall, it could be suggested that the company had a strong leverage position. It should take advantage of its liquidity and make investment in businesses that could help it improve its technology and reduce resources required by users to access Facebook (Facebook Inc. Form 10-K (Annual Report), 2014).
The profitability position of the company was determined by the return on equity ratio. In 2012, the companys profits declined significantly due to a sharp increase in its cost of revenues and research and development expenditure. The cost of revenues increased by almost 58% in 2012. Also, research and development expenditure increased by 261% in the same year. It reflected that the companys strategy to improve its technology that could enhance users experience and website accessibility (Facebook Inc. Form 10-K (Annual Report), 2014). In 2013, the return on equity improved 0.27% to 9.64%. The company generated net income of $1,491 million in 2013 as compared to $32 million and $668 million in 2012 and 2011 respectively (Facebook Inc. Form 10-K (Annual Report), 2014). It suggested that the company was able to capitalize higher returns from the investment that it made in the previous years. Furthermore, the company was in a better position to explore further avenues of revenues on its website. It has invested in several support businesses that would eventually contribute to the expected increase in the companys profits. Higher return on equity ratio value implied that the companys shareholders could expect better returns on their investments. The findings are also supported by an improvement in the companys earnings per share (EPS) recorded in 2013. The last EPS reported by the company was $0.62 as compared to $0.02 in 2012 (Facebook Inc. Form 10-K (Annual Report), 2014).
Another important ratio that was included in this report is the cash flow ratio. The cash flow ratio assists in determining whether a company is able to generate enough cash flows from its operating activities that could cover obligations of its current liabilities (Ibarra, 2009). It is calculated by dividing operating cash flows by current liabilities of the company (Black & Al-Kilani, 2013). It is an important measure of financial performance as it does not use the companys profits, which could easily be manipulated, to ascertain the companys ability to settle its debt and trade related obligations (Brigham & Ehrhardt, 2014). The cash flow ratio value improved significantly in 2013 i.e. from 1.53 in 2012 to 3.84. It implied that the company was able to generate higher cash flows from its business operations, which were almost four times its current liabilities. In 2013, the companys cash flows from operations increased by $2.610 million (Facebook Inc. Form 10-K (Annual Report), 2014). On Even after paying all its current liabilities, the company would have sufficient cash to pay off its long-term liabilities. It could be anticipated that the company would face minimal problems related to its short-term liabilities and trade obligations.
Risk Assessment
Based on the financial ratio analysis of Facebook, Inc., it could be suggested that there were no immediate threats facing the company except certain litigation related to intellectual property claims. The companys had a strong liquidity position. The strong liquidity position of the company reflected that it would face no problems in the short term. It suggested that a low level of risk is associated with investment in the company. Moreover, the company had low asset utilization. It implied that the company was not making efficient use of its assets to generate the desirable level of revenues. Such situation faced by the company could lead to problems for the company in the future. It also implied that there are risks associated with investment in the companys stocks. However, if the company further improves its technology and expands its global network then this risk could be mitigated.
The company managed to maintain a low level of total debt in comparison to its total equity. The company proved that it could reduce its dependency on the external debt by generating high cash flows from operations. It also suggested that if the company would require additional capital in the future then it would face fewer difficulties. The expected interest costs would also be lower, as well. The leverage position of the company suggested that there is a low level of risk associated with investment in the companys stocks.
The profitability of the company fluctuated in the last three years. However, it is understood that profits of any business tend to fluctuate with changes in business and market conditions. Moreover, it was noted that a sharp decline in the companys profits in 2012 was mainly due to the significant amount of research and development expenditure made by the company to improve its technology and users experience. The company generated healthy profits in 2013, and such profits could also be expected from the companys business in the coming years. The risk level associated with the companys profits is low.
A better indicator of financial performance was included in this report i.e. the cash flow ratio. The company generated strong cash flows from its operating activities in the last three years. The ratio values indicated that there were no immediate risks faced by the company. It could be suggested that there is a low level of risk associated with the companys ability to generate cash flows from operations.
The following table summarizes the risk profile of the company, which is evaluated on the basis of the companys financial performance recorded in the last three years.
Category of liquidity
Risk level
Liquidity
Low
Efficiency
Moderate
Leverage
Low
Profitability
Low
Cash flow
Low
The overall risk level associated with investment in the companys stocks remains low. It is perceived that investments with low risks are expected to generate low returns for investors. In the case of Facebook, an investor could also expect slow and steady growth in the value of its stocks (Baker, Bradley, & Taliaferro, 2014). For a moderate investor, it could favor long term holding of the companys stocks (Kumar, 2009). An investment in the companys stocks could generate capital gains in the long term. Moreover, a moderate investor could invest in other similar stocks to reduce the risk level associated with low asset utilization.
Recommendations
In the recent years, technology-oriented companies have outperformed other businesses in terms of their ability to generate profits. However, it was also noted that such companies often failed to maintain their competitive edge and fell behind other companies that introduced new and better technologies (Heinrichs, Lim, & Lim, 2011). Therefore, a cautious approach has to be maintained when making investment in these companies. Since 2004 Facebook proved its ability to outperform other social networking websites, and it continued to improve its technology that not only attracted billions of active users to use its website, but also made the companys position impeccable in the IT industry. Other companies such as Google and Microsoft on various occasions tried to challenge Facebooks position in the social networking industry, but they failed (Curran, Morrison, & Mc Cauley, 2012).
The financial analysis of the company clearly reflected that the company is less likely to face any major risks or threats from other websites. However, it must not stop its innovative process. It should introduce new ways of attracting users in non-English countries such as China where Chinese websites have the major share of social networking market. Moreover, the company should simplify its marketing tools and packages offered to businesses and individuals. For a moderate investor, investment in the companys stocks is favorable as they offer long-term capital gains.
References
Baker, M., Bradley, B., & Taliaferro, R. (2014). The low-risk anomaly: A Decomposition into micro and macro effects. Financial Analysts Journal, 70 (2), 43-58.
Black, G., & Al-Kilani, M. (2013). Accounting and finance for business. London: Pearson Education.
Brigham, E. F., & Ehrhardt, M. C. (2014). Financial management: Theory and practice (14th ed.). Mason: Cengage Learning.
Facebook Inc. Form 10-K (Annual Report). (2014). Web.
Heinrichs, J.H., Lim, J.S., & Lim, K.S. (2011). Influence of social networking site and user access method on social media evaluation. Journal of Consumer Behaviour, 10 (6), 347-355.
Ibarra, V. C. (2009). Cash flow ratios: Tools for financial analysis. Journal of International Business Research , 8, 91-107.
Kumar, A. (2009). Who Gambles in the stock market? Journal of Finance, 64 (4), 1889-1933.
Tabbush, V. C., Trueman, B., Levine, D., Opler, T., Brandwein, & Cohen, A. (2011). MBA primer: Finance 3.0 instructor-led printed access card (3rd ed.). Mason, OH: Cengage Learning.
Thompson, James R., Williams, Edward E., & Findlay, M. Chapman (2009). Models for Investors in real world markets. New York: John Wiley & Sons.
Van-Tien Dao, W., Nhat Hanh Le, A., Ming-Sung Cheng, J., & Chen, D. C. (2014). Social media advertising value. International Journal of Advertising, 33 (2), 271-294.
A social networking site has been described by Gary Schneider as a site which allows individuals to create and publish a profile, create a list of other users with whom they can share a connection (or connections), control that list, and monitor similar lists made by other users (262). Social networking Web sites such as Facebook, MySpace, and Twitter have impacted daily life and social relationships in a profound way (Lusted 9). In this case the argument is whether first movers are better than later counterparts, the market followers. This case is built on MySpace as a fast mover and Facebook as a market follower in which a market follower exhibits better success.
MySpace became the most popular social networking site in the US when it was launched. In 2006 it became one of the fastest growing with 300 million users (Vakali and Jain 222).Facebook has been described by Marcia Lusted as one that started in February 2004, when the flamboyant MySpace had more than a million members and was quickly becoming the nations dominant social network (7). Lusted reports that statistics from 2010 show that Facebook had more than 500 million active users, and MySpace had more than 122 million (10). As a predecessor to Facebook, MySpace was a first mover and Facebook a market follower.
Facebook had a number of advantages entering into a market that was not completely unaware of the functionalities of a social networking site. Facebook evaded the significant cost of being a pioneer in a field had been suffered by MySpace which was gaining popularity by the time Facebook was starting (Hill, Jones and Schilling 229). MySpace had already tilled the ground thus Facebook had an easier time acquiring users. Facebook also had an advantage in that they could understand the market better from the performances of other social networking companies and could hence focus on what would work.
As a first mover, MySpace did not provide the tools needed to capture its audience. According to a Forbes Web page, MySpace users felt that the social networking site was not personal enough and was more commercially filled with ads and the users were targeted mostly at bands and celebrities ( Mui ). Facebook took advantage of this later and its platform was created more for users to connect with real people. MySpace has also been stiff in terms of accessibility to a wider demographic. MySpace has been heavily criticized to not cater to the needs of people with disabilities (Ellis and Kent 108).
First movers often have to pour in huge sums of capital and learn along the way into a new market, and that makes them prone to mistakes that sometimes are difficult to rebound from in a fragile market. This gives an upper hand to market followers who learn from the trends and tailor their services to better suit the market. Facebook is an example of a market follower that tapped into the misdoings of the earlier social networking sites to appeal more to the online market (Wenzimer and McConoughey 33). Most of the earlier social networking sites like MySpace had minor to major hitches like slow-loading pages, non-customizable profiles and even mere appearances that was a turn down to a majority of users. Facebooks main factor of success is that it listened to the market and was user friendly.
Works Cited
Chunka, Mui. Why Facebook Beat MySpace and why MySpaces Revised Strategy will probably fail. Forbes. Forbes, 2011.
Ellis, Katie & Kent, Mike. Disability & New Media. New York: Taylor & Francis, 2011. Print.
Hill, Charles, Gareth Jones and Melissa Schilling. Strategic Management Theory: Theory. An Integrated Approach.11th ed. Stamford: Cengage Learning, 2015. Print.
Vakali, Athena and Jain, C. Lakhmi.New Directions in Web Data Management 1. Berlin: Springs-Verlag, 2011. Print.
Weinzimer, G. Laurence and McConoughey, Jim. The Wisdom of Failure. How to Learn the Tough Leadership Lessons. Without Paying the Price. San Francisco: Josey Bass, 2013. Print.
Focus on the fact that the users technically consented to the data gathering without realizing it
Describe the concerns voiced by the users after the discovery of the breach
Highlight the broader context surrounding privacy in the digital age
Specific areas my research will tackle
The mechanism of data gathering and analysis in the scandal
Potential uses of data gathering
Political
Marketing
Manipulation
Its effect on society
Erosion of privacy
Increased manipulation by powerful entities
Thesis
The Cambridge Analytica scandal is a sign of potentially much more problematic future developments
Benefits of the research
Increase the publics understanding of the threat of data gathering and selling
Body 1
Data gathering mechanism
Source of the information
Online businesses:
Many online businesses gather and store their customers data, which they can then make available to third parties
Methods of processing the information
API-based research:
Datasets provided by companies such as Facebook can be analyzed for specific traits, producing detailed information on large groups of people (Venturini and Rogers 532)
Uses
Improved targeting:
By determining the preferences of a user group, marketers can tailor advertisements to their targets and target narrower groups with more specialized ads
Body 2
Potential uses
Positive uses of the technology, such as research, exist
Potentially malicious or unethical applications
Political:
Cambridge Analytica was accused of designing ads that would subtly influence peoples voting preferences in favor of one candidate (Hinds et al.)
Marketing:
Companies can create advertisements that appeal strongly to their target audiences, spurring further consumption
Manipulation:
Peoples lack of understanding of how modern manipulation techniques based on API data work leads them to be vulnerable to deception due to a belief in their immunity to such efforts (Hinds et al.)
Body 3
Effects on society
Erosion of privacy:
More and more products require the users to submit their data because of the benefits that this practice confers to the manufacturer
People are starting to accept these policies as normal, valuing the convenience more than they are concerned about the risks (Fast and Jago 44)
While the Cambridge Analytica scandal led to an outcry, few people left Facebook as a result (Brown)
Eventually, even those concerned about their data may have to surrender it to participate in society fully
Increased manipulation:
Democratic systems are notoriously prone to manipulation via public opinion, as history shows
API research gives organizations with sufficient funding and power the tools to subtly influence people
Such manipulation would be extremely challenging to detect or counter with the current mechanisms in place
Conclusion
The gathering and processing of millions of users data is invaluable for research, particularly in the fields of sociology and public health.
However, in its current state, it enables public and private actors to access and use it for malicious purposes.
Users are either not aware to what extent their information is being gathered or apathetic to it due to acceptance.
The Cambridge Analytica scandal is a single incident that indicates the existence of a much larger, likely still-unknown field or potential for one to emerge.
Measures to counter this issue, such as increased transparency, greater promotion of privacy, and promoting understanding of the implications of mass data collection, are necessary.
Works Cited
Brown, Allison J. Should I Stay or Should I Leave? : Exploring (Dis)continued Facebook Use After the Cambridge Analytica Scandal. Social Media + Society, vol. 6, no. 1, 2020, Web.
Fast, Nathanael J., and Arthur S. Jago. Privacy Matters& Or Does It? Algorithms, Rationalization, and the Erosion of Concern for Privacy. Current Opinion in Psychology, vol. 31, 2020, 44-48.
Hinds, Joanne, Emma J. Williams, and Adam N. Joinson. It Wouldnt Happen to Me : Privacy Concerns and Perspectives Following the Cambridge Analytica Scandal. International Journal of Human-Computer Studies, vol. 143, 2020, Web.
Venturini, Tommaso, and Richard Rogers. API-based research or How Can Digital Sociology and Journalism Studies Learn from the Facebook and Cambridge Analytica Data Breach. Digital Journalism, vol. 7, no. 4, 2019, 532-540.
Daniel Castro the author of this article is a Senior Analyst with Information Technology and Innovation Foundation. Castro Has done a lot of research in areas such as information accessibility, e-government, e-commerce, health IT, electronic voting among others. Working in the government agencies like Federal Insurance Corporation, Security and Exchange Commission has gained him so much experience. Through the article The Right to Privacy is Not a Right to Facebook Castro tries to explore the issue of online privacy by focusing on a Facebook company that recently came up with new privacy policies. The article answers two fundamental questions; does Facebook have the right to use private information to deliver services and products to customers and whether any other has the right to do this?
New applications introduced by Google and Facebook should not be interpreted as a way of exposing personal private information but instead one should see it as a way of enhancing service delivery. Privacy policies are very clear because they stipulate what an organization is supposed to do with an individuals personal data. If an organization deviates from such agreements then it must be held liable but one must prove beyond reasonable doubt that Facebook has violated the stipulated privacy policies before accusing it. Some people argue that the government needs to regulate the use of personal information that most customers do not read them.
Facebook has never coerced anyone to agree to its privacy policies rather it gives everyone freedom to read and make a personal decision and so even the government would not be justified to interfere with the business of a private entity. According to Mark Zuckerberg Facebook CEO, social media should move from the traditional way of doing business and embrace openness. Facebook always responds to public pressure and that is why it always modifies its privacy settings to meet the demands of its users. The few people who feel that the company is unfair in imposing some privacy policies should feel free to choose other forms of social media that they are comfortable with (Castro, 2010).
Castro discourages the idea of some powerful persons in a government like the senators and cabinet ministers from interfering with Facebook and its affiliate companies. When Coca-Cola decided to introduce coke into the market nobody reacted as it is with Facebook. It is very wrong for people to act as if the privacy policies introduced by Facebook is a national Emergency with others protesting to close their profiles. The interests of the majority must be protected at all cost. On the other hand every business entity must understand that the citizens have a right to privacy of their electronic data. The government also has the responsibility of taking the legislative and oversight action in order to safeguard the rights of its citizens. Electronic Communications and Privacy Act must be respected by all parties involved with online data (Castro, 2010).
Social media allows individuals from different parts of the world to share information freely. Facebook being part of social media plays an integral role connecting individuals who may be near or far from each. This article argues that preventing Facebook from introducing privacy policies is killing the spirit of innovation and discouraging it from discharging its mandate. It also denies most individuals right to information. It is important to allow the company to exercise its business rights freely. Given that the market is very competitive, every company is trying to put every effort to please its customers and increase its products and services.
Reference
Castro Daniel (2010). The Right to Privacy is Not a Right to Facebook.Washington: University Press.
The title of the article Facebook envy: how the social network affects our self-esteem speaks for itself: the author Andrea Shea reflects on the impact that the social media has on its users, and in particular on the ways people feel about themselves and about the others. The article includes results of the scientific researches as well as the real-life experiences of those who are engaged in social networks, for example, in Facebook. The main message of the article is that the effect of Facebook on peoples life can be ambiguous: it can cause negative thoughts and reactions, for example, envy, but at the same time it provides the users with more ways to express themselves and boosts their creativity.
The main problem with the Facebook is that it presents the distorted version of reality. For example, most photographs that people put on social networks were previously airbrushed. Another illustration is that people tend to expose aspects of their lives that can be perceived as glamorous and photogenic (pictures of parties, festivals, concerts), while concealing others, such as routine everyday activities. When Facebook users constantly omit the facts of their life that contradict the perfect image they have created, it prevents them from forming genuine bonds with other people, and it forecloses intimacy . Facebook users create enhanced versions of their lives, which can lead to the unhealthy situation of constant measuring up to others, to other peoples lives and standards, especially among vulnerable teenagers.
This competition may results in negative thoughts, low self-esteem, and even depression: The studies showed that one in three respondents felt more dissatisfied with their own lives after spending time on the site. Viewing the number of birthday greetings and likes were big culprits. Unprecedented access to other peoples photos also triggered emotional pain and resentment (Shea par.6). While the social networks are the telling illustration of how people construct their identity, this phenomena is not limited to the virtual aspect of our lives, as we do this in the real world too. In everyday life each time people decide what to wear and how to look, they engage in practices of self-presentation: Its an agreed upon human behavior that we all present ourselves, and cover up and cultivate these images and personas (Shea par.27). Social networks simply provide people with more means for the process of cultivating postures.
It is important to admit and to further explore the ambivalent effect of the social media on peoples perception of themselves. On the one hand, social networks like Facebook can create a challenging atmosphere of competition between its users, compelling people to compare themselves to others all the time, which inevitably leads to feeling of self-dissatisfaction and low self-esteem. The resentment, envy, and other negative feelings that the use of social media evokes may alienate people from each other. In order to avoid the negative impact of social media on persons self-perception, it is necessary to understand that what people portray on Facebook is not always an adequate reflection of the reality. On the other hand, the social media can be beneficial for the users as they create opportunities for self-presentation and construction of ones image that were unknown to previous generations. It is in human nature to present ourselves to others, and social networks, Facebook, in particular, provides people with more opportunities for creative self-expression.
Facebook is a social network that allows people to communicate to one another irrespective of their location. It lets its users to sign up; create their personal profiles, search and invite friends to be part of their contact list. With the friend list one will effectively communicate to the other through a chat, messaging or commenting of an updated status.
Facebook has brought a huge number of people together letting them share ideas, recent news and stories. However, facebook has also helped in the marketing field. It has brought a truly new level in the business world of personal marketing where a business associate can interact with other associates and focus in a specific target audience (Dharra, 2010).
Facebook has proved to be unique in the world of personal marketing. This is because it lets businesses to create a strong business relationship with specific clients. There are many forms of advertising but the use of facebook for personal marketing is unique.
Facebook lets one to brand them self and also to convince their clients of irresistible value of the products or services one is offering, hence positioning one as the leading in the target market. For instance, the price of advertising on facebook is barely little. This is because one is required to sign up in facebook then create a page, invite prospective customers in the page and introduce the product to the customer.
The beauty of this form of personal marketing is that, when one is signing into facebook they voluntarily provide some basic information and details like gender, birth date and location, favorite TV shows and even religious and political views. This helps the marketer to choose the target market, get the views of these clients about the product and also the possible ways to improve the product (Granville, 2004).
Facebook has the option of one uploading ads as a form of personal marketing. With these ads, one marketer will pay for every click by a client on the ads to view the product of interest. This makes facebook very cheap in terms of the price of advertising and its flexibility.
When an audience clicks on the product of interest, the client may pose a clarification or remark on the product, the sales person will be in a position to make adjustments to address questions or concerns of the customer.
This is an advantage as compared to other non-personal forms of advertising like radio advertising which is inflexible in the short term to easily address the questions and concerns of customers. This makes facebook a unique way of personal marketing of products (Granville, 2004).
Facebook is not just a passing fad but is to stay. It has so many strengths in using it for personal marketing. Facebook is a great resource for generating brand awareness since using facebook application will help one to engage consumers and build a relationship with the consumers. Facebook also helps in management due to the response of the consumers on the product being sold.
This helps the management to make the necessary improvements on the product. Facebook is also a good way to acquire new consumers. However, there are risks that are associated with the use of facebook for marketing purpose.
For instance, facebook has millions of users daily, which poses a threat of many hackers to personal accounts, hence the spread of viruses. These viruses affect the web pages. Facebook is also an addictive site and can lead to the waste of professional life (Dharra, 2010).
Facebook was recently affected by a privacy issue since hackers would intentionally hack into people personal accounts and change their personal information.
This privacy issue will not affect personal marketing, since as much as people know the drawbacks of using facebook they are still addicted to the application, in order to keep track of their friends. This means there numerous consumers who use facebook. This has brought a big excellence in marketing (Dharra, 2010).
Reference List
Dharra, B. (2010). What are the disadvantages or dangers of using Facebook. Retrieved from Yahoo Answers website: https://answers.yahoo.com/
Granville, C. (2004). Marketing plan in Facebook an Hour a day. Web.
There are so many online communicators people may use every day in order to meet personal needs and achieve positive results within the professional sphere of life, for example. There are so many things people can do online and even do not leave the room; numerous innovations within the Internet technologies provide users all over the world with different abilities to develop their sills, exchange information, learn more captivating facts, and help the others to comprehend how wonderful and useful the web world is.
Facebook and MySpace are the two most popular networking websites, where people get a chance to communicate, create profiles, share information, etc. Nowadays, it is hard to imagine that, at the beginning of the 21st century, people had no ideas of what Facebook or MySpace meant and how people could spend so much time there.
If a person has a chance to improve own work and communication, he/she is going to use one of these online community without any doubts and without taking into account that this use may be harmful. Such mediums for communication like Facebook and MySpace have lots of advantages and disadvantages; to comprehend the essence of their impact on people, it is better not only to know some general facts about these websites, but also be ready to analyze, compare, and realize their benefits and negative aspects.
First of all, it is necessary to admit that a certain battle between Facebook and MySpace takes place for a long period of time. These two networking websites cannot clear up which one has more dominance nowadays, which one has more international page views, and which one has heftier traffic. In spite of the fact that MySpace is one year older than Facebook, the latter has a certain number of benefits and advantages and can easily compete with the former.
Kleindorfer (2009) admits that numerous websites like Facebook have risen from the primordial swamps of cyberspace to become major players based primarily on the power of their networks (p.4). This is why it is not that surprisingly that Facebook and MySpace have advantages and disadvantages at the same time and have different impact on people and their online communication. Each of the above-mentioned websites has constant users and those people, who just visit it from time to time.
The preferences of users for one of these sites are caused by the differences, which MySpace and Facebook have and which people more or less active on. It does not matter that one of the website is better or worse; it is all about the spheres of work and users needs.
If you are searching for a job, it is possible to find some with the help of these two communicators; it turns out to be one of the benefits of MySpace and Facebook as people get a chance to find a good job within a short period of time and even do not leave their homes (Stair & Reynolds, 2009, p.73).
However, Facebook will be more beneficial for those people, who are good at computers and business, and MySpace will be more attractive for people with more creative preferences: people of art, musicians, and designers can find much more useful information on MySpace than on Facebook.
Even the general view of the sites and each page may be divided: MySpace has quite unique view, and each page has its own style and colors; and the pages of Facebook look like a bit strict and restrained. But still, both Facebook and MySpace aim at providing people with a chance to create, innovate, and demonstrate the best qualities only (Deans, 2009, p. 189).
MySpace and Facebook have lots of privileges for people, who want to communicate being far from each other: they can easily show photos, organize meetings, meet lots of new people, and find out more information. The point is that MySpace allows its users to concentrate on their creativity and amaze everyone with personal skills to create captivating pages and make them in different colors.
It turns out to be more interesting for teenagers and attract their attention more than Facebook. However, lots of adults prefer to use Facebook in order to have a chance to concentrate on the necessary communication and getting exact information, nothing more. If they have some time and desire, Facebook allows to create something really attractive as well, but not that creative as it is possible with MySpace.
This comparison of online communities will be impossible if we do not mention several negative aspects of MySpace and Facebook right now. Quick exchange of information and constant communication online has numerous advantages as well as disadvantages. For example, people are happy to have a free access to communicate with distant friends and discuss news and innovations; however, such communication may be too close and lead to quarrels and misunderstandings between rather good friends.
More than 250,000 accounts are created on MySpace each day (Mooney et al., 2008, p.631); this is why it is hard to imagine how many people can make friends day by day and have enough time to communicate with each other. So, some people take offence if one of friends does not either answer within a short period of time or check own mail frequently. This is why such inability to answer in time may cause quarrels and negatively influence users psychological condition.
Close connection with lots of people creates one more disadvantage inability to get a private status. At MySpace, a personal profile is available for everyone, who has a desire to watch your page. This is why just a perfect advantage of distant communication may be easily frustrated with this negative affect of privacy inability.
Another disadvantage of such networking websites is constant spam and improper and vulgar comments. Those people, who use MySpace and Facebook to search for a job or a person, are constantly distracted by numerous windows, which appear very quickly. Such unexpected open windows may bring some harm to users computers and present offensive information. This inability to control spam turns out to be one of the most annoying negative affects of Facebook and MySpace.
People themselves create difficulties for other people in order to earn money this cruel reality is evident even for online communities. They create new technologies and services and want other people evaluate and use them; MySpace and Facebook are the places, where users share this information without getting an approval from other people. Such freedom may enjoy one person and make anger another.
Of course, such diversity of online communities may be considered as a positive achievement of our society that makes our every day life easier. However, with such fast development, numerous negative aspects appear as well. For example, MySpace and Facebook cannot stop their fight in order to prove those services are better and more usable.
To get any possible answer, the developers of these communities try to create more and more conditions to follow. As a result, certain inequalities and divisions take place and make people choose something and be devoted to the chosen item. So, it is better to keep in mind that one advantage may cause several disadvantages in a short period of time; and users have to be ready to pick out the best way to follow and be satisfied with the choice.
Online communities like MySpace and Facebook, their benefits and disadvantages will be always under hot consideration among people of different age and social status. These kinds of communities are around us, and we cannot just skip them. People create more and more opportunities to develop and improve personal skills and learn this world better.
This is why all those numerous pages with quite different information about society, innovative technologies, and relations burn people with the desire to concentrate more and more on them.
It is known that more than three-quarters of 18-34 year olds have an account on one of these social networking sites (Business Wire, 2009); lots of people, when meet each other for the first time admit that they are Facebookers or MySpacers. Such kind of information turns out to be rather informative for some people and completely unknown for the others.
It is bad and good at the same time. This is why the comparison of benefits and negative affects of MySpace and Facebook will be always interesting and useful in order not to become addicted and even fall ill.
Reference List
Deans, P. C. (2009). Social Software and Web 2.0 Technology Trends. Richmond, United States: Idea Group Inc (IGI).
Business Wire. (2009). Just Under Half of Americans Have a Facebook or MySpace Account. BNET. Web.
Kleindorfer, P., Wind, Y., and Gunther, R.E. (2009). The Network Challenge: Strategy, Profit, and Risk in an Interlinked World. Upper Saddle River: Wharton School Publishing.
Mooney, L. A., Knox, D., & Schacht, C. (2008). Understanding Social Problems. Boston, MA: Cengage Learning.
Stair, R. M. & Reynolds, G. W. (2009). Principles of Information Systems. Boston, MA: Cengage Learning.
The author of this essay addresses the legal issue that arose between Facebook and Eduardo Pintor. Facebook made an oral contract with a world-famous mural painter. Mark Zuckerberg, the founder, and president of Facebook, then terminated this contract before its execution. It is important to note that after the conclusion of the contract and before its termination by Zuckerberg, Pintor did not accept any other orders because of a deal of such magnitude.
Rule
It is safe to say that this case falls under the legal force of the Statute of Frauds. However, the question is whether the Statute of Frauds stops Pintor from enforcing his contract with Facebook. The author of this paper thinks the answer is yes, it does stop. Sections of the Statute of Frauds that should be considered in this case are the oral contract and Frustration of Purpose.
Application
Both parties entered into an oral contract. According to Californias statute of frauds, California Civil Code § 1624, generally requires that contracts which sell& stipulate performance or authorize anothers performance in the distant future must be written to be valid (Wex Definitions Team). Zuckerbergs decision can be considered here as a later and unforeseen event, which makes its termination due to the Frustration of Purpose ( Frustration of Purpose ). Therefore, Facebook had a legal reason to terminate this oral contract.
Conclusion
As can be seen, Pintor has no legal reasons and cannot enforce his contract with Facebook. The author of this work also proved that Facebook and Zuckerberg, in particular, had a legal prerequisite for terminating the contract. The only sufficient evidence that Pintor can use is evidence of the board of directors.
