Project Report On “Business Ethics- Case Study: Facebook”

Submitted in the partial fulfilment for the requirement of Post Graduate Diploma in Management


Submitted By: PGDM-VII (A) Submitted To: Prof. Aditi Midha Sachin Dhiman (47) Sachin Narang (48) Anuj Sharma (63)

Jagannath International Management School Kalkaji, New Delhi

Contents S. 1 2 3 4 Particulars Introduction To Ethics Five Sources Of Ethical Standards Framework For Ethical Decision Making Case study: 4.4 Too Big To Go To Jail Page Number .1 Company‟s overview 4.No.3 The Ethical Challenges Start 4.2 Introduction 4.

at the heart of a free-market economy.method of analysis. or business ethics as it is often called. and theories of ethics to the organizational context. this philosophy of ethics is. would tend to choose the course of action that he or she believes would best serve selfinterest." Business ethics is also a descriptive term for the field of academic study in which many scholars conduct research and in which undergraduate and graduate students are exposed to ethics theory and practice. mental. there is a concern raised about moral behavior in business. By far the most common teleological theories are egoism and utilitarianism. principles. when faced with a business decision. Ethical behavior in business is critical. Hence. or emotional well being. advocates of a free . Thus. APPROACHES TO ETHICAL DECISION MAKING Philosophers have studied and written about ethics for thousands of years. usually through the case . When business firms are charged with infractions. and when employees of those firms come under legal investigation. Business ethics have been defined as "principles and standards that guide behavior in the world of business. Egoism is defined by self-interest. An egoist would weigh an ethical dilemma or issue in terms of how different courses of action would affect his or her threatened. which is the foundation of our free-market economy. to some degree. Teleology Teleological theories of ethics focus on the consequences caused by an action and are often referred to as "consequentalist" theories. Although it seems likely that egoism would potentially lead to unethical and/or illegal behavior. an egoist. is the application of the discipline. The moral philosophies or ethical "theories" that have been developed form the foundation for ethics in business. Egoism Egoism defines right and wrong in terms of the consequences to one's self.ETHICS IN BUSINESS Ethics in business. the level of mutual trust. Since the time of political economist Adam Smith.

or even emotional terms. the costs and benefits of a decision. Sometimes these can be measured in economic. if the benefits outweigh the costs. In this. Interpersonal fairness has to do with the respect and consideration shown in the administration of decisions. or an action are compared. If the good appears to outweigh the harm. a policy. one emphasizes the utility. that might be produced by an action or a decision. social. then the action may be considered ethical. would actually benefit society at large. or the overall amount of good. Utilitarianism In the utilitarian approach to ethical reasoning. A just (ethical) action is one that treats all fairly and consistently in accord with ethical or legal standards." Justice Justice-based theories of ethics concern the perceived fairness of actions. . by the utilitarian yardstick. One fair criticism of this approach is that it is difficult to accurately measure costs and unencumbered by governmental regulation have argued that individuals. Many deontologists believe that the rights of individuals are grounded in "natural law. each pursuing their own self-interest. This approach also encompasses what has been referred to as cost-benefit analysis. Deontological theories differ substantially from utilitarian views on ethics and would not allow. human. interactional fairness relates to the personal treatment one receives in the administration of a decision-making process. Deontology Deontological theories of ethics focus on (1) the rights of all individuals and (2) the intentions of the person(s) performing an action. Another criticism is that the rights of those in the minority may be overlooked. the decision to move may be deemed an ethical one. When all the costs are added and compared with the results. Deontology proposes that the principles of ethics are permanent and unchanging—and that adherence to these principles is at the heart of ethical behavior.

Each of these factors. 2. individually and collectively. utilitarian. The individual difference factor that has received the most research support is "cognitive moral development. . the organizational factors that affect ethical decision-making include the work group. organizational codes of conduct. judgment. FACTORS EFFECTING ETHICAL DECISION MAKING 1. In the business ethics context. Individuals at different levels of moral development are likely to think differently about ethical issues and resolve them differently.” The cognitive moral development framework is relevant to business ethics because it offers a powerful explanation of individual differences in ethical reasoning. in that they purport to advance principles of morality that are permanent and relatively enduring.Individual Difference Factor Individual difference factors are personal factors about an individual that may influence their sensitivity to ethical issues. Relativism states that there are no universal principles of ethics and that right and wrong must be determined by each individual or group. their judgment about such issues. and behavior are affected by contextual factors.Situational (Organizational) Factors Individuals' ethical issue recognition. the supervisor. and the overall organizational culture. and their related behavior. Relativism Teleological. Research has identified many personal characteristics that impact ethical decision-making. organizational policies and procedures. and justice theories of ethics are all "universal" theories.Informational fairness has to do with the explanations and accounts provided for the decisions made. can cause individuals to reach different conclusions about ethical issues than they would have on their own.

the research suggests that issues with more serious consequences are more likely to reach the threshold level of intensity. Individual and situational factors are unlikely to influence decision-making for issues considered by the individual to be minor. Certain characteristics of issues determine their moral intensity. In general.Issue Related Factors Ethical issues in business must have a certain level of "moral intensity" before they will trigger ethical decision-making processes. issues that are deemed by a societal consensus to be ethical or unethical are more likely to trigger ethical decision making process.3. Likewise. .

and Overstock. “Sites like Facebook must respect my privacy. stop invading my privacy!” that stated. Facebook would not send the information.” TheFacebook group and petition garnered 2. however. the Beacon service tracked off-Facebook user activities after they had logged off the social-networking site and tracked those who had previously opted out of having their activities on partner sites broadcasted to Facebook friends. the Beacon program would track the user‟s activities and ask Facebook if the user was a Facebook member. the notification window appeared every time the user entered a partner site. If. users still were not offered the ability to permanently opt out of the service. users were not informed that the data on their activities was always flowing back to Facebook. created the Facebook group “Petition: Facebook.Online community response to this practice was immediate. offered a free tool to online partners such as Blockbuster.CASE STUDY FACEBOOK : BEACON AND PRIVACY Synopsis In November 2007. the social networking site. nor were they given the option to block that information from reaching Facebook. All Facebook members would be asked if their activity should be sent as a broadcast to their friends through a notification window. The New York Times. If the user opted out. Facebook would take the user activity data and send the information to the user‟s friends through an existing service called News Feed. They should not tell my friends what I buy on other sites—or let companies use my name to endorse their products—without my explicit permission. While Facebook improved the notification window. Rather. Users were not given the ability to reject sharing all to track users‟ activity.000 members within the first 24 hours and eventually grew to over 80. MoveOn. . the user ignored the window or neglected to opt-out of the broadcast. Additionally. In fact.000. Embedded in a partner‟s website.

The problem however is that even though you can choose whether or not it is made public that you visited these sites. when a little window pops up in the corner of my screen and says ―Kongregate is sending this to your Facebook profile: Nate played Desktop Tower Defense 1. Considered at the forefront of online for tracking user activity. when social networking site. So I clicked ‗No Thanks„.5 at Kongregate. The New York Times. Weiner„s Internet choices were being shared with all his closest ―friends‖ via his Facebook profile. Now I don„t mean to sound like I„m tin-foil-hat-wearing paranoid. it recorded Facebook members„ activities and proactively broadcast such off-Facebook activities to designated Facebook friends. Facebook. and Overstock. to online partners such as Blockbuster. but that does seem to encroach a little past what Facebook„s role in my life should be.So here I am. Nate Weiner realized his personal life was being circulated online without his permission. ‗notify me„. Beacon It was also in November 2007.‖ Which immediately elicited a ―Hell no‖ from my mouth. or ‗never„. Once Beacon was embedded into a partner„s web site. essentially saying that Kongregate was sending the data without even asking my permission (even though there is a ‗No Thanks„ button in the corner) but needless to say.FACEBOOK : BEACON AND PRIVACY In November 2007. While registering with Facebook had seemed like a good thing at the time—automatically updating a group of preselected friends on his activities—Weiner was uncomfortable with unauthorized information dropping into the hands of his Facebook friends. and hopped over to Facebook and looked at the privacy settings for this new program. And found they give you the options of choosing allow„. Maybe what shocked me was the way it was worded. so he decided to blog about it. Facebook still has the data regardless of your privacy settings. I was not too thrilled about my surfing habits showing up on my Facebook profile. began offering a free tool. burning some brain cells and taking some time to relax playing a game on Kongregate. Beacon. .

Facebook„s attempts to alert its users of this new feature. the user ignored the window or neglected to optout of the broadcast. family.Beacon was hailed as a mechanism to target potential customers based on their social network(s) and through friends„ implied recommendations. Unless the user opted out quickly—the notification window would close or could be missed all together by the user—the user activity data would be sent to the Facebook user„s friends through an existing service called News Feed. Facebook would take the user activity dat and send the information to the user„s friends. They should not tell my friends what I buy on other sites—or let companies use my name to endorse their products—without my explicit permission. however. All Facebook members would be asked if their activity should be sent as a broadcast to their friends through a notification window. rather. If the user opted out. the Beacon program would track the user„s activities and ask Facebook if the user was a Facebook member.000 members within the first 24 hours and eventually grew to over 80. The site relied upon user-generated data of particular interest to their friends and allowed for viewing and comments. and coworkers. MoveOn. the notification window appeared every time the user entered a partner site. The opt-out notice appeared in a small window. Facebook would not send the Information.‖ The Facebook group and petition had 2.000 names. Facebook was ―a social utility that helps people communicate more efficiently with their friends. were not easily identified. The online community responded immediately to this intrusion. Users were not given the ability to reject all created a Facebook group ―Petition: Facebook. however. Facebook Facebook was created in a Harvard dorm room by Mark Zuckerberg and co- founders Dustin Moskovitz and Chris Hughes as an online version of the ubiquitous facebook. known primarily on college campuses and used to identify and locate individuals. If. which disappeared without users taking any action. Residing on a partner„s website. A Facebook member maintained a Facebook . stop invading my privacy!‖ that stated: ―Sites like Facebook must respect my privacy.

Facebook also competed with LinkedIn by allowing members to separate work friends from non-work friends. and how to get rid of information. Facebook members could limit the type of information available to others. In addition. News Feed allowed friends to be proactively notified of a user„s changes without having to constantly visit the user„s Facebook page. the ability of others to search their by frequently updating important information relevant to the member. Facebook users had created uproar over News Feed—a Facebook feature that allowed user activity on one„s own Facebook site to be broadcast to friends. MySpace. Facebook users were offered a variety of designations for each piece of information rather than merely public versus private. Facebook and Privacy Previously. and (2) an individual should have access to the information others want to share. and accomplishments could be viewed by individuals who were identified as ―friends. Facebook required its members to join under a real name and use real information where MySpace placed fewer limits and users often operated anonymously. Facebook differentiated its service from its closest competitor. Facebook„s organizational principles centered on privacy concerns and formed the core of its organization. In doing so. by offering users various privacy settings based on the user„s friends or social networks. . and the degree to which personal information was accessible to others„ Facebook applications. These principles went on to delineate the type of information Facebook collected. The site allowed individuals to provide updates and view others„ updates on their own time. Pictures. News Feed was individualized for each member based on the activities of the member„s friends since the previous log-in. activities. Instead. Previously. Seen as a key differentiator for Facebook. why Facebook collected the information. What makes the Facebook News Feed unlike any other communications tool that preceded it is that none of these friends explicitly said they wanted you to get this information. At a most basic level. relationship status. The principles stated that (1) an individual should have control over his personal information. who had access to the information.

however. Facebook groups formed with spokesman Adam Green was quick to provide an additional response.The revolt over Beacon. Facebook community Reaction to differed in its pervasiveness and intensity. and members of the online community shared their opinions.„ that shows how weak Facebook„s argument is.‖ Green said in an e-mail. stored. Crusoe„s blog response: Looks to me like Facebook has found a solution to the problem of their site„s popularity. as indicated by R. There is a growing number of Facebook competitors and this is a sure fire way of encouraging their users to go somewhere else. ―If Facebook„s argument is that sharing private information with hundreds or thousands of someone„s closest friends„ is not the same as making that information ‗public. the uproar diminished as members learned to use News Feed. How much user activity data was captured. ―Facebook users across the nation are outraged that the books. and released by Facebook was not disclosed quickly enough for much of the blogging community. much . Bloggers continued to criticize Facebook„s Beacon advertising program. and gifts they buy privately on other sites are being displayed publicly without permission— and it„s time for Facebook to reverse this massive privacy breach. As it became apparent through journalistic inquiries and the persistence of the online community. The online community„s level of expertise pushed Facebook to understand Beacon at a fine-grained level. The feature has been embraced since by the„s charge that Facebook„s Beacon advertising program was a violation of users„ privacy. One blogger highlighted online activist group came to you because Facebook's software has concluded. In reality. Beacon captured detailed data along with IP addresses of all visitors on a partner site—Facebook users and non-Facebook users—and determined whether or not to store and broadcast the information once the tracking information was sent back to Facebook. MoveOn. however. Upon its initial release. movies.000+ members to protest the broadcasting of personal information. by sophisticated algorithmic means. Privacy settings remained in place and the member could remove any data from being in the broadcast at any time Slowly. that you are likely to be interested.

Facebook hears nothing and everyone is happy Facebook Beacon Drama Continues Nick O'Neill. Communicating his feelings online produced a wave of response not only from others in the online community. 4. The service tracked users offFacebook even after they had logged off the social-networking site as well as those who had previously opted out of having their partner site activities broadcast to their Facebook friends. 5. More information soon became known about Beacon. Chris Kelly. but also from Facebook. users still were not offered the ability to permanently opt out of the service. informed me that Facebook discarded purchase information if the user did not want that information to be displayed. Blockbuster sends the movie the user rented to Facebook. is this person a Facebook User? 3. . THEN the transaction to Facebook could be made. Facebook„s Chief Privacy Officer. And if not. Blockbuster Online asks Facebook. would you like to share the movie you rented with your Facebook friends?„ And if you choose to.of the technical information about Beacon was pulled out of Facebook through reactions to blogs. This could all go away by simply adding a first step on Blockbuster„s end that says: ‗Are you a Facebook user? And if so. User goes rents a movie from Blockbuster online. 2. Facebook stores the data. Follow-up blog postings continued. 2007 Of particular interest to me was that Facebook was notified of purchase information prior to a user confirming whether or not they approved that information being displayed. In the latest Beacon drama. he was not alone in his dismay over privacy issues caused by Beacon. As Nate Weiner discovered. Facebook is accused of storing information even if the user is no longer logged into Facebook. users were not informed that data on their activities was always flowing back to Facebook. In fact. Facebook says yes (log could be made of transaction).While Facebook improved the notification window. December 1st. An example of the current process as is: 1.

What Next? On November 30.nor given the option to block that information from arriving at Facebook. not other activities on the site. inserted the script for the Beacon program. Sony Online Entertainment. was paid to the Facebook partners who voluntarily implemented Beacon. Kongregate used the program only to track games people played. eBay. Overstock. Other partners took a similar nuanced approach to installation. Six Apart asked its users to ―optin‖ and at that point. however. For example. Six Apart started with Beacon turned off. the front page of The Washington Post carried the story of Sean Lane and his encounter with Beacon.‖ Others opted to trust Facebook to delete the information they sent back via Beacon. Little attention. The New York Times. Then it appeared as a news headline—―Sean Lane bought 14k White Gold 1/5 ct Diamond stated: ―We have a specific threshold that the program needs to meet. users and their information were not included and never sent to Facebook. so at the onset. Partners such as Blockbuster. Facebook could then tie into third-party site activities even if the user was logged off or had opted out of broadcast. An open question remained: What happened to that user activity data (1) if the user was not a Facebook member or (2) if the Facebook member opted out of the broadcast? Pressure on Partners Beacon was directly targeted to these partner sites by giving partners the control to insert the Beacon program code (―Add 3 lines of code and reach millions of users‖) when and how it worked for them. . before we„ll be turning it back on. Sean Lane„s purchase was supposed to be a surprise for his wife. took a wide range of approaches to the adoption of Beacon. Facebook user ever decided to have her computer ‗remember„ If a herlogin information. and IAC. in terms of privacy. 2007. eBay also used Beacon in a limited fashion by applying the program to sellers only. asking them to ―opt in.

org petition drive had gathered 50. The MoveOn. the headline was visible to everyone in his online network. I want to thank you for your feedback on Beacon over the past several weeks and hope that this new privacy control addresses any remaining issues we‟ve heard about from you. No longer solely within the online community. Facebook CEO Mark Zuckerberg made the following announcement: Announcement: Facebook Users Can Now Opt-Out of Beacon Feature. Facebook made the following changes to Beacon: . and articles began appearing in papers and magazines across the country. On December 6. the Beacon and Facebook privacy debate had hit the mainstream media. … “On behalf of everyone working at Facebook.”~~Mark Zukerberg Beacon transformed from an extreme opt-out program—where if the user ignored the pop-up window. Thoughts on Beacon About a month ago. While I am disappointed with our mistakes. thus affecting 55 million users. co-workers and acquaintances. but we‟ve made even more with how we‟ve handled them. including 500 classmates from Columbia University and 220 other friends. and apologized for its mistakes. Remedial Actions by Facebook In December 2007.Without Lane„s knowledge. 2007. the user activity data would be broadcast—to a multi-stage optin program Specifically. we appreciate all the feedback we have received from our users. We‟ve made a lot of mistakes building this feature. and I apologize for it. Facebook decided to give its members the option to permanently turn off Beacon. We simply did a bad job with this release.000 members. and his wife. Thanks for taking the time to read this. we released a new feature called Beacon to try to help people share information with their friends about things they do on the web. I‟d like to discuss what we have learned and how we have improved Beacon.

 Facebook users were asked to allow the broadcast of their activity before their offFacebook activity was sent to friend-. Facebook deletes the data upon receiving it. . IP addresses. you can opt-out by checking the „Don‟t allow any websites to send stories to my profile‟ box.”since Beacon captured web-page addresses visited. and if they ignored the reminder. Any off-Facebook activity would not be automatically sent to friends through a News Feed story even if the members had already opted-in. Any information that was sent to Facebook‟s servers will be deleted.  In addition. the website will send some information to Facebook in order for Facebook to generate a notification that will display in the lower right corner of your screen. no stories or information will be published anywhere on Facebook. deactivated accounts and non-members.Whereas consent was assumed previously. This facet of Beacon was referred to as “broad user tracking. If you click “Close” or ignore the story. Beacon would send activities to a member‟s friends through a News Feed.  Facebook added an additional point of control for members to clarify the type of information to be broadcast to their friends. Rather. the story will be sent to Facebook. but not yet published. and actions performed on sites of Facebook members and nonmembers. If you click “No Thanks”. Beacon now asked users to opt-in to the service. Facebook would not automatically store information from thirdparty partner sites. members would be asked to proactively approve the story again.  Facebook clarified the ability to permanently turn off Beacon: “If you do not want any websites to ever attempt to generate Beacon stories for you.”  Facebook decided not to modify Beacon‟s ability to “indiscriminately track actions of all users on external sites that have implemented Beacon. however… Before that happens. no story would be sent. members were reminded of a pending story. Upon visiting their Facebook pages. “In the case of logged-off users.

different friends lists allowed members to determine what information was shared with different groups of people and to create distribution lists for messaging and group invitations. The more control and the more granular the control. In addition. Facebook updated its privacy options to support Zuckerberg‟s statement in May 2008.” .In March 2008. We need to give people complete control over their information. with a standardized user interface to increase the probability of members actually using the privacy settings. Zuckerberg stated: “Almost all of the mistakes we made. the more info people will share and the more we will be able to achieve our goals. we didn‟t give people enough control. The friends lists were critical to giving members the “ability to share and restrict information based on specific friends or friend lists.

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