Fixing Facebook: Fake

news, Privacy, and Platform

governance

1
Facebook Business Model
• Targeted advertising
- More than 7 MLN advertisers
- ARPU (Average Revenue per User): US$10 (2015)  US$33 (2019)
• M&A: Don’t be too proud to copy
- Instagram: US$1 BLN (2012)
- Oculus VR: US$2 BLN (2014)
- WhatsApp: US$19 BLN (2014)

2
Two Criticism of Facebook
• Curation: Removing or failing to remove certain contents (i.e.,
fake news, political misinformation)
• Privacy: Advertisers, 3rd party application developers access to
user’s personal information

3
Curating Content (1):
Content category & Moderator
• 9 banned content categories: (1) Adult nudity and sexual activity, (2) bullying
and harassment, (3) Child nudity and the sexual exploitation of children, (4)
Fake accounts, (5) Hate speech, (6) the Sale of drugs or firearms, (7) Spam, (8)
Terrorist propaganda, and (9) Violence and graphic content
• Moderators:
- 30,000 moderators around the world & Viewing hundreds of pieces of contents every-
day
- Lack of hard and fast rules for consistent and predictable judgment
• Ambiguities of categories of content
- Context-dependent
- People’s disagreement

4
Curating Content (2):
Misinformation & Fake news
• Zuckerberg’s philosophy:
- Facebook is the platform where people could share opinions. It could not be in the busi-
ness of deciding what is true and what is not true.
- Err on the side of free expression
• Misinformation: Theory of pretty crazy idea, Self-cleaning oven theory
- 2016 U.S. presidential election: Inattentive to pro-Trump propaganda
- Deep-fakes (2019, Zuckerberg)
- But the problem is.. False information spreads farther and faster than accurate news
• Curation
- Fact-checkers, News Feed algorithms to affix the warning labels
- WhatsApp(encrypted data): Forwarding limit: Limit on the number of groups a message
could be forwarded to

5
Privacy
• Zuckerberg’s philosophy:
- Users do not care as much about privacy as critics think and will care even less about privacy in the future
• Run-ins with FTC (Federal Trade Commission) in 2011 & settlement
- Failing to ask for meaningful consent
- Confusing privacy policy (how private information is shared)
• Cambridge Analytica
2014, Alxander Kogan (Lecturer at University of Cambridge) earned data of 87 MLN Facebook users and
shared a large portion of it with political consulting group Cambridge Analytica to work with Ted Cruz for
presidential campaign and Trump afterwards for target advertising
• Settlement with FTC in 2019 for US$5 BLN
• In 2019, a federal appeals court upheld a district decision to deny Facebook’s motion to dis-
miss on the claim that Facebook did not ask for explicit consent on Tags Suggestion (Facial
recognition tools on photos), exposing to the damage of US$7 BLN

6
Facebook’s Two Announcement in 2019
• Public square model  The Digital Living Room: “The future
is private”
- Two challenges: Advertising? Content curation?
- Instagram users interact with misinformation 2.5 times more than
Facebook users do
• The Oversight Board
- Independent board for reviewing content decisions
- 11 members chosen by an independent trust to serve a maximum
three three-year terms

7
Facebook’s Choices
• Governing Less: Privacy, WhatsApp model
- Encrypted data
- Depending user’s reports
• Governing More: Curation, WeChat model
- Friction (10 minute gap) between stimulus and response
- Curation rules?: Legitimacy is not about outcome but processes and
procedures
• Breakup the company

8
Questions
• Please provide your team answers to the following questions
for discussion on November 7th (Monday)
1. Should Facebook govern more, govern less, or do some-
thing in between?
2. How can Zuckerberg monetize the digital living room? Par-
ticularly, on an encrypted platform focused on private
communications, could an advertising model work?