Face­book’s data deals un­der crim­i­nal in­ves­ti­ga­tion


Fed­eral pros­e­cu­tors are con­duct­ing a crim­i­nal in­ves­ti­ga­tion into data deals Face­book struck with some of the world’s largest tech­nol­ogy com­pa­nies, in­ten­si­fy­ing scru­tiny of the so­cial me­dia gi­ant’s busi­ness prac­tices as it seeks to re­bound from a year of scan­dal and set­backs.

A grand jury in New York has sub­poe­naed records from at least two promi­nent mak­ers of smart­phones and other de­vices, ac­cord­ing to two peo­ple who were fa­mil­iar with the re­quests and who in­sisted on anonymity to dis­cuss con­fi­den­tial le­gal mat­ters. Both com­pa­nies had en­tered into part­ner­ships with Face­book, gain­ing broad ac­cess to the per­sonal in­for­ma­tion of hun­dreds of mil­lions of its users.

The com­pa­nies were among more than 150 firms, in­clud­ing

Ama­zon, Ap­ple, Mi­crosoft and Sony, that had cut shar­ing deals with the world’s dom­i­nant so­cial me­dia plat­form. The agree­ments, pre­vi­ously re­ported in The New York Times, let the com­pa­nies see users’ friends, con­tact in­for­ma­tion and other data, some­times without con­sent. Face­book has phased out most of the part­ner­ships over the past two years.

“We are co­op­er­at­ing with in­ves­ti­ga­tors and take those probes se­ri­ously,” a Face­book spokesman said in a state­ment. “We’ve pro­vided pub­lic tes­ti­mony, an­swered ques­tions and pledged that we will con­tinue to do so.”

It is not clear when the grand jury in­quiry, over­seen by pros­e­cu­tors with the United States at­tor­ney’s of­fice for the Eastern Dis­trict of New York, be­gan or ex­actly what it is fo­cus­ing on. Face­book was al­ready fac­ing scru­tiny by the Fed­eral Trade Com­mis­sion and the Se­cu­ri­ties and Ex­change Com­mis­sion. And the Jus­tice De­part­ment’s se­cu­ri­ties fraud unit be­gan in­ves­ti­gat­ing it after re­ports that Cam­bridge An­a­lyt­ica, a po­lit­i­cal con­sult­ing firm, had im­prop­erly ob­tained the Face­book data of 87 mil­lion peo­ple and used it to build tools that helped Pres­i­dent Don­ald Trump’s elec­tion cam­paign.

The Jus­tice De­part­ment and the Eastern Dis­trict de­clined to com­ment for this ar­ti­cle.

The Cam­bridge in­ves­ti­ga­tion, still ac­tive, is be­ing run by pros­e­cu­tors from the North­ern Dis­trict of Cal­i­for­nia. One for­mer Cam­bridge em­ployee said in­ves­ti­ga­tors ques­tioned him as re­cently as late Fe­bru­ary. He and three other wit­nesses in the case, speak­ing on the con­di­tion of anonymity so they would not anger pros­e­cu­tors, said a sig­nif­i­cant line of in­quiry in­volved Face­book’s claims that it was mis­led by Cam­bridge.

In pub­lic state­ments, Face­book ex­ec­u­tives had said that Cam­bridge told the com­pany it was gath­er­ing data only for aca­demic pur­poses. But the fine print ac­com­pa­ny­ing a quiz app that col­lected the in­for­ma­tion said it could also be used com­mer­cially. Sell­ing user data would have vi­o­lated Face­book’s rules at the time, yet the so­cial net­work does not ap­pear to have reg­u­larly checked that apps were com­ply­ing. Face­book deleted the quiz app in De­cem­ber 2015.

The dis­clo­sures about Cam­bridge last year thrust Face­book into the worst cri­sis of its his­tory. Then came news re­ports last June and De­cem­ber that Face­book had given busi­ness part­ners — in­clud­ing mak­ers of smart­phones, tablets and other de­vices — deep ac­cess to users’ per­sonal in­for­ma­tion, let­ting some com­pa­nies ef­fec­tively over­ride users’ pri­vacy set­tings.

The shar­ing deals em­pow­ered Mi­crosoft’s Bing search en­gine to map out the friends of vir­tu­ally all Face­book users without their ex­plicit con­sent, and al­lowed Ama­zon to ob­tain users’ names and con­tact in­for­ma­tion through their friends. Ap­ple was able to hide from Face­book users all in­di­ca­tors that its de­vices were even ask­ing for data.

Pri­vacy ad­vo­cates said the part­ner­ships seemed to vi­o­late a 2011 con­sent agree­ment be­tween Face­book and the FTC, stem­ming from al­le­ga­tions that the com­pany had shared data in ways that de­ceived con­sumers. The deals also ap­peared to con­tra­dict state­ments by Mark Zucker­berg and other ex­ec­u­tives that Face­book had clamped down sev­eral years ago on shar­ing the data of users’ friends with out­side de­vel­op­ers.

FTC of­fi­cials, who spent the past year in­ves­ti­gat­ing whether Face­book vi­o­lated the 2011 agree­ment, are now weigh­ing the shar­ing deals as they ne­go­ti­ate a pos­si­ble multi­bil­lion-dol­lar fine. That would be the largest such penalty ever im­posed by the trade reg­u­la­tor.

Face­book has ag­gres­sively de­fended the part­ner­ships, say­ing they were per­mit­ted un­der a pro­vi­sion in the FTC agree­ment that cov­ered ser­vice providers — com­pa­nies that acted as ex­ten­sions of the so­cial net­work.

The com­pany has taken steps in the past year to tackle data mis­use and mis­in­for­ma­tion. Last week, Zucker­berg un­veiled a plan that would be­gin to pivot Face­book away from be­ing a plat­form for pub­lic shar­ing and put more em­pha­sis on pri­vate com­mu­ni­ca­tions.


Mark Zucker­berg, chief ex­ec­u­tive of Face­book, tes­ti­fies to the Se­nate in­side the Hart Hear­ing Room in Wash­ing­ton on April 10, 2018.

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