Facebook to combat fake news with this new fact-checking program: Know how

Facebook Inc said on Tuesday it would ask community reviewers to fact check content in a pilot program in the United States, as the social media platform looks to detect misinformation faster.

The company will work with data services provider Appen to source community reviewers.

The social media giant said data company YouGov conducted an independent study of community reviewers and Facebook users, who will be hired as contractors to review content flagged as potentially false through machine learning, before it is sent to Facebook's third-party fact-checking partners. Facebook is under pressure to police misinformation on its platform in the United States ahead of the November 2020 presidential election.

The company recently came under fire for its policy of exempting ads run by politicians from fact checking, drawing ire from Democratic presidential candidates Joe Biden and Elizabeth Warren.

Yes, privacy crackdowns matter: Facebook is starting to feel the pinch

It’s easy to believe that Facebook Inc. is an unstoppable advertising force built on pervasive human surveillance and that meek regulatory or legislative efforts do nothing to stop it.

Despite those concerns, the privacy reckoning for Facebook and the rest of the internet is denting the company’s ad machine.

Facebook spooked investors a bit on Wednesday during a conference call to discuss its second-quarter earnings. Executives said revenue growth would slow more than the company previously expected at the end of this year and into 2020, in part because of various restrictions or self-imposed limitations on Facebook’s data harvesting.

Facebook didn’t spill all the details about the scope of this growth sag or the causes. Europe’s strict data privacy rules, imposed last year, require Facebook to obtain explicit permission from people for all sorts of data harvesting that is considered normal in the US, and executives have said that some Europeans are saying no.

Facebook’s revenue growth in Europe is slower than the pace in the US and Canada and in the Asia-Pacific region. Facebook has also said the European data rules are having an impact outside of that continent, perhaps because of more attention on Facebook’s privacy practices.

Companies such as Apple Inc. that control important online gateways are also trying to crack down on the types of broad data collection in which Facebook and others engage. And Facebook itself has imposed limits on types of sometimes-creepy information marketers had used to target ads and closed down some of Facebook’s own ad-targeting categories, including ones that should not have existed.

Facebook has also promised a long-delayed feature that would allow people to decouple their internet browsing history from their Facebook user profiles. The company has warned advertisers that this “clear history” feature will make Facebook’s ads less personalised. (It should be said that Facebook hasn’t done much to limit the kinds of data the company itself harvests on billions of people.)

The revenue warning shows that when Facebook and its advertising partners have handcuffs on how much they can do to assemble complex portraits of people as they roam around the web and the real world, the unstoppable growth machine sputters a bit. Facebook can’t pinpoint ever-more personalised ads, and people are less likely, perhaps, to respond to those pitches. Facebook makes a little less money.

Analysts have been looking for Facebook’s growth rate to come in under 25 per cent for the rest of this year. That is enviable for a company with more than $60 billion in yearly sales, but revenue rose 37 per cent last year. There are a host of reasons Facebook isn’t growing as fast, including a slow shift of people away from its lucrative core social network 1 into slightly less lucrative Instagram. Still, the expected slowdown shows that privacy limits imposed by governments, internet gatekeepers and Facebook itself are having an impact.

It’s not clear whether Facebook’s revenue forecast anticipated possible effects related to the US Federal Trade Commission, which hit Facebook with a $5 billion fine on Wednesday for privacy-related violations and forced some structural changes on its handling of privacy matters. Facebook did tell investors that the FTC-imposed changes will require the company to spend a significant sum of money and will most likely slow the release of new products.

It’s still possible that people will want many more concessions and actions from Facebook on user privacy. I wrote on Wednesday that the entire internet economy, including Facebook and Google, has thrived by normalising ever more aggressive data harvesting in ways that people don’t fully understand and can’t meaningfully consent to. One fix would be to allow more users to permit Facebook’s information collection only inside the walls of its social network and other apps — not just about everywhere online and in the real world.

But even without that drastic step, it’s clear that years of reckoning have complicated Facebook’s path forward. Yes, privacy crackdowns matter.

Facebook's Libra cryptocurrency: Five things we know, five we don't

Facebook Inc unveiled plans for a new cryptocurrency called Libra this week. When it launches in 2020 or later, it will be a stablecoin–a digital currency that doesn’t fluctuate much because it’s supported by established government-backed currencies and securities.

The world’s largest social media company published a 12-page white paper on Libra and has more than 20 partners for the project. But there are still many questions. After a week of analysis, here’s what Bloomberg reporters and editors know about Libra, along with key unknowns that remain:

Joe Weisenthal, executive editor: digital news at Bloomberg:

For sure: Libra is being touted as a cryptocurrency, so it’s natural to use existing cryptocurrencies like Bitcoin and Ethereum as mental models for what it could be. But it’s probably better to think instead about traditional peer-to-peer payment networks. Whether you’re talking about PayPal, Venmo, Square, WeChat, or even Western Union, all of these networks are in some way layered on top of the traditional financial system in order to ease some type of transaction (e-commerce, check-splitting, remittances). The problem is that these networks aren’t interoperable, and in many cases the fees can be quite high. Like all these other networks, Libra will be layered on top of the existing financial system, since each coin will be backed by traditional money in the bank to support a stable price. Unlike these other networks, however, there is an opportunity to create payments unification on a global scale, and at potentially a much lower cost. And in theory, anyone will one be able to build payment applications on top of Libra. Some might focus on friends splitting the cost of dinner. Others might be focused on remittance payments to developing markets. In the most extremely successful version of Libra, it’s not so much a cryptocurrency, but a global operating system for moving fiat money around.

Unanswered: There are basically two ways to hold a cryptocurrency. One is you can hold your coins with a custodian, or in a custodial wallet. If you buy your Bitcoin on a site like Coinbase, you can just leave it there, and they’ll hold it for safekeeping. The drawback is that you’re trusting Coinbase, which is a regulated entity. If law enforcement comes after you, and says you’re engaged in some illegal activity, Coinbase can freeze you out of your account and your Bitcoin might as well be gone. The other way to hold Bitcoin is in your own, non-custodial wallet. This entails keeping the cryptographic keys that unlock your coins in your own hands. This could be on your phone, on your computer, on a USB drive, or even on a piece of paper that you keep in a safe deposit box. The drawback is if you lose your keys, then your Bitcoin is gone forever. The advantage is that you have the freedom to do whatever you want with them, and it’s very difficult for law enforcement to do anything about it. The question for Libra is whether a user will be able to hold their coins in a truly non-custodial wallet. Can I keep access to the coins on a piece of paper? Or on a thumb drive? And if so, how will Libra stop someone from transferring that piece of paper to a criminal, or someone in a country that has banking sanctions against it? Facebook says its currency will have mechanisms to defeat illegal activity. But if users can take their keys into their own hands, it’s unclear how Libra will prevent them from being given over to a bad actor. And if Facebook doesn’t have a guaranteed way of preventing this, then will regulators really let it get off the ground?

Kurt Wagner, Bloomberg social-media reporter:

For sure: Facebook is aware that people don’t want to mix their financial data with other personal data, like the information they post to their Facebook profile. So Facebook created a new subsidiary, Calibra, that will build and maintain the company’s digital wallets and work on the Libra cryptocurrency. Facebook’s blockchain boss, David Marcus, says Calibra will store this financial data on separate servers, and won’t share it with Facebook.

Unanswered: Facebook makes almost all of its money from advertising, and it's unclear how exactly it plans to generate profit from Libra. Under Calibra, Facebook will build new digital wallets into its WhatsApp and Messenger services to make it easier for people to send money to contacts. That could open the door for Facebook to expand into payments and commerce. While messaging apps have been a successful portal for these kinds of activities in Asia, it has been less popular in the U.S., and it’s unclear if people will actually trust a new cryptocurrency invented by Facebook.

Olga Kharif, Bloomberg cryptocurrency reporter:

For sure: Libertarians and crypto geeks have flocked to Bitcoin because it's not controlled by any government or corporation. Anyone with computers can support the network and help it verify transactions. Libra will be, at least initially, controlled by about 100 organizations–mostly companies. That's likely to rub crypto diehards the wrong way. It's even rubbing Bitcoin skeptics the wrong way because they see it as essentially a way for corporations to start minting money. Nouriel Roubini, a professor of economics and international business at New York University Stern School of Business, called Libra "a Monopoly scam.” David Marcus, who heads the Libra project at Facebook, said the network will eventually become distributed, but he hasn't said when that will happen.

Unanswered: Libra is not necessarily intended to appeal to the crypto faithful, of course; instead, it's targeting the 1.7 billion unbanked people globally. With Libra, they'll be able to have something similar to digital bank accounts at companies like Facebook. The problem is, unlike traditional banks, it's not clear that these accounts will pay interest on deposits. Most other digital wallets for holding crypto don’t pay interest. Facebook emphasized that it doesn't provide banking services.

Robert Schmidt and Ben Bain, financial regulation reporters at Bloomberg:

For sure: Facebook’s rollout of the Libra coin was close to a disaster in Washington. The negative response in D.C. could threaten its ambitious plan to release the digital tokens by the middle of next year–and reinforces the notion that Silicon Valley companies have no clue how to operate in the nation’s capital. Democrats were quick to lambaste the social media behemoth for jumping into the crypto fray while so many questions still linger about Facebook’s commitment to consumer privacy, its digital market power and the company’s role fueling fake news and Russian-sponsored political attacks in the 2016 election. Republicans were more muted in their response. One thing both sides agreed upon is the need to haul Facebook executives up to Capitol Hill for a public interrogation about Libra. Expect to see them in the next few weeks being sworn in before the Senate Banking and the House Financial Services Committees.

Unanswered: Who will step into the regulatory breach? No single US agency is charged with overseeing cryptocurrencies–a situation that has allowed digital coins to flourish but also made it relatively easy for criminals to use them for laundering money, dealing drugs and ripping off consumers. With the potential of Facebook’s two billion-plus users joining the crypto universe, the government will be forced to confront its laissez-faire policies. Federal supervision of digital money could be streamlined and increased. More than half a dozen regulators have some jurisdiction over cryptocurrency and they will likely vie to take more prominent roles. The Securities and Exchange Commission and the Commodity Futures Trading Commission, because of their expertise monitoring markets, are the leading candidates. Congress, too, could help set new rules. But it would have to pass legislation, an unlikely prospect before the 2020 US elections. 

Jenny Surane, Bloomberg finance reporter, and Julie Verhage, Bloomberg’s fintech reporter:

For sure: Facebook needs support from incumbent financial institutions to win consumers' trust and gain traction in payments. Banks’ initial absence was noticeable, although the project has the backing of the largest payment networks, Visa Inc. and Mastercard Inc. Facebook also hired a slew of former PayPal employees to help with Libra.

Unanswered: How many companies will really work together to make Libra a success? Historically, Visa and Mastercard have been adamant that they only allow fiat currencies on their networks. Banks have also been vocal about the fact that they cannot traffic in cryptocurrencies because of money laundering risks. It's also unclear if anyone else will join the party. Facebook has said it hopes to have 100 members join the currency's governing body by next year and the Libra Association is in talks with the largest U.S. banks about teaming up. Citigroup Inc.’s boss said he’d consider it.

Amazon cloud storage dilemma exposed in Facebook's latest database leak

After security researcher Chris Vickery discovered millions of records from Facebook Inc. users sitting unsecured on a public database, he tried for weeks to get Amazon.com Inc., owner of the servers where the data were stored, to take it down.

“We’re looking into the situation and assessing any extra steps we can take,” came the response from Amazon security staff on Feb. 21 -- three weeks after Vickery initially brought the data exposure to Amazon’s attention.

The trove in question included 540 million pieces of information, such as identification numbers, comments, reactions and account names, that had been culled from Facebook pages and stored on Amazon servers by Mexico City-based digital platform Cultura Colectiva. The records were accessible and downloadable for anyone who could find them online, and they didn’t get taken down until April 3, after Facebook -- alerted by Bloomberg News -- contacted Amazon.

The slow-footed response underscores a dilemma faced by businesses like Amazon Web Services, which along with cloud computing behemoths Microsoft Corp. and Alphabet Inc.’s Google, generate billions of dollars in revenue by providing storage and other computing services via remote data centers. Were Amazon to shut down a customer’s services, it could open itself to lawsuits and risk broken trust with clients, said Sean Curran, who advises companies on security issues for consulting firm West Monroe Partners. “It really is a gray area between [Amazon’s] responsibility and the customer’s,” he said.

Amazon views itself as responsible for the servers that populate data centers, and its customers should be in charge of the information that gets stored there, Vickery said. “Companies like Amazon Web Services push a narrative of a shared responsibility model, where they’re responsible for the hardware,” he said in an interview with Bloomberg TV. “And then it’s up to the ones who are paying to store the data to correctly configure their storage instances to make sure anyone on the internet can’t access it.”

Vickery said he also reached out to Cultura Colectiva to take down the data, but didn’t receive a reply.

Whatever role Amazon should play, the episode is only the latest embarrassment for Facebook, still smarting from revelations last year that the company lost track of data that it shared with third parties. Facebook for years allowed anyone making an app on its site to obtain information on the people using the app, and those users’ friends. Once the data left Facebook’s hands, the developers were able to do whatever they wanted with it.

Facebook, in a statement, said it worked with Amazon to take down the database. It’s unclear whether Amazon pulled the plug itself, or persuaded Cultura Colectiva to take the files offline.

AWS customers “own and fully control their data,” Amazon said in a statement. “When we receive an abuse report concerning content that is not clearly illegal or otherwise prohibited, we notify the customer in question and ask that they take appropriate action, which is what happened here.”

Amazon has grown into the world’s biggest provider of on-demand data storage and computing power in part by pledging to big companies that their data will be as private in the cloud as it was sitting in a back-room server.

“They just don’t want to start a precedent of them meddling with the data,” Vickery said, back when he was having trouble getting Amazon to take it down. “If they start shutting down access to data breaches, they start getting into liability a bit more. They’re in a sticky situation.”

On its website, AWS says customers maintain ownership of the data they upload to the service. “We do not access or use your content for any purpose without your consent,” the company said. Microsoft and Google make similar guarantees about their cloud businesses.

Even so, once Amazon becomes aware of information that shouldn’t be publicly available, it should quickly take steps to make the data private, said Ashkan Soltani, a privacy researcher and former chief technology officer at the Federal Trade Commission.

Vickery concurs. “I would hope that when they were notified they would have taken more steps to close it off,” he said.

Amazon’s terms of service give the company wide latitude to remove content it deems illegal. In cases where content infringes on the rights of a third party, Amazon can disable a service with two days notice.

After a series of inadvertent exposures of information stored on AWS’s Simple Storage Service in recent years, the company made it more difficult for its customers to make data public facing in the first place, peppering the service with warning notices when something is exposed, and giving administrators easier options to shut down open databases.