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Posts Tagged ‘Sheryl Sandberg’

Where Was the Board? Facebook’s “Pinto Memo” Says Volumes About Them

April 2, 2018 Comments off

02-facebook-1-hacker-way-sign

Everything is not awesome at 1 Hacker Way.  No, the House of Zuck is in serious trouble over many aspects of the business model that Sheryl Sandberg perfected for Facebook. However, Facebook has been very good at keeping attention focused on what third parties have done with Facebook’s data, whether that use violated the Facebook terms of service, all the usual overly legalistic twisting and turning to avoid legal liability that we are so familiar with.

The real question, of course, is not so much what some app developers did with “Facebook’s data” but rather what was Facebook doing with your data and how does Facebook profit from creating an addictive product.  It was only a matter of time before this came up and it’s unfortunate that it came up as Facebook tries to get the “royalty deadbeat” monkey of off their back and onto Twitter’s–more on that later.

But as the Guardian reports, it was Sheryl Sandberg–nowhere to be seen in the current crisis–who developed Facebook’s stalker-esque business model that made Bentham’s panopticon look like a high school lark.

Under Sandberg’s leadership, an ad model that took advantage of Facebook’s social graph emerged, starting with “engagement ads” that invited users to “like” the page of an advertiser and interact with the brand. Later, Facebook developed “custom audiences”, allowing external advertisers to merge the data they had about individuals with Facebook’s data.

This meant companies could micro-target their existing customers on the platform, layering their own customer data with Facebook’s invaluable information about likes, friends and biographical material.

It is this exploitation of your Facebook addiction that makes them rich–just ask Sean Parker.  (“‘God only knows what it’s doing to our children’s brains,’ Parker said.”)

But it also meant that Facebook’s “product” was you.  And it meant that they needed you good and hooked, “addicted” as Sean Parker has said, to all those likes and comments and comments on comments to keep you working for them for free in the great tradition of drug fueled manipulators as Professor Alter demonstrates in his very important book Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked.

Spotify also has had recent problems with manipulating users privacy.  They came up with the usual excuse: It’s all for your benefit.  It’s not that we want to sell your data out the back door, it’s that we want to give you a better user experience.

No one believes this, of course.  Although often maligned for using music as a loss leader for other high margin products, at least Apple has a product that is quite distinct from the music they sell and a brand that has always had extremely high integrity.  Apple has no nonprosecution agreements for violating the Controlled Substances Act like Google–that directly implicated Sheryl Sandberg during her Google days.

In an upcoming interview with MSNBC, Apple CEO Tim Cook makes the key point, the major difference between data scrapers and people who actually have a product:

“If our customer was our product, we could make a ton of money. We’ve elected not to do that….We don’t subscribe to the view that you have to let everybody in who wants to or if you don’t you don’t believe in free speech….Because we’re like the guy in the corner store.  What you sell in that store says something about you.”

But to focus solely on what Cambridge Analytica did with Facebook’s data is to accept the premise that Facebook wants you to accept.  The real question is what is Facebook doing with your data?  Because it is your data.  Facebook may be able to flash its terms of service in your face, but prosecutors are going to look at that TOS with a jaundiced eye once the nasty stuff starts to come out.

For example, Buzzfeed reports on a memo written by Facebook senior manager Andrew Bosworth:

“We connect people. Period. That’s why all the work we do in growth is justified. All the questionable contact importing practices. All the subtle language that helps people stay searchable by friends. All of the work we do to bring more communication in. The work we will likely have to do in China some day. All of it,” VP Andrew “Boz” Bosworth wrote.

“So we connect more people,” he wrote in another section of the memo. “That can be bad if they make it negative. Maybe it costs someone a life by exposing someone to bullies.

“Maybe someone dies in a terrorist attack coordinated on our tools.”

I’ve always said that there is a “Pinto memo” out there somewhere at Facebook and Google and that Big Tech is going to get taken down by a Jeffrey Wigand-style whistleblower.  (See Grimshaw v. Ford Motor Co., 119 Cal.App.3d 757 (1981) and the Tobacco Master Settlement Agreement (1998).) The downfall will be over the addiction issue which is, of course, directly tied to the data issue which is tied to the indifference issue.  The amoral indifference to “maybe someone dies in a terrorist attack coordinated on our tools.”

I often get criticized for saying that these are bad people.  Actually, it can’t be said enough.  And they’re not that different from other bad people we’ve dealt with over the years.

Wyden Tobacco

What also can’t be said enough:  Where was the board?

Sheryl Sandberg is shocked, shocked that there is bad behavior on Facebook

September 24, 2017 Comments off

This has been a bad few weeks for two out of the four members of the FANG cartel–Facebook and Google.  Their problems can all be summed up in a post by former Googler and current Facebook COO Sheryl Sandberg–yes, that Sheryl Sandberg, who is a leading contender for beatification by the Congregation for the Causes of the Commercial Saints and former defendant in the Google shareholder derivative suit over Google’s violation of the Controlled Substances Act.

According to Ms. Sandberg:

Last week we temporarily disabled some of our ads tools following news reports that slurs or other offensive language could be used as targeting criteria for advertising. If someone self-identified as a ‘Jew-hater’ or said they studied ‘how to burn Jews’ in their profile, those terms showed up as potential targeting options for advertisers.

Seeing those words made me disgusted and disappointed – disgusted by these sentiments and disappointed that our systems allowed this.

Could the problem be that Facebook’s “systems” are designed to “allow this”?  Just like Google’s “systems” were designed and optimized to allow selling advertising keywords for pirated recordings derived from artist names?

Luke Sample

And as was demonstrated by the FBI and Department of Justice sting operation, Google perfected selling search terms for illegal drugs?  As Wired reported in 2013, Sheryl Sandberg is no stranger to the issue of state of the art “systems” mysteriously allowing bad acts:

At one point during a meeting with [then inmate and former online illegal drug impresario David] Whitaker and his lawyer, the Feds asked him how he had grown his online enterprise. Whitaker’s answer was immediate: He had used Google AdWords. In fact, he claimed, Google employees had actively helped him advertise his business, even though he had made no attempt to hide its illegal nature. It was reasonable to assume, Whitaker said, that Google was helping other rogue Internet pharmacies too.

If true, this would be a bombshell. This was Google, after all. Since its founding, the search giant had prided itself on being a different kind of corporation, the “don’t be evil” company. And for almost as long, its open-to-all-comers ad policy had come under scrutiny. Online pharmacies were a particular sticking point; in 2003, three separate congressional committees initiated inquiries into the matter.

On July 22, 2004, a month before Google went public [and she cashed out big time], Sheryl Sandberg—at the time Google vice president of global online sales and operations—testified before the Senate Permanent Subcommittee on Investigations. Legislators had proposed two bills that would regulate online pharmaceutical sales, but Sandberg argued that the measures would be unduly burdensome. [Kind of like stopping child sex trafficking–too much trouble for elites in the Internet Associations membership.] She said that Google employed a third-party verification service to vet online pharmacies. She also described Google’s own automated monitoring system and the creation of a team of Google employees dedicated to enforcing all of the company’s pharmaceutical ad policies. “Google has taken strong voluntarily [sic] measures—going beyond existing legal requirements—to ensure that our advertising services protect our users by providing access to safe and reliable information,” she testified. Neither bill made it out of committee. (Sandberg, now Facebook’s chief operating officer, declined to comment or be interviewed for this story.) [I bet.]

However–at the same time that Ms. Sandberg’s people were crowing about their verification service, other Googlers were selling advertising keywords to criminals selling illegal drugs into the United States.  Google subsequently negotiated a non-prosecution agreement (kind of like a plea bargain) pursuant to which Google paid a $500,000,000 fine, evidently with the approval of Eric Holder, then Attorney General of the United States.  Google was represented in that deal by one Jamie Gorelick (Amazon board member and former Deputy Attorney General in the Clinton Administration, replaced by…Eric Holder.  Ms. Gorelick is employed by Washington DC swamp powerhouse law firm Wilmer Cutler Pickering Hale (former employer of Senator Elizabeth Warren).).

As Google (referred to as “the Company”) expressly acknowledged in the non prosecution agreement (which you can read here):

Non Prosecution Excerpt

So–Sheryl Sandberg has a very great deal of experience going back well over a decade with big rich Silicon Valley companies profiting from debased behavior.  Some might argue profits that she enjoyed herself in the form of stock awards, salaries and cash bonuses.

This is no doubt one reason why she was sued as a defendant in the stockholder derivative suit against Google (read the complaint here) that arose out of the $500,000,000 payment of the stockholders money to keep Google executives like her from being prosecuted criminally and potentially going to prison for facilitating the sale of illegal drugs to kids among other people.  (See also The Ryan Haight Online Pharmacy Consumer Protection Act of 2007, legislation sponsored by Senator Diane Feinstein and then-Senator now Attorney General Jeff Sessions.)

Remember–there’s no public evidence that I can find (and I’ve looked) that any of this bad behavior ever cost her a penny of her own money.

Shareholder Suite

Whether it’s drugs, hate groups, human trafficking or the Russians, Sheryl Sandberg has made lots of money exploiting human misery if you ask me.  I don’t quite see how she couldn’t have.

Given her carefully sanitized checkered past, should we accept the wringing of hands, wailing and mourning and rending of garments by an unimaginably rich power player like Ms. Sandberg?

I think not.  But that doesn’t mean there isn’t a different law for the Silicon Valley elites than there is for the hoi polloi.  Trust me, Sheryl Sandberg will never be held to account and will be able to buy her way out of prosecution yet again probably using the stockholders’ money yet again.

If $500 million is “nonmaterial” then why does royalty deadbeat Facebook refuse to pay artists and songwriters?

February 8, 2017 Comments off

MTP readers may have seen that Facebook’s Oculus virtual reality division lost a copyright infringement case in a $500,000,000 jury verdict for a variety of claims.  While that seems like a lot of money to me, the verdict was far short of what was at stake. What is interesting about the case for our purposes was not the details (covered by the Hollywood Reporter and a bunch of other outlets if you want to read up on it).

What is interesting is how Facebook reacted to having to pay $500,000,000 for rights.  Particularly since Facebook currently pays zero for music.

According to the Hollywood Reporter:

Facebook COO Sheryl Sandberg on Wednesday told CNBC, “The verdict is non-material to our business.”

A $500,000,000 rights payment is “non-material to our business.”  This really is how the other half lives.  Without going down the rabbit hole on materiality (see the SEC statement on materiality in financial statements here), let us take Ms. Sandberg’s rather breathtaking statement as true, or at least truthy.

What Ms. Sandberg suggests to me is that any rights payment that Facebook might make for songwriters and artists is also likely to me “non-material” to their business, even if that payment were hundreds of millions annually on an industry-wide basis.

It also makes you wonder why a public company for whom a $500,000,000 copyright infringement verdict is “non-material” prefer to be unlicensed royalty deadbeats rather than pay their fair share?  People who have enriched themselves in the public markets that protect their property rights in securities transactions just as the law protects intellectual property–as demonstrated by the Oculus verdict.

Who are these people?

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