Running head: FACEBOOK PRIVACY
Facebook Privacy Policy Change Process: A Case Study
FACEBOOK PRIVACY 2
Facebook Privacy Policy Change Process: A Case Study
Part 1: Facebook
Business Overview
Facebook was founded in 2004 and is currently headquartered in Menlo Park, CA. As of
December 31, 2018, the company is reported to employ 37, 773 people (Bloomberg, 2019). The
company’s founders were Mark Zuckerberg who also currently serves as chairman and CEO
along with Dustin Moskovitz, Chris Hughes, and Eduardo Saverin (Soukup, 2018, p. 3). Other
notable executives serving at Facebook are David Wehner, CFO, Sheryl Sandberg, COO and
director, and Michael Schroepfer, Chief Technology Officer (Facebook Newsroom, 2019). As of
its December 2018 reporting, Facebook’s total revenue was $55.8 billion with a net income of
$22.1 billion as well as total assets of $97.3 billion and total equity $84.1 billion (“FB Income
Statement”, 2019). Facebook offers products that allow users to connect with each other through
mobile phones, tablets, computers, and other devices. Through Facebook products, users can
interact with each other through devices via a virtual community. Facebook also produces
Oculus, which is described as a hardware, software, and developer exchange that allows people
to interact through virtual reality products (Bloomberg, 2019). According to Shiau, Dwivedi,
and Lai (2018), because of Facebook’s approximately 1.56 billion users who actively use the
system daily, Facebook is the most popular global spanning social network in the world today (p.
53).
Shiau et al., (2018) use Boyd and Ellison’s characteristics to describe a social network as
a network that allows users of the system to share personal information and perspectives, share
their relationships with others, and view the information displayed by others (p.53). Facebook
has become the most important new communication tool for transmitting messages and the most
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widely recognized networking site most used by professionals (Ye and Cheong, 2017, p. 442).
Ye & Cheong (2017) further identified how Facebook allows firms to strengthen relationships
with consumers by releasing information regarding promotions, consumer focused events, and
product details through postings. Organizations also can allow their customers to interact
directly with the organizations by allowing customers to post directly on their pages or through
messaging. Facebook has become a cheaper and easier way for organizations to gauge and
market to customer needs (p. 442).
According to the NASDAQ website, Facebook generates the vast majority of its revenue
from advertising. This revenue is earned through displaying ad products on Facebook,
Instagram, Messenger and third-party online websites or mobile applications. The earnings for
the company are measured by way of the number of impressions delivered or the number of user
actions such as clicks or likes (“FB Income Statement”, 2019). Facebook delivers its ads to users
based on user profiles and Facebook's algorithms to match marketers' desired target audience.
The price per ad depends on factors including but not limited to marketer interest in user profile,
demand for user mindshare, geography, ad relevance for the user, and other aspects as
determined by Facebook's matching algorithms. Between 2016 and 2018, the contribution of
advertising revenue to total revenue increased from 97.3% to 98.5% (Bloomberg, 2019). Given
the cumulative size of Facebook's active user base, this trend is expected to continue, with the
contribution from advertising revenue reaching 99% by 2020 (Facebook, 2019).
The remaining 1.5% revenue is accounted for through payments, other fees, and Oculus
revenue. This revenue stream is generated primarily by way of the net fees that Facebook
receives from developers using its Payments infrastructure, in addition to other revenue streams
such as the Oculus business. Bloomberg reported that Facebook is working on a blockchain-
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based payments solution, which could provide some long-term upside. Between 2016 and 2018,
the contribution of this revenue stream to total revenue has decreased from 2.7% to 1.5%,
primarily due to the substantial growth in ad revenues. This trend is expected to continue, with
the stream's contribution declining to 1% by 2020 (Bloomberg, 2019).
Facebooks use of once assumed private information as a way to generate revenue has
raised questions regarding privacy. Those who use Facebook share a great deal of information
that could open the network to be used for monitoring and surveillance purposes. The viewpoint
has been raised that users of Facebook and social apps voluntarily give up some measure of
privacy, however the question is posed of how much information are institutions allowed to
glean from Facebook (Soukup, 2018, p. 21).
Organizational History and Progression
Facebook started as a college-based web resource at Harvard (Soukup, 2018, p. 3). The
company reports its official beginning as February 4, 2004 (Facebook Newsroom, 2019).
Founder Mark Zuckerberg confessed to hacking into Harvard’s student database for photos and
information, but later took down the site due to university and privacy concerns (Soukup, 2018,
p. 3). In March 2004, the company grew from its home base on the campus of Harvard to
include the campuses of Stanford, Columbia, and Yale (Facebook Newsroom, 2019). In June of
the same year, Facebook moved its operations to Palo Alto, California and by September the
Facebook Wall was launched which allowed users to share messages and information with those
connected to them. The website grew in popularity and profitability, which allowed for the
expansion of its service to include 800 college networks, and began to include high school
networks (Facebook Newsroom, 2019).
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With the increase of users, Facebook developed various additional sharing tools that
allowed users to connect with one other and allowed Facebook to become more profitable by
selling more information to other parties for advertising. In 2005, Facebook launched Facebook
Photos as well as began international operations; by 2006, Facebook expanded its offerings to
include mobile device support, added work networks, allowed the mass public to join the
network, and launched what we consider today as the news feed (Facebook Newsroom, 2019).
The ease of using a mobile device to check Facebook, as well as opening the network to
everyone, continued to generate the potential for increased profits from advertising.
With the increased user traffic and Facebook popularity, by 2010 Facebook began
construction on its first custom-built data center in Prineville, Oregon and in 2011 moved the
company headquarters to Menlo Park, CA (Facebook Newsroom, 2019). In April 2012,
Facebook acquired Instagram and in May held its first public offering. In February of 2013,
Facebook made another company acquisition when it acquired Atlas and by 2014 had acquired
WhatsApp and Oculus (Facebook Newsroom, 2019). One of the results from these acquisitions
was an increase in data and an additional data center built in Fort Worth, TX in 2015. This trend
of acquisitions and continued development of Facebook offices have continued and are projected
to continue into the future. In order to maintain the infrastructure and the tremendous user
traffic, Facebook has established data centers in Prineville, Forest City, Lulea, Altoona, Fort
Worth, Clonee, Los Lunas, Odense, Papillion, New Albany, Henrico, Newton, Eagle Mountain,
Huntsville, and Singapore (Facebook Newsroom, 2019).
Facebook accounted for almost a quarter of U.S. digital display ad revenues with growth
potential for more. With the expected contribution from advertising revenue to reach 99% by
2020, the way in which Facebook protects the information of its users will continue to be a
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critical component of its business strategy (Facebook Newsroom, 2019). Facebook’s enormous
online audience reach and high user engagement rates situate the platform as an attractive
advertising base for brands and companies. From a Harvard dorm room in 2004 to becoming a
company with global presence within ten years, Facebook leadership has sought to develop
smarter ways to advertise to the consumer. While their vision is to build a company that
connects billions of people around the world by providing users the ability to share what matters
most to them, resulting in bringing people closer together. Their business strategy is built on
collecting personal data that can be sold to outside parties that will use the information to
generate more effective marketing and advertisements based on that data. Facebook is truly a
data giant in need of creative change processes that address the modern challenges it faces.
Part 2: Change Processes within Facebook
Need for Change
While Facebook achieved unprecedented growth and revenue from advertisements over
the years, the organization has failed to address the increased public demand for transparent data
practices. Events such as the 2016 Cambridge Analytic crisis in which millions of Facebook
users’ personal data was used, without their knowledge, to aide political campaigns has caused
Facebook to face public scrutiny like never before (Kazlowska, 2018). According to Wiederhold
(2018), “$16 billion was stolen from 15.4 million U.S. consumers in 2016, compared to $15.3
billion and 13.1 million victims in 2015” resulting in the uproar of Facebook users worldwide in
regards to cybersecurity (p. 69). When accused by the public of utilizing microphones of
personal cellular devices to listen to conversations and endorse related advertisements, Facebook
flat out denied the accusation in the matter (Wiederhold, 2018). The current challenge of
Facebook is to increase users’ trust in the privacy and data sharing practices to ensure users
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maintain site usage while also developing the revenue opportunities through advertising that has
made the organization profitable.
Facebook’s enormous online audience reach and high user engagement rates situate the
platform as an attractive advertising base for brands and companies. The world has experienced
a phenomenal shift through advancements in technology and enabled users to have easier access
to fast communication networks (4G LTE and now 5G), smartphones, and user-friendly
application features. Whenever users download and install a new application on their phone and
in order to enable the all of the features of the application, users must approve the access to
several components of the device such as camera, global positioning, phone number contacts and
log, etc. Wiederhold (2018) stated that “Tech giants such as Facebook and Google already have
access to reams of user data based on people’s shopping habits, age, and location, among other
granular factors—including the personal information we readily provide, such as credit card
details and phone numbers” (p. 69). It is through the access of these large dumps of data that
Facebook is able track users’ activities real time to generate record breaking revenue in providing
services to other business and organizations worldwide (Soukup, 2018, pg. 1).
While meeting quarterly goals and growing the organization are essential in any
organization, senior leaders of Facebook must operate ethically and protect rights and privacy of
users. Soukup (2018) argues if it is ethical for Facebook to promote “consent culture” in users
having no choice but to accept permissions and policies through end-user license agreement (p.
21). Do users really understand what they are consenting to when they approve of such accesses
to cameras, pictures, text messages, and phone call logs? How can big tech giants such as
Facebook, do a better job in protecting the privacy of users while continuing the growth and
increasing revenue for the organization?
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Required Changes
Facebook must improve upon their previous norms to meet user expectations while also
meeting the market expectations that its shareholders anticipate. Considering the nature of how
Facebook generates revenue based off user data and statistics, it will require social and ethical
core changes in the way it operates in trying to be less intrusive toward user’s privacy while
promoting relevant and effective advertisement on behalf of their customers. According to
Waldman (2016), “higher levels of trust in the platform and higher levels in those individuals in
our networks are associated with a higher propensity to share personal information” (p. 195-
196). Facebook is fully aware of this concept and its core operation was designed to take
advantage and benefit from it; it exploits the trust of the users through sharing of personal
information to third party advertisers (Waldman, 2016, p. 196). It is imperative that Facebook
regains the trust of the public through a more transparent system in informing users of how their
personal information is being used and shared to these third-party advertisers.
Senior leaders at Facebook to include the CEO, Mark Zuckerberg, are fully aware of the
situation at Facebook. In February 2017, Zuckerberg wrote a manifesto titled, Building Global
Community, portraying and emphasizing his vision on using social media to build a better world
and society. After conducting a full analytical review of the document, Scott (2018) stated, “at
no point does he state that Facebook will develop its own moral and ethical standards, but rather
allow this to be set at a local level; the risks this poses for freedom of expression and censorship
are self-evident” (p. 462).
Past Change Methods
In the early days, before advertising led to huge profit potential, Facebook was just a
social media platform and a way for users to share with each other. When Facebook went public
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and tried to make money with advertising, the current crisis began. Users' personal data was
captured and used for the site's advertising business. It was successful, and protests over
personal privacy violations were treated dismissively. Facebook privacy agreements have
changed over the years and are reflective of that cultural change and the focus on profitability of
selling user data for targeted ads.
However, privacy scandals and data leaks over the last few years have increased.
Facebook had numerous scandals in 2018 ranging from involvement with Russian trolls, a
spyware app the company paid users to download, and general mismanagement of maintaining
user’s security information (Silverstein, 2019). In 2013, a bug in Facebook’s system exposed the
private information of millions of Facebook users to others. In 2018, Facebook faced legal
trouble in Europe because several countries claimed the Facebook was tracking people through
the Internet. Facebook was ordered not to collect private information on users through third
party websites and was told to delete all of the data they collected on any European citizens.
Facebook responded by saying that they do not give its users an option to have their data being
gathered from any third parties. Unfortunately, just a month later, it was discovered that
Facebook had experienced a massive data breach and did not do anything about it initially (Isaac
& Frenkel, 2018).
Facebook claims that it has new practices to protect its users data that include:
investigating any app or website that could access their users’ data; setting restrictions for all
apps or websites that can access someone’s Facebook accounts, and providing its users a way to
see which apps or websites have access to their Facebook account and provide users with an
option of taking away that access from apps or websites (Zuckerberg, 2019). Broadly speaking,
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Zuckerberg’s latest proposals are mostly superficial when compared to the scale and the scope of
the problems Facebook is confronting.
Future Implementation Plan
It is undeniable that Zuckerberg and Sandberg have done a remarkable job building out a
successful company. However, now that Facebook's privacy problems are continuing to stay on
the public radar, they need to come up with an immediate fix. Developing a solution to the issue
of protecting over a billion users’ personal information is something that will be difficult to
implement without jeopardizing the entire company. At the core of this issue is Facebooks lapse
in culture. The culture problem explains Facebooks’ consistent but needless privacy missteps.
From unwarranted requests for sensitive data to audacious violations of user privacy, Facebook
as a whole has simply not prioritized the security or privacy of its users for reasons than can only
be ascribed to culture.
The measurable steps that should be implemented by Facebook include the immediate
stoppage of mining users’ personal and private information for the availability of advertisers
without users’ explicit consent. In addition to allowing the users to explicitly agree to what type
of information is shared to third party markets, Facebook should allow users to request and see
what data is collected and have the ability to request personal information be deleted. This
would create a system of increased user trust and mutual accountability. Facebook could also
generate additional revenue by introducing premium paid accounts for people who do not want
any of their data stored by Facebook or sold to third party vendors. Only recently as more issues
with privacy have become apparent that users have begun to appreciate all the risks inherent in
the regular usage of digital technologies like Facebook. User training should be incorporated
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and provided on a regular basis to help ensure all members of Facebook have a current
understanding of the user agreements and how to modify security settings.
A member of the group provided a great example of how they ensured all Facebook posts
and photos that went to their timeline was friends only. All of their personal information such as
where they went to school or where they lived would only be viewable by their Facebook
friends. Additionally, privacy settings can be enacted to only allow existing Facebook friends to
post comments. On Facebook, users are given a choice of who can see your posts and photos.
They can make it public, friends only, or completely private. Users can also make comments on
any Facebook posts or photos from public, friends only, or completely private. Even after
posting a photo, comment, or a post, users can change the audience at any time. These steps
provide a sense of security to users; however, it does not stop that data from being collected and
stored by Facebook to potentially be stolen in a data breach or sold by Facebook to third parties
for their own purposes. Facebook’s business model must evolve to address the challenges
addressed and ultimately centers around trust. Users must regain the trust that Facebook will
make user privacy and data security as important as monetization. Without one, Facebook will
not be able to sustain the other.
The General Electric’s Change Acceleration Process Model is the most efficient model
Facebook can use to help achieve these change initiatives. The initial process can be
summarized the equation, Q x A = E; or simply put, quality work and good acceptance will result
in effective change. The advantage of General Electric Change Acceleration Process is its
inherent flexibility. As Facebook begins to initiate the various recommended adjustments,
managers must understand that those efforts will exist in a nonlinear fashion (Galli, 2018, p.
127). This construct will allow Facebook to maximize the speed that these initiatives can be
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implemented. The 7 steps of leading change, creating a shared need, shaping a vision,
mobilizing commitment, making changes last, monitoring progress, and changing systems and
structures, all help move Facebook into its ideal future state. One of the highlighted
disadvantages of the model is its requirement of a strong leader. Because of the strong
leadership and constant presence of Facebook executives, the risk that the model will fail is
mitigated (Galli, 2018, p. 128). By using the change model to implement the changes previously
outlined, the leaders of Facebook will be able to get everyone committed to making the changes
required.
This model was selected because it was designed with large organizations in mind. The
large quantities of people in large organizations need to have many who are committed to a
change to work successfully. As a result, this model separates the steps into enough detail to
manage change elementally and in smaller pieces (Galli, 2018, p. 130). Most importantly, it
monitors the progress of the change before implementation, which allows for greater probability
of success.
Biblical Integration
The Cambridge Analytica revelations that the personal data of millions of Facebook users
was accessed and used without their consent to aid political campaigns placed the site under
serious public scrutiny (Issak & Hanna, 2018). The Facebook security lapse was probed by the
Congress and the Federal Trade Commission. Due to the rise of similar cases in the site, some
users have lost trust in Facebook. The bible advocates for honesty. This is a value that Facebook
needs to adopt to resolve the unethical issues that it is facing. The company should perform an
internal audit, publish the findings of the audit, and report on the interventions it will put in place
to safeguard user privacy going forward. It has to be brutally honest about its own shortcomings.
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To effectively resolve criminal and unethical issues affecting Facebook, it is vital to understand
the actual cause of crime. Biblically, it is the evil deeply rooted in man’s heart that causes crime
(Genesis 6:5-11, New King James Version). God, therefore, created the civil government as a
way of restraining criminals and protecting citizens who are law abiding. Various governments
should have tight legal policies on data breaching which Facebook should adhere to (Esteve,
2017).
Facebook has been used spread hate and to incite violence which has had deadly
consequences. In March 2019, for instance, a shooter at the mosque in New Zealand streamed
on Facebook live causing a lot of panic and devastation among the public. The company should
channel some of its resources towards cracking down misinformation and hate speech on its
platform. Facebook should invest in content moderators and technology. Hiring cyber security
professionals will enable the company to secure systems and protect the data of users (Issak &
Hanna, 2018). The book of Psalms 19:7-10 states that God’s law is perfect, His commandments
are pure and the judgments of God are true and righteous (New King James Version). When
hiring cyber security specialists, the company should look for individuals with firm Christian
values who are righteous and follow God’s commandments. This is because the cyber security
specialists and cyber criminals share the same knowledge, just that cyber criminals use the
knowledge to commit crime. Matthew 18:16-17 lays out a biblical system for escalation (New
King James Version). If Facebook is not able to resolve the ethical issues it is facing, it should
open its doors for external help by bringing in external auditors and specialists.
One of God’s Commandments to man is that man should not steal. Using data of users without
their consent equals to stealing of their data. Facebook should strive to find the vulnerabilities in
their systems and then correct them before criminals find the vulnerabilities and exploit them.
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The Federal Trade Commission should be granted the power to impose penalties for data
breaches. Penalties such as heavy fines or being shut down temporarily will force Facebook to
investigate the data breaches and other ethical issues it is facing seriously and come up with
measures to improve the privacy of its users.
Conclusion
In a world where public perception is driving corporate value, it is important for
organizations to be deemed socially responsible. Facebook has evolved into the global leader of
social media. It has rapidly expanded their products through various acquisitions and maintains
a global presence through data centers and offices around the world. As it has grown, the
organization and many of its users have adopted technologies too quickly at points, without first
attempting to understand the potential risks and mitigation methods. As more users came to use
Facebook and more focus was directed towards the breach of trust considering the ongoing data
breaches, Facebook has only made feeble attempts to rectify the issues and restore public trust.
They seem to remain focused on generating revenue instead of improving upon their previous
norms to meet user expectations while also meeting the market expectations that its shareholders
anticipate. The suggested change initiatives and specific change management method would
help ensure that Facebook begins to change the culture that resulted in loss of public trust and set
the course for a long and stable future.
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