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Another huge data breach, another stony silence from Facebook | Facebook

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Half a billion Facebook users’ accounts stolen. Personal information compromised. Telephone numbers and birth dates drifting across the internet being used for God knows what. And for four days, from Facebook’s corporate headquarters, nothing but silence.

If this sounds familiar, it’s because it is. This week saw reports of a massive new Facebook breach and everything about it, from Facebook’s denials of the words “data” and “breach” to its repeated refusal to answer journalists’ questions, has been uncannily reminiscent of the Cambridge Analytica scandal.

Three years on, “Cambridge Analytica” is a byword for mass-data abuse, Facebook has been fined billions of dollars for failing to protect users’ data and… not a thing has changed. If ever there were a moment to understand how profoundly all systems of accountability have failed, and continued to fail, it is this.

Last week Nick Clegg, vice president of global affairs at Facebook, admitted on The Verge website that the Cambridge Analytica scandal had “rocked Facebook right down to its foundations”. And yet it has learned nothing. It has paid no real price (the record $5 billion fine it paid to the Federal Trade Commission (FTC) is literally no price at all to Facebook), suffered no real consequences, and failed to answer any questions over the involvement of its executives.

Nick Clegg, Facebook’s vice president of global affairs.
Nick Clegg, Facebook’s vice president of global affairs. Photograph: Hannah McKay/Reuters

That impunity was in full sight this week. The news of the latest breach, of 533 million people’s data, dropped over a holiday weekend; Facebook responded only by saying it was “old data” and the problem had been “found and fixed in August 2019” – an absurd statement given that the data had only just been dumped on the internet, and clearly that hadn’t been fixed at all.

These are the actions of a company that knows it can get away with it. And repeatedly does. On Tuesday morning I submitted a set of questions to its press office: when was the issue first discovered? Did Facebook inform the regulators (as it is required to under US, UK and EU law)? If so, when? Had it informed users? But Facebook didn’t respond. It still hasn’t responded. It uses silence to throttle reporting, a strategy that works. It passes “exclusive” scoops to favourite reporters, and stonewalls the rest. Not just me. At an impromptu event on the data breach, journalists from Wired, Politico and Business Insider revealed that it refused to answer their questions too.

Instead it published a blogpost, The Facts on News Reports About Facebook Data, saying it wasn’t hacked, the data was “scraped”. It later confirmed that it had no intention of informing users because it wasn’t “confident” who they were, users “could not fix the issue”, and anyway, “the data was publicly available”. What do you do when a trillion-dollar company with 2.8 billion users treats the public with brazen contempt? When it won’t answer basic journalistic inquiries? When it ignores even the regulator? Ireland’s Data Protection Commission – its lead regulator in Europe – released a pointed statement saying that it received “no proactive communication” from Facebook.

It’s this culture of impunity that makes Facebook such a dangerous company. Even where there are laws, it operates above them. There will be mass class actions that arise from this breach. But so what? It’ll take years and anyway, it’s only money. Money! As if Facebook cares. The Irish Data Protection Commission could act. But will it? Enforcements are hard, regulators respond to pressure, and in a news cycle that every day brings fresh new reports of Facebook enabling Nazis or driving teenagers to suicide, this story barely broke through.

The US Congress has finally woken up to the danger of disinformation, but the disinformation from Facebook about Facebook is toxic and continues unabated – from its shiny new Oversight Board, a $130m exercise in evading responsibility, to the estimated $7m a year it invests in its own pet Lord Haw Haw, aka Sir Nick Clegg.

War is not Peace. Love is not Hate. And the “facts” Facebook published this week about the data breach aren’t. They’re dangerous, irresponsible, at best half-truths designed to enable it to get away with it, as it does again and again.

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Big Brother is still watching you and he goes by the name Facebook | John Naughton

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The security guru Bruce Schneier once famously observed that “surveillance is the business model of the internet”. Like all striking generalisations it was slightly too general: it was strictly true only if by “the internet” you meant the services of a certain number of giant tech companies, notably those of Facebook (including WhatsApp and Instagram), Google (including YouTube), Twitter and Amazon.

The trouble is (and this is what gave Schneier’s aphorism its force) that for a large chunk of networked humanity, especially inhabitants of poorer countries, these walled gardens are indeed what people regard as “the internet”. And that’s no accident. Although Chinese smartphones are pretty cheap everywhere, mobile data tends to be prohibitively expensive in poor countries. So the deal offered by western tech companies is that data charges are low or zero if you access the internet via their apps, but expensive if you venture outside their walled gardens.

Of all the companies, Facebook was the one that first appreciated the potential of this strategy. It offered a way of signing up a billion new users in hitherto underserved parts of the world, thereby reducing the digital divide between the global north and the south. This meant that it could be spun as a philanthropic initiative, initially badged as internet.org and then as Free Basics. The app gave users access to a small selection of websites and services that were stripped of photos and videos and could thus be browsed without paying for mobile data. The rationale was that Free Basics would provide a taster of the internet, which would let people see the value of being connected. Conveniently, though, it also made Facebook the gateway to the internet for these new users. It was the default setting, as it were, in an online world where most people never change defaults and so functioned as a gateway drug for online addiction.

Rather to Facebook’s surprise, Free Basics was not universally welcomed in some of its target territories. The most vocal opposition came in India, the most important market outside of the west, where ungrateful critics perceived it an example of “digital colonialism” and it was eventually blocked by the country’s telecoms regulator on the grounds that it violated the principle of net neutrality by explicitly favouring some kinds of online content while effectively blocking others. Beyond India, however, Free Basics seems to be thriving, being used by “up to 100 million” people in 65 countries, including 28 in Africa.

Last May, Facebook launched a kind of Free Basics 2.0 called Discover. It’s a mobile app that can be used to browse any website using a daily balance of free data from participating mobile network partners. Effectively, it strips out all website content that’s data-intensive (images, video, audio) and displays a pared-down version of the site. “We’re exploring ways to help people stay on the internet more consistently,” explains the Facebook blurb. “Many internet users around the world remain under-connected, regularly dropping off the internet for some period of time when they exhaust their data balance. Discover is designed to help bridge these gaps and keep people connected until they can purchase data again.”

Sounds good, eh? But a recent study by researchers at the University of California, Irvine, on how Discover works in the Philippines (where it has replaced Free Basics) found that not all websites seemed to be stripped for onward viewing. When accessing Facebook through Discover, for example, it wasn’t stripped much – just 4% of images were removed from Instagram, compared with more than 65% of images on other popular sites such as YouTube and e-commerce platform Shopee. The inference was that Discover rendered Facebook’s own services far more functional than those of its competitors. Charged with this, the company blamed a “technical error” that had since been resolved.

Maybe it has, but it might not be wise to trust what Facebook has to say on questions such as this. It’s not that long ago, for example, that it offered its users Onavo Protect, a free virtual private network (VPN) app that would protect their privacy. The company is now being sued by Australia’s competition and consumer commission (ACCC) for using Onavo to allegedly spy on users. “Through Onavo Protect,” said the regulator, “Facebook was collecting and using the very detailed and valuable personal activity data of thousands of Australian consumers for its own commercial purposes, which we believe is completely contrary to the promise of protection, secrecy and privacy that was central to Facebook’s promotion of this app.” Facebook responded that it was “always clear about the information we collect and how it is used”, that it had cooperated with the ACCC’s investigation and that it “will continue to defend” its position in response to the regulator’s filing.

You get the point? Maybe surveillance isn’t the only business model of the internet. Hypocrisy runs it a close second.

What I’ve been reading

Masters and servants
Between Golem and God: The Future of AI is a beautifully structured essay on the 3 Quarks Daily website.

Dressed for all weathers
How clothing and climate change kickstarted agriculture is the thesis of an intriguing Aeon essay by Ian Gilligan, a prehistorian at the University of Sydney.

On the mend
Monopolists Are Winning the Repair Wars is a terrific blog post by Cory Doctorow on the importance of the “right to repair” our own equipment.

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Amazon exec’s husband jailed for two years for insider trading. Yes, with Amazon stock • The Register

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The husband of an Amazon financial executive was sentenced on Thursday to 26 months behind bars for insider trading of the web giant’s stock.

Viky Bohra, 37, of Bothell, Washington, reaped a profit of $1,428,264 between January 2016 and October 2018 by buying and selling Amazon stock using eleven trading accounts managed by himself and his family.

Bohra was able to pocket these big gains because he got copies of Amazon’s confidential financial figures from his wife, Laksha Bohra, who worked as a senior manager in the mega corp’s tax department. Laksha had access to Amazon’s earnings before the numbers were publicly disclosed and reported to the Securities and Exchange Commission. Her husband “obtained” this secret information, despite her being repeatedly warned to not leak the confidential data, and used it to favorably trade in Amazon stock and options.

“This defendant and his wife were earning hundreds of thousands of dollars in salary and bonuses from their jobs in tech – but he was not content with that – greedily scheming to illegally profit by trading Amazon stock,” Acting US Attorney Tessa Gorman, said in a statement.

“This case should stand as a warning to those who try to game the markets with insider trading: there is a heavy price to pay with a felony conviction and prison sentence.”

The FBI began sniffing around, and the Attorney’s Office for the Western District of Washington filed criminal charges [PDF] against Viky in 2020. He pleaded guilty in November to securities fraud. The prosecution had asked the courts for a 33-month sentence.

Separately, he was also charged by the SEC and told to cough up $2,652,899 in disgorgement, interest, and penalties.

“Mr Bohra knew exactly what he was doing and was driven solely by greed,” Donald Voiret, an FBI Special Agent leading the Seattle Field Office, added. “With his nearly unlimited access and knowledge of securities trading, he undermined public trust in our financial markets.”

Laksha Bohra was suspended from her job in 2018 and resigned shortly after, according to a lawsuit filed by the SEC [PDF], and will not face criminal charges as part of Viky’s agreement to plead guilty. ®

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Stripe rolls out new tax compliance tool for merchants

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Stripe Tax automates much of the calculating and collecting of levies like VAT and sales tax for businesses.

Fintech giant Stripe is rolling out a new product to automate businesses’ tax compliance.

Stripe Tax, which was built at the company’s engineering hub in Dublin, helps businesses to automatically calculate and collect sales taxes, VAT and goods and service taxes where they do business.

The product has been rolled out in 30 countries and all US states. Stripe Tax manages the requirements for tax collecting from jurisdiction to jurisdiction. This ensures merchants are in compliance with local tax rules but without the headache of managing it themselves.

According to a 2020 report from Stripe, two-thirds of businesses say that managing tasks like tax compliance inhibits their growth and takes up time that could otherwise be spent on product development.

The matter of tax has become more complex with the mix of physical and digital goods and sales across borders.

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Non-compliance with taxes, even through accidental oversight, can lead to serious sanctions or interest-laden tax bills for businesses.

Stripe Tax calculates taxes due by determining an end customer’s location and products they’re buying. It adapts as changes to tax regimes come into effect and generates reports for businesses on the levies calculated and collected.

“No one leaps out of bed in the morning excited to deal with taxes,” Stripe co-founder John Collison said. “For most businesses, managing tax compliance is a painful distraction. We simplify everything about calculating and collecting sales taxes, VAT and GST, so our users can focus on building their businesses.”

Large companies, including News UK, have started using the product.

“Directly integrating Stripe Tax into our subscriptions platform will save us countless hours, time that can be better spent elsewhere,” Ruan Odendaal, head of subscriptions platform at NewsUK, said.

Stripe has had a very busy 2021 so far. After raising funding at a $95bn valuation, it has been rolling out more services that go beyond the payments processing the company was originally built on, as well as expanding geographically with a focus on the Middle East.

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