Privacy & Profits

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  • Good (EVENING/morning) ladies and gentlemen My name is Paul Johnson. 6 months ago, you hired my team and I to investigate the current and future stakeholder interests of Facebook We, at HCP Consulting, have had the chance to spend a significant amount of time reviewing these interests and forming our own suggestions and recommendations to best serve your needs. Our team concentrated on extracting our own research as well as investigating already existing data and findings, to provide you with a strategy to deliver satisfaction on all accounts for the best interest of your company. We have thoroughly enjoyed working with you for the past 6 months and appreciate the relationship we have established thus far. At this point, I’d like to re-introduce to you the members of our team: NAMES Now remember, you hired us to be critical… to really delve into the minds of the users and deliver you the truth, as harsh as it may sound. So, without further a due, we will present our findings….
  • Privacy & Profits

    1. 1. Reconciling the Competing Stakeholder Interests of Facebook Prepared for the Executive Directors of Facebook Consultants : Mai Hoang, Paul Johnson, Dan McCarty, Laura Molinari, Lily Tang Coordinator : Brett Klein Privacy & Profits
    2. 2. Overview <ul><li>The Crisis: </li></ul><ul><ul><li>Tremendous pressure to generate revenue </li></ul></ul><ul><ul><li>Violations of Privacy </li></ul></ul><ul><li>Dilemmas: </li></ul><ul><ul><li>Ethical </li></ul></ul><ul><ul><li>Legal </li></ul></ul><ul><ul><li>Financial </li></ul></ul><ul><li>Solution: “reviewbook” TM </li></ul><ul><ul><li>Respects user privacy </li></ul></ul><ul><ul><li>Better targeted ads </li></ul></ul>
    3. 3. Negative Press
    4. 4. Pressure to generate revenue $150 M $300 M Facebook’s Revenue
    5. 5. Violations of Privacy <ul><li>Beacon </li></ul><ul><ul><li>Why it was made </li></ul></ul><ul><ul><li>What it did </li></ul></ul><ul><ul><li>What happened </li></ul></ul><ul><li>Flawed Privacy Practices </li></ul><ul><ul><li>Wild-Wild-West Methodology </li></ul></ul>
    6. 6. Ethical Dilemmas <ul><li>Invading Privacy </li></ul><ul><li>Violating the Duty of Care </li></ul><ul><ul><ul><li>Informed Consent </li></ul></ul></ul>
    7. 7. Ethical Dilemmas: Invading Privacy <ul><li>3 rd Party information exchange </li></ul><ul><li>Highly deceptive </li></ul><ul><li>Beacon stores all information exchanges even if the user does not wish to publish information </li></ul><ul><li>Beacon launch was unannounced to users </li></ul>
    8. 8. Ethical Dilemmas: Invading Privacy <ul><li>Traffic to Facebook’s “Privacy” Settings Page </li></ul>Facebook announces that it will open profiles to search engines in October (encourages users to adjust their privacy settings) New Ad platform launches (including Facebook beacon)
    9. 9. Ethical Dilemmas: Violating the Duty of Care <ul><li>Digital Immigrants </li></ul><ul><ul><li>Not born during the digital age (over the age of 28) </li></ul></ul><ul><ul><li>Often have poor understanding of the Internet and its capabilities </li></ul></ul>May 2007 User Distribution
    10. 10. Ethical Dilemmas: Violating the Duty of Care <ul><li>Chose investors over other stakeholders </li></ul><ul><li>Did not care for its users in the most fundamental ways </li></ul><ul><ul><li>Contributing to society and human well being </li></ul></ul><ul><ul><li>Be honest and trustworthy </li></ul></ul><ul><ul><li>Respect the privacy of others </li></ul></ul><ul><ul><li>Honor confidentiality </li></ul></ul>
    11. 11. Legal Dilemmas <ul><li>Potential legal liability </li></ul><ul><li>Interpretation of the Law </li></ul><ul><li>Law cannot keep up with technology </li></ul>
    12. 12. Legal Dilemmas: Potential Legal Liability <ul><li>No current legal cases against Facebook </li></ul><ul><li>Legal reviews of Facebook </li></ul><ul><ul><li>MoveOn.org </li></ul></ul><ul><ul><li>EPIC.org </li></ul></ul><ul><ul><li>Center for Digital Democracy </li></ul></ul>
    13. 13. Legal Dilemmas: Interpretation of the Law <ul><li>New York Law of Torts: </li></ul><ul><li>§ 652C Appropriation of Name or Likeness </li></ul><ul><li>New York’s well-known statute creates both a misdemeanor and a civil cause of action for “[a]ny person whose name, portrait, picture, or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained.” </li></ul>
    14. 14. Legal Dilemmas: Interpretation of the Law <ul><li>California Online Privacy Protection Act of 2003 </li></ul><ul><ul><li>Requires commercial websites to post a privacy policy </li></ul></ul><ul><ul><li>Policy must state a list of the categories of third-parties with whom the operator may share such personally identifiable information </li></ul></ul>
    15. 15. Legal Dilemmas: Law cannot keep up with Technology <ul><li>Law should not solely guide business practices </li></ul><ul><li>Facebook should set a precedent for other social networking sites </li></ul>
    16. 16. Financial Dilemmas <ul><li>Jeopardizing user growth </li></ul><ul><li>Loss of potential revenue </li></ul>PRIVACY USERS
    17. 17. <ul><li>Average Daily Visitors Worldwide </li></ul>Financial Dilemmas: Jeopardizing User Growth
    18. 18. Financial Dilemmas: Loss of Potential Revenue
    19. 19. Solutions: Recent action steps <ul><li>New privacy controls </li></ul><ul><li>Announced privacy policy on home page </li></ul><ul><li>Changed Beacon to opt-in </li></ul><ul><li>Public statements </li></ul>
    20. 20. HCP Consulting Solution <ul><li>reviewbook TM : </li></ul><ul><ul><li>Facebook formatted application </li></ul></ul><ul><ul><li>User-generated review system </li></ul></ul><ul><ul><li>Increased revenue </li></ul></ul><ul><ul><li>No 3 rd party information exchange </li></ul></ul>
    21. 22. Projected Revenue <ul><li>Premium : </li></ul><ul><ul><li>$4,500 per campaign x 2,000 campaigns = $9,000,000 </li></ul></ul><ul><li>reviewbook : </li></ul><ul><ul><li>Large box: $.004 x 5% users x 30 pages = $414,000 </li></ul></ul><ul><ul><li>Small box: $.003 x 5% users x 30 pages = $310,500 </li></ul></ul><ul><li>Banner ads: </li></ul><ul><ul><li>25.2 M users per day x 5 pages = 126 M </li></ul></ul><ul><ul><li>126 M x $.004 x 30 days = $15,120,000 </li></ul></ul><ul><li>Click-throughs: </li></ul><ul><ul><li>126 M x 2% x $.05 x 30 days = $3,780,000 </li></ul></ul><ul><li>Total monthly revenue $28,624,500 </li></ul>
    22. 23. Solution: reviewbook TM <ul><li>Ethical: User-generated information </li></ul><ul><li>Legal: No 3 rd party exchange of information </li></ul><ul><li>Financial: More effective targeted ads </li></ul>
    23. 24. Getting back to your roots <ul><li>Putting power back in user hands </li></ul><ul><li>Facebook is a tool with great avenues of making money </li></ul><ul><li>Mission driven </li></ul><ul><ul><li>Connecting people to people </li></ul></ul><ul><ul><li>Privacy </li></ul></ul><ul><ul><li>Profits </li></ul></ul>
    24. 25. Questions/Comments ©2008

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