By John D. McKinnon, Emily Glazer, Deepa Seetharaman and Jeff Horwitz
Facebook Inc. uncovered emails that appear to show Chief
Executive Mark Zuckerberg's connection to potentially problematic
privacy practices at the company, according to people familiar with
the matter.
Within the company, the unearthing of the emails in the process
of responding to a continuing federal privacy investigation has
raised concerns that they would be harmful to Facebook -- at least
from a public-relations standpoint -- if they were to become
public, one of the people said.
The potential impact of the internal emails has been a factor in
the tech giant's desire to reach a speedy settlement of the
investigation by the Federal Trade Commission, one of the people
said. Facebook is operating under a 2012 consent decree with the
agency related to privacy, and the emails sent around that time
suggest that Mr. Zuckerberg and other senior executives didn't make
compliance with the FTC order a priority, the people said.
It couldn't be determined exactly what emails the agency has
requested and how many of them relate to Mr. Zuckerberg.
The FTC investigation began more than a year ago after reports
that personal data of tens of millions of Facebook users improperly
wound up in the hands of Cambridge Analytica, a data firm that
worked on President Trump's 2016 campaign. The FTC is investigating
whether that lapse violated the 2012 consent decree with the agency
in which Facebook agreed to better protect user privacy. Since the
Cambridge Analytica affair, other privacy missteps have come to
light, adding to Facebook's headaches.
Facebook has been eager to strike a deal with the FTC and put
the Cambridge Analytica scandal behind it. The firm said in April
it was expecting to pay up to $5 billion as part of an accord with
the agency.
"We have fully cooperated with the FTC's investigation to date
and provided tens of thousands of documents, emails and files. We
are continuing to work with them and hope to bring this matter to
an appropriate resolution," a Facebook spokesperson said on Tuesday
in a statement. "Facebook and its executives, including Mark, at
all times strive to comply with all applicable law, and at no point
did Mark or any other Facebook employee knowingly violate the
company's obligations under the FTC consent order."
It couldn't be determined whether any of the emails -- which
have been described by people familiar with them but not reviewed
by The Wall Street Journal -- reveal practices that violated the
2012 accord. Any evidence that Mr. Zuckerberg was directly involved
in a potential failure on Facebook's part to honor the terms of its
consent decree with the FTC could complicate efforts on both sides
to resolve the matter.
At least some internal emails already provided to the agency
show Facebook grappling with gray areas in how it should address
privacy under the consent order, with Mr. Zuckerberg closely
involved, according to people familiar with the messages.
In one email exchange from April 2012 that has caught
regulators' attention, according to a person familiar with the
matter, Mr. Zuckerberg asked employees about an app that claimed to
have built a database stocked with information about tens of
millions of Facebook users. The developer had the ability to
display that user information to others on its own site, regardless
of those users' privacy settings on Facebook, the person said.
Mr. Zuckerberg wanted to know if such extensive data collection
was possible and if Facebook should do anything to stop developers
from displaying that data, the person said.
Another employee responded to Mr. Zuckerberg's question, saying
it was possible and many developers do the same thing but adding it
was a complicated issue, the person said.
The discussion continued without Mr. Zuckerberg or anyone else
suggesting by email that the company investigate how many other
apps were stockpiling user data, the person said. Eventually
Facebook suspended the app in question, the person said, adding
that it didn't move aggressively to address the broader
problem.
At the time, Facebook executives were largely focused on
increasing the company's user base and adding advertisers, and
appeared to be less diligent about enforcing its data-use rules,
developers and former employees have said. The company had
repeatedly said it was too slow to react to privacy and security
issues.
That email exchange occurred after the FTC's consent decree had
been announced but before it went into effect. The decree says
Facebook must honor a user's privacy settings and not share data
without a user's explicit permission. If it had been in effect at
the time, the stockpiling of such user data would potentially have
violated it. Mr. Zuckerberg's message seemed to indicate he was
aware of that, according to the person who was familiar with the
exchange.
FTC staffers have been exploring the episode as part of the
investigation, the person said.
A multibillion-dollar civil penalty would be a record for the
FTC, but the agency is under pressure from some lawmakers to
extract more punitive terms or litigate the matter, since even such
a large financial penalty would inflict little pain on the tech
giant.
Some FTC officials have debated whether to name Mr. Zuckerberg
as a respondent in the complaint that would be filed by the agency
as part of a settlement. If there are documents suggesting Facebook
and Mr. Zuckerberg specifically didn't take regulators seriously,
that could complicate those discussions. There is no indication
that any of the documents turned over to the FTC show that.
Facebook has vigorously opposed any efforts to hold Mr.
Zuckerberg personally liable as part of a settlement, according to
people familiar with the matter.
The FTC alternative of suing Facebook in court holds risks for
both sides. Even if it were to win, the agency would likely obtain
far less in both monetary penalties and operational changes at
Facebook than it could gain through a settlement, legal observers
have said. For Facebook, those people said, litigation would make
emails involving Mr. Zuckerberg and other senior executives more
likely to become public, possibly casting doubt on the company's
renewed public commitment to privacy.
Mr. Zuckerberg, who last year said he made a "huge mistake" in
not focusing on user privacy earlier, has been talking about
charting a new path for Facebook. He announced earlier this year
that the company would pivot toward encrypted and ephemeral
messaging products and would support the U.S. government imposing
personal-data protection along the lines of Europe's existing
laws.
Legal and political efforts in numerous jurisdictions are
continuing to explore the company's past practices.
Sealed American court documents obtained and made public by the
British Parliament show Facebook sought to expand its access to
users' data without informing them and snooped on mobile phone
users' activities on other platforms.
In the U.S., the attorney general of Washington, D.C., Karl
Racine, is suing the company over the Cambridge Analytica matter,
alleging in a recent filing that Facebook's staffers were aware
that its data was being misused for political purposes as early as
2015.
Facebook is fighting the D.C. lawsuit and has disputed that the
company knew of the Cambridge Analytica misconduct in 2015. The
company has called the documents obtained by U.K. officials
"cherry-picked" and misleading.
Write to John D. McKinnon at john.mckinnon@wsj.com, Emily Glazer
at emily.glazer@wsj.com and Deepa Seetharaman at
Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
June 12, 2019 11:50 ET (15:50 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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