Facebook Fallout Spreads With Product Delay, Privacy Overhaul
(Bloomberg) -- The fallout from Facebook Inc.’s data privacy scandal is spreading.
The social media giant will delay the unveiling of new home products and is redesigning a menu of privacy settings on its network, stepping up its response to public outrage over revelations that it mishandled user data.
Facebook’s new hardware products, connected speakers with digital-assistant and video-chat capabilities, are undergoing a deeper review to ensure that they make the right trade-offs regarding user data, according to people familiar with the matter. While the hardware wasn’t expected to be available until the fall, the company had hoped to preview the devices at its developer conference in May, said the people, who asked not to be named discussing internal plans.
Facebook is also rolling out a new Privacy Shortcuts menu in the coming weeks that will let people regulate the amount of personal information the social media giant keeps on them, like political preferences and interests. Users will be able to delete things they’ve already shared and manage the information the company uses to show ads.
Chief Executive Officer Mark Zuckerberg has come under intense pressure from politicians in Europe and the U.S. to explain how political consulting firm Cambridge Analytica, which worked with Donald Trump’s presidential campaign, harvested data from about 50 million Facebook users as it built an election-consulting company that boasted it could sway voters in contests all over the world. Zuckerberg is poised to address the uproar on Capitol Hill in coming weeks.
The recent moves are unlikely to put to rest the broader issue of user privacy, but the efforts underscore a key concern of both Facebook and its investors: how to keep people from deleting their accounts -- or just avoiding the service -- over what many see as a betrayal of customers’ trust.
The Cambridge Analytica affair has plunged Facebook into one of its worst crises of confidence in years. The stock has fallen 18 percent since the news was first revealed by the New York Times and The Observer of London earlier this month, wiping out almost $100 billion of market value. Facebook is no longer among the top five most valuable companies in the world. The stock was up less than 1 percent at $152.82 on Wednesday in New York.
The new home devices are part of Facebook’s plan to become more intimately involved with users’ everyday social lives, using artificial intelligence -- following a path forged by Amazon.com Inc. and its Echo in-home smart speakers. As concerns escalate about Facebook’s collection and use of personal data, now may be the wrong time to ask consumers to trust it with even more information by placing a connected device in their homes. A Facebook spokeswoman declined to comment.
The social-media company had already found in focus-group testing that users were concerned about a Facebook-branded device in their living rooms, given how much intimate data the social network collects. Facebook still plans to launch the devices later this year.
Zuckerberg last week apologized for the breach of trust and outlined concrete steps the company would take to better protect users, including ways to make sure people understand who has access to their data and showing them a tool at the top of the News Feed. Facebook has produced multiple iterations to its privacy settings pages over the years, often in response to criticism that the system is too complicated for most people to understand what they are and aren’t sharing.
Under the redesign, users still won’t be able to delete data that they had given third-party apps on the platform previously, even if it was used for reasons other than what was agreed to. That data, generated over years of games and personality quizzes that had access to private information, is largely still stored outside of Facebook’s grasp by the private individuals and companies that built those applications.
At the developer conference, set for May 1, the company will also need to explain new, more restrictive rules around what kinds of information app makers can collect on their users via Facebook’s service. The Menlo Park, California-based company said in a blog post this week that for developers, the changes “are not easy,” but are important to “mitigate any breach of trust with the broader developer ecosystem.”
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