Facebook’s Privacy Changes Leave Developers Steaming


Some, like Cubeyou, said they have been unfairly blocked from accessing Facebook users. Tinder, the dating app, discovered that its users were no longer able to log into the app using their Facebook accounts. Pod, a calendar syncing app, found that its users could no longer see Facebook events within their calendars. And Job Fusion, a jobs app that allowed users to see where their Facebook friends worked, announced that it was not longer able to offer its services within Facebook.

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A meeting at Cubeyou last week. Facebook cut off Cubeyou after a CNBC report said that the small data analytics company had misled people into believing its quizzes would be used for nonprofit academic research.

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Andres Kudacki for The New York Times

The fallout has cast a shadow over Facebook’s annual meeting with developers, which was scheduled to start on Tuesday in San Jose, Calif. The event, which includes a speech from Mark Zuckerberg, Facebook’s chief executive, is typically a major attraction for developers. But this year, half a dozen developers who had previously attended the conference told The Times that they did not plan to go because they objected to Facebook’s policy changes. Others who planned to be there said they intended to challenge Facebook’s leaders over the changes.

Facebook said it expected roughly 5,000 people — a record high — to be at the developer conference, which is known as F8. But the company also said it has tweaked the event with an eye toward data privacy. For example, the social network canceled the announcement of a Facebook smart home speaker to challenge Amazon’s Echo and Google’s Home amid worries that the device would raise more questions about the amount of data the company collects.

Ime Archibong, Facebook’s vice president of product partnerships, said developers are “incredible partners” for the company, but also added that it must “strike the right balance between creating compelling social experiences, protecting people’s data, and supporting an innovative developer ecosystem.”

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Facebook’s conference for developers features a speech from Mark Zuckerberg, the company’s chief executive.

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Justin Sullivan/Getty Images

Bhaskar Chakravorti, senior associate dean at The Fletcher School at Tufts University, said Facebook had to walk a fine line. “They have taken a blunt instrument approach, which is the right thing to do from a public relations standpoint,” he said. “But now they need to reach out to developers and smooth things over.”

For much of its history, Facebook has had a rocky relationship with developers. It has sometimes adopted policies to attract developers, including by opening access to its vast troves of user data. Developers, in turn, created apps that became emblematic of the Facebook experience — apps such as Farmville, a farming simulation game played with friends on the social network, which was made by the gaming company Zynga.

But developers are often at the mercy of any changes that Facebook decides to make. When Facebook clamped down on viral apps several years ago, it became harder for companies like Zynga to spread their games across the social media site. Zynga has since turned toward making mobile games and its fortunes have plummeted.

Facebook announced a series of privacy changes in early April. Under the new measures, developers can only see a Facebook user’s name, profile photo and email address; previously, the could see more information, like users’ Facebook posts. Facebook is also cutting off developers’ access to user accounts if someone has not used their apps for three months or longer. That policy is intended to prevent developers from collecting information in the background for months or years after people stop using their apps.

Facebook Here Together Video by Facebook

Facebook also announced that it was investigating apps that had gained access to large amounts of its data in the past, and said it was conducting an audit of any company that it believed has shown suspicious activity.

Cubeyou got caught up in the dragnet in early April. At the time, CNBC reported that the company, which is based in Redwood City, Calif., had collected users’ Facebook information for academic purposes and then sold the data to commercial firms without informing users. Facebook said it was conducting an audit of Cubeyou to determine if there was any wrongdoing.

Mr. Treu said Cubeyou fully complies with Facebook’s requirements of disclosing the data it collects and what that data is used for. He added that Cubeyou strips out any personally identifiable information that it gets from Facebook. Cubeyou is simply being singled out as part of “a witch hunt” by Facebook, he said.

“We did everything by the rules, and we are ready to prove that,” said Mr. Treu, who said his company has repeatedly reached out to Facebook to talk. “There is no way to talk to them, to find out anything.”

Correction: April 30, 2018

An earlier version of this story misstated the given name of CubeYou’s chief executive. He is Federico Treu, not Frederico.

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Professor Apologizes for Helping Cambridge Analytica Harvest Facebook Data


But in his first extensive interview since the report in The Times, Mr. Kogan insisted that he was upfront about the Facebook app used to harvest the data, and that no one seemed to care.

“The belief in Silicon Valley and certainly our belief at that point was that the general public must be aware that their data is being sold and shared and used to advertise to them,” Mr. Kogan said in an interview with “60 Minutes” on Sunday.

Founded by Stephen K. Bannon and Robert Mercer, a wealthy Republican donor, Cambridge Analytica rose to prominence for its work with President Trump’s campaign in the 2016 election. The company claimed it had developed analytical tools that could identify the personalities of American voters and influence their behavior — and that Facebook data had been used to help create so-called psychographic modeling techniques.

The techniques have been widely questioned by academics and other political data firms, and Cambridge Analytica has since insisted that the Facebook data was not used in its work in the 2016 campaign.

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Until April 2015, Facebook allowed app developers to collect some private information from the profiles of users who downloaded apps, and from those of their friends.

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Josh Edelson/Agence France-Presse — Getty Images

Mr. Kogan was hired on a contract by Cambridge Analytica in June 2014 — the same month the company was founded — and harvested the data throughout the summer by asking Facebook users to take a lengthy personality questionnaire.

The questionnaire was not actually on Facebook. It was hosted by a company called Qualtrics, which provided a platform for online surveys. Respondents were asked to authorize access to their Facebook profiles, and when they did, an app built by Mr. Kogan performed its sole function: harvesting the data of users and all of their Facebook friends. Their names, birth dates and location data, as well as lists of every Facebook page they had ever liked, were downloaded without their knowledge or express consent.

Facebook has said that those who took the quiz were told that their data would be used only for academic purposes, claiming that it and its users were misled by Cambridge Analytica and Mr. Kogan. Cambridge Analytica has said it was told that Mr. Kogan’s app complied with Facebook’s own rules.

But The Times reported last month that the fine print accompanying Mr. Kogan’s questionnaire told Facebook users that their data could be used for commercial purposes. That was an outright violation of Facebook’s rules at the time, but the company did nothing to stop Mr. Kogan’s app from collecting the data.

“This is the frustrating bit, where Facebook clearly has never cared. I mean, it’s never enforced this agreement,” Mr. Kogan told “60 Minutes.”

“I had a terms of service that was up there for a year and a half that said I could transfer and sell the data,” he continued, adding: “Never heard a word.”

Until April 2015, Facebook allowed app developers to collect some private information from the profiles of users who downloaded apps, and from those of their friends. Facebook has said it allowed this kind of data collection to help developers improve the “in-app” experience for users.

Facebook even worked with Mr. Kogan. In November 2015, it brought him in as a consultant to explain the technique he had used for Cambridge Analytica, which focused on how the Facebook pages that users had “liked” could reveal aspects of their personalities.

“At the time, I thought we were doing everything that was correct,” Mr. Kogan told “60 Minutes.”

“If I had any inkling that what I was going to do was going to destroy my relationship with Facebook, I would never have done it,” he said.

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The Week Ahead: Tech Companies Report Earnings and Economic Growth Data Is Released


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An Amazon warehouse in Florence, N.J. Amazon, a frequent target of President Trump, is one of several big tech companies that will report earnings this week.

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Bryan Anselm for The New York Times

Here’s what to expect in the week ahead:

TECHNOLOGY

Some of biggest tech companies report earnings.

Five of the best known companies in technology will report their earnings this week, including Twitter, Microsoft and Alphabet, the parent company of Google. Two of the tech giants that will share their financial results have been under political assault, but for very different reasons. Facebook has come under scrutiny by Congress and regulators for its data practices and role in the spread of misinformation, while Amazon has become a punching bag for President Trump, who has attacked it for not collecting enough taxes and its relationship with the United States Postal Service. It’s not clear whether the financial results of either company were affected, but the attacks have nonetheless spooked investors in the past. Nick Wingfield

British panel hears testimony on Cambridge Analytica.

The researcher at the center of the Cambridge Analytica scandal will testify on Tuesday before a British panel investigating fake news and the use of social media in the weeks before the country voted to leave the European Union. The University of Cambridge researcher, Aleksandr Kogan, has been accused of improperly gathering personal data on millions of Facebook’s users and sharing the information with the voter-targeting firm Cambridge Analytica. On Thursday, the same panel, the Digital, Culture, Media and Sport Select Committee, will hear from Mike Schroepfer, Facebook’s chief technology officer. Mr. Schroepfer can expect to hear about the frustration of committee members who have wanted Facebook’s chief executive, Mark Zuckerberg, to testify rather than lower-ranking executives. The committee has little legislative authority, but is working on a much-anticipated report that aims to shed light on the ways that political campaigns have manipulated social media to win over voters. Adam Satariano

TRADE

European leaders will discuss trade with Trump.

President Emmanuel Macron of France and his wife, Brigitte, will arrive in Washington early this week for a state visit, and they will be followed closely by Chancellor Angela Merkel of Germany on Friday. Their discussions with Mr. Trump are likely to center on global security concerns but also on his administration’s aggressive trade agenda, as an important trade deadline looms. On May 1, the exemptions that the United States granted several countries from steel and aluminum tariffs are set to expire, meaning the European Union and other close allies would to pay a steep premium to send metal into the United States. The Trump administration is hoping to use the tariffs as leverage in a trade negotiation, but European leaders have said they would not be bullied into concessions. Ana Swanson

AUTO INDUSTRY

Detroit automakers report earnings.

The three Detroit automakers all report first-quarter earnings this week, and most of the attention will focus on the struggling Ford Motor, which replaced its chief executive a year ago. Ford brought in Jim Hackett last May to reinvigorate earnings, cut costs and sharpen its strategy, but after 11 months on the job he’s offered few specifics on a turnaround plan. At least some details on cost-cutting are expected when Ford reports on Wednesday. General Motors and Fiat Chrysler Automobiles both present their results on Thursday, and are expected to show solid performances, thanks to sales of high-margin trucks and sport-utility vehicles. Neal E. Boudette

ECONOMY

Stimulus is on the European Central Bank’s agenda.

Have signs of a slowdown in Europe pushed back the European Central Bank’s timetable for ending its emergency stimulus measures? That will most likely be the chief question when Mario Draghi, the central bank’s president, holds a news conference on Thursday after a meeting of the bank’s Governing Council. The central bank is not expected to make any changes to its monetary policy at the meeting. But it will probably discuss whether a downturn in some economic indicators signals a slowdown or is just the result of one-time factors, including an especially brutal flu season that kept many workers off the job. Jack Ewing

BANKING

Deutsche Bank’s C.E.O. makes his debut on earnings call.

Christian Sewing, the new chief executive of Deutsche Bank, Germany’s largest lender, will take part in its first-quarter earnings report on Thursday. Mr. Sewing (pronounced “saving”), who was named to replace John Cryan this month amid chronic losses at the bank, will face investors and analysts in an early morning conference call. They will most likely interrogate Mr. Sewing about the bank’s strategy, which some investors complain is amorphous and unconvincing. Jack Ewing

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The Saturday Profile: Long Before Cambridge Analytica, a Belief in the ‘Power of the Subliminal’


Adolf Hitler “didn’t have a problem with the Jews at all, but people didn’t like the Jews,” he told the academic, Emma L. Briant, a senior lecturer in journalism at the University of Essex. He went on to say that Donald Trump had done the same thing by tapping into grievances toward immigrants and Muslims.

This sort of campaign, he continued, did not require bells and whistles from technology or social science.

“What happened with Trump, you can forget all the microtargeting and micro-data and whatever, and come back to some very, very simple things,” he told Dr. Briant. “Trump had the balls, and I mean, really the balls, to say what people wanted to hear.”

Mr. Oakes did not respond to requests for comment. A spokesman for Cambridge Analytica endeavored to distance the company from Mr. Oakes and his comments, saying he “never had any role at Cambridge Analytica, has never worked for Cambridge Analytica and did not work on the Trump campaign in any way whatsoever.”

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Nigel Oakes of SCL Group, the parent company of Cambridge Analytica.

The company said his comments were made “in a personal capacity about the historical use of propaganda to an academic he knew well from her work in the defense sphere.”

The hearings marked a sudden public exposure for Mr. Oakes, an upper-crust Englishman whose air of mystery was also a selling point: From its inception, the central promise of the SCL Group was to shape public opinion without being seen. Dr. Briant, who interviewed Mr. Oakes repeatedly for her book “Propaganda and Counter-Terrorism: Strategies for Global Change,” said she suspected that for Mr. Oakes, the hearings had been a painful experience.

“You need to bear in mind, these are powerful, arrogant men,” she added. “They think they own the world. I honestly think they thought they were invincible.”

As a young man, Mr. Oakes cut a rakish figure. Raised in rural gentility — his father was for a time the high sheriff of Warwickshire — and educated at Eton, he had “a kind of smoothness and charm and charisma that you associate with people who have that kind of education,” his former colleague Barrie Gunter said.

After Eton, instead of continuing on to college, he embarked on a racy career as a disc jockey and music producer and dated Lady Helen Windsor, a cousin of Queen Elizabeth and 40th in line to the throne.

The business idea he brought to the team of psychologists was “Marketing Aromatics,” a service that pumped in fragrances — of pine trees, the ocean, or new-mown grass — on the principle that “smells can influence attitudes and therefore behavior.” Mr. Oakes was “a young man in a hurry,” under pressure to repay his investors, said Professor Gunter, of the department of mass communications at the University of Leicester.

He was also anxious over his lack of a university diploma, pressing the professors to suggest a “short cut” that would save him years of study. “He was what the English would call economical with the truth,” said Mr. Furnham, a professor of psychology at University College London.

They parted ways, the younger man intent on building a company with a strong research component, Professor Gunter said, “designed in such a way that if the client wanted, it could be used to influence the subject and make them do something.”

That company was Strategic Communication Laboratories, and its new targets — procurement officials in the American and British militaries, and politicians in Asia, Africa and the Caribbean — were more responsive. Mr. Oakes was able to leverage his aristocratic background, attracting a list of prominent people, like Jonathan Marland, a member of the British House of Lords and former treasurer of the Conservative Party, as shareholders in his venture. Lord Marland said he was steered by a private equity form to invest around $70,000 in the company, which he said was “set up to give people security and military advice.”

An element of what Mr. Oakes offered his clients was dirty tricks. In 2000, Jeremy Wagstaff, an investigative journalist, encountered Mr. Oakes as an adviser to the president of Indonesia at the time, Abdurrahman Wahid. Mr. Oakes was paid $300,000 in cash for a two-month campaign, Mr. Wagstaff said. It was heavy on optics, featuring “a Tom Clancy-style ops center with lots of screens and people beavering away at computers.”

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Mr. Oakes with Lady Helen Windsor in 1985.

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Mike Forster/ANL, via Shutterstock

“The money was changing hands in U.S. cash in sports bags, so it was a somewhat unusual arrangement,” he said.

Mr. Oakes abruptly left Indonesia after Mr. Wagstaff reported in The Wall Street Journal that he had paid several thousand dollars to a nongovernmental journalist’s organization, falsely claiming it was from the United States Agency for International Development, and that the organization had then put out statements beneficial to Mr. Wahid. Mr. Oakes denied claiming the money came from U.S.A.I.D.

By then, Mr. Oakes was pivoting to counterterrorism, presenting a more sophisticated option for “hearts and minds” campaigns than the blunt propaganda offered by P.R. firms and Madison Avenue, said Dr. Briant.

“This pseudointellectual, academic approach, it looked really good,” she said. “You are creating a situation in which behavior will change. That idea underpins a lot of what they have developed since.”

By 2012, Strategic Communication Laboratories was a trusted partner of Britain’s Ministry of Defense, included on the so-called “X list” of companies “cleared to routine access to U.K. secret information.” It was also providing training for Britain’s 15th Psyops Group, according to documents released this month by Christopher Wylie, a former Cambridge Analytica employee.

When Dr. Briant last met Mr. Oakes for an interview, late last year, he was in an expansive, boastful mood. Mr. Oakes praised Mr. Nix, his younger colleague, for expanding the company’s electoral work swiftly, making it into “a very successful commercial entity.” But he credited himself with the big ideas behind the firm’s work.

“If he’s the Steve Jobs, I’m the Steve Wozniak,” he said, referring to the inventor who built the Apple computer. “I’m the sort of guy who wants to get the engineering right, and he’s the guy who wants to sell the flashy box.”

He rolled his eyes a little at the controversy that had built up around Cambridge Analytica’s advance work for a pro-Brexit campaign, a role which he said Mr. Nix had inflated for commercial reasons.

Yes, the company had been branded as using “pretty unethical ways of achieving their results,” he acknowledged to Dr. Briant. But on the bright side, he said, this was exactly what many clients were looking for.

“People coming to us are not ethical,” he continued. “I mean, frequently people come to us and say we’ve got so many dirty tricks against us, we now need to know the dirty tricks to go back. Or we need to know how to counter the dirty tricks and you guys seem to know how to do it.”

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Inside Cambridge Analytica’s Virtual Currency Plans


The effort was overseen by Cambridge Analytica’s British chief executive, Alexander Nix, who was forced out of the company in March after he was caught on tape bragging about his company’s approach to political work in other countries, including the use of shell companies and strategies designed to entrap opponents. The Facebook data revelations and Mr. Nix’s comments appear to have put the virtual currency work, which was still in the early stages, on hold.

Initial coin offerings, or I.C.O.s, are a method of fund-raising in which companies sell their own virtual currencies. The tokens are generally structured like Bitcoin, using a so-called blockchain to record transactions. The coins are usually designed to be used as an internal payment method in software that the start-ups are building. Over the last year, companies have raised over $6 billion through I.C.O.s.

The New York Times Explains…

Coin offerings generally avoid the regulatory oversight that accompanies traditional fund-raising methods, opening the door for significant fraud. A number of coin offerings have been shut down by law enforcement, and there are several broad investigations of the industry by regulators around the world.

“There are only a handful of more controversial areas it could have expanded its business into,” said Tim Swanson, a consultant to companies in the industry, who was briefed on the Cambridge Analytica coin offering.

A spokesman for Cambridge Analytica did not respond to multiple requests for comment.

Cambridge Analytica began working with coin offerings in the middle of last year. The business was guided by Ms. Kaiser, an American who led the company’s business development and previously appeared at a press event with organizers of the “Brexit” campaign to get Britain out of the European Union.

Cambridge Analytica boasts that its “psychographic profiles” of voters and consumers allow for more persuasive and precisely targeted advertising. In marketing material sent to investors, the firm said Ms. Kaiser was “helping blockchain companies in using predictive modeling to target investors for token sales.”

Jill Carlson, a consultant who has worked with several blockchain companies, attended meetings where Cambridge Analytica pitched its services to virtual currency companies, including one that Mr. Nix attended.

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Wan Kuok-koi, center, a Macau gangster, after his release from prison in 2012. Documents have listed Mr. Wan as a supporter of a Dragon Coin, a digital token promoted by Cambridge Analytica.

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Laurent Fievet/Agence France-Presse — Getty Images

Ms. Carlson said the Cambridge Analytica employees had bragged about their success in helping get President Trump elected and their ability to carefully target advertising campaigns using data from social networks like Facebook.

She also remembers they spoke about an array of potential campaigns. The most unusual idea involved sending virtual currencies to people in far-flung regions of Mexico. The payments would give people incentive to fill out surveys and get data that could then be used to help design campaigns for Mexican political candidates.

Ms. Carlson said the pitch was contrary to the ideas of openness and transparency that drew her to virtual currency projects like Bitcoin.

“The way that Cambridge Analytica was talking about it, they were viewing it as a means of being able to basically inflict government control and private corporate control over individuals, which just takes the whole initial premise of this technology and turns it on its head in this very dystopian way,” she said.

Cambridge Analytica did win over some clients. Last summer, Ms. Kaiser’s team began working with Dragon Coin, a new virtual currency that was designed to be used by gamblers. The coin was supposed to make it easier for people to get their money to casinos in Macau, an island that is technically a part of China with some independent political structures.

Cambridge Analytica had little public role in promoting Dragon Coin. But behind the scenes the company emailed potential partners and investors and arranged for some of them to take all-expenses-paid trips to a glitzy Dragon Coin event in Macau.

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Brittany Kaiser, who guided Cambridge Analytica’s work with initial coin offerings, has been critical of the company since leaving it in February.

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Stefan Wermuth/Reuters

The South China Morning Post published a photo from the event showing Wan Kuok-koi in attendance. Mr. Wan is known as Broken Tooth Koi from his days as the leader of the famous 14K gang in Macau. He was released from prison in 2012 after serving a 14-year term.

The founder of Dragon Coin, Chris Ahmad, told Business Insider at the time that Mr. Wan “is not involved in Dragon, and he is not financing Dragon in any way.”

But documents sent in September to potential investors by Dragon Coin’s co-founder Paul Moynan listed Mr. Wan as the sponsor of the initial coin offering and included his picture. Ms. Kaiser was included in the email. A separate Dragon Coin document that Mr. Moynan sent out at the same time listed Mr. Wan as one of a few high-profile supporters of the project.

When reached recently, Mr. Moynan initially said that his email address had been hacked and that he did not recognize the documents. He later said the documents were a “hypothetical wish list” of a “junior staff” member.

“We will be conducting an internal investigation, as unfinished draft documents would never have been indicative of actual agreed partnerships,” he said.

Ms. Kaiser said that her work on the Dragon Coin event in Macau had been done in a personal capacity, and that the Dragon Coin team had told her that Mr. Wan was not involved with the project.

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The Manhattan location of Cambridge Analytica, a British company. Its virtual currency work, which was still in the early stages, now appears to be on hold.

Credit
Joshua Bright

Dragon Coin claimed it raised over $300 million from investors last fall. That total has been hard to verify. But like many coin offerings, Dragon Coin has failed to live up to its promises.

The document sent to investors in September said Dragon Coin had secured a partnership with Visa to release a debit card that would work on the Visa network. A spokeswoman for Visa said that there was no partnership and that no Dragon card had been approved, as is necessary for a card to be issued.

The documents last summer also said the Dragon app, which would let investors use its virtual coin, would be available in September. When that didn’t happen, the company promised the app in January — but it still has not appeared. In the meantime, the company has spent its money sponsoring a Formula E car racing team and a team climbing Mount Everest.

The setbacks did not stop Cambridge Analytica from plunging further into the virtual currency realm. The company’s New York office continued reaching out to potential investors and partners, emails show. And in January, Ms. Kaiser hosted a side conference dedicated to blockchain projects, known as CryptoHQ, at the World Economic Forum’s annual conference in Davos, Switzerland. Mr. Nix spoke on a panel at the event.

He said that the technology would be helpful in solving the very problems that Cambridge Analytica has since become the emblem of — the abuse of online personal data.

“We’re going to see a new type of economy emerging where people can start to take ownership of their data and monetize on their data,” Mr. Nix said, according to a tweet from the CryptoHQ account. “And that is only possible through the blockchain.”

The virtual currency that Cambridge Analytica was designing was aimed at exactly this problem, and would have also helped the company raise money from investors.

The company wrote a document describing the technical specifications of the coin, Ms. Kaiser said. Her account was confirmed by another person who worked on the project and agreed to speak on the condition of anonymity. The work was overseen by Alexander Tayler, the firm’s chief data scientist and briefly the interim chief executive after Mr. Nix stepped down.

Ms. Kaiser left Cambridge Analytica in February and has been sharply critical of the company since then. As far as she knows, the coin offering has not moved forward. But she is still working on similar concepts at her new consulting firm, Bueno Capital.

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Facebook Takes the Punches While Rest of Silicon Valley Ducks


For now, at least.

Before Mr. Zuckerberg testified on Tuesday, Charles E. Grassley, Republican of Iowa and chairman of the Senate Judiciary Committee, sent letters to Mr. Pichai and Mr. Dorsey with 14 questions. In his letter to Google, Mr. Grassley wanted to “understand how Google manages and monitors user privacy for the significant amounts of data which it collects.”

[2 days, 10 hours, 600 questions: Read about what happened when Mark Zuckerberg went to Washington.]

The companies have until April 25 to respond. When asked whether they were concerned about congressional or regulatory scrutiny, Google and Twitter, though company representatives, declined to comment.

“Outside of Facebook, there is probably no company paying more attention” than Google, said Jason Kint, a frequent critic of Google and Facebook and chief executive of Digital Content Next, a trade group that represents entertainment and news organizations, including The New York Times. “They’re absolutely ducking for cover while the heat is on Facebook. They don’t want to try to trip any alarms.”

Like Facebook, Google collects vast amount of data on users — including their YouTube choices, internet searches, and location history — to target advertisements. While Facebook has more than 2 billion users globally, Google has seven products, including YouTube, Gmail and its Android software, with more than a billion users each.

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Mark Zuckerberg, questioned about Facebook’s tracking of logged-off users, pointed out that Google and “the rest of the industry” employed similar tactics.

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Tom Brenner/The New York Times

On Wednesday, when Representative John Shimkus, Republican of Illinois, questioned Facebook’s tracking of logged-off users, Mr. Zuckerberg was quick to point out that Google and “the rest of the industry” employed similar tactics. It was one of the few times Google’s data practices were mentioned in the two days of hearings.

Mr. Zuckerberg didn’t get a chance to say much more about Facebook’s industry peers this week. Over two days of hearings, Google was referenced 11 times by lawmakers. Twitter was mentioned 10 times and Amazon once. Apple was mentioned three times, mostly in passing.

Google employees said they have not received explicit order from management to keep a low profile because most already understand the risk. One employee, who spoke on the condition of anonymity because workers were not allowed to speak publicly on the issue, said there is an understanding inside Google that the company is the obvious next target.

In a statement, Aaron Stein, a Google spokesman, said the company is “completely focused on protecting our users’ data” and “will take action” if it finds evidence of “deceptive behavior or misuse of personal data.”

Google has been criticized — even fined — for its privacy practices over the years. It paid a $17 million fine to settle a case when it bypassed privacy settings in Apple’s Safari browser to track users and show them advertisements in 2011 and 2012. It also got dinged for scooping up people’s passwords, email and other personal information during its Street View mapping project.

Privacy advocates also criticized a Google social network, called Buzz, in 2010 for automatically including users’ email contact. Google eventually settled the matter with the Federal Trade Commission and agreed to strengthen an existing privacy program.

Google is staying on the sidelines in other ways. Four days before Mr. Zuckerberg was set to testify, Facebook surprised many in Washington when it endorsed the Honest Ads Act, a Senate bill that would require more transparency and stricter rules for political ads on the internet. Facebook’s endorsement was a reversal from its previous opposition, said a spokeswoman for one of the bill’s co-sponsors, Mark Warner, Democrat of Virginia.

Mr. Warner and another co-sponsor, Senator Amy Klobuchar, Democrat of Minnesota, called on Twitter and Google to also back the bill. Twitter quickly responded with an endorsement. Google has not taken a public position.

Similarly, Facebook and Google had donated $200,000 each to a group opposing a California ballot initiative that proposes enabling Californians to sue companies for data breaches, among other things. Facebook this week dropped its opposition to the initiative, which organizers said is on track to appear on the November ballot in California.

Mr. Zuckerberg’s notes, which were photographed during the testimony, also contained a prepared response if lawmakers echoed criticism from Tim Cook, Apple’s chief executive, who has chided Facebook and other companies for collecting gobs of personal information about their users.

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Google’s main campus in Mountain View, Calif. The tech giant has been criticized and fined for its privacy practices over the years.

Credit
Christie Hemm Klok for The New York Times

“Lots of stories about apps misusing Apple data, never seen Apple notify people,” said the document. “Important you hold everyone to the same standard.”

Representatives for Facebook and Apple declined to comment on Mr. Zuckerberg’s notes.

Apple has long campaigned to draw a distinction between the way it operates and Facebook and Google.

“We’re not going to traffic in your personal life. I think it’s an invasion of privacy,” Mr. Cook, Apple’s chief executive, told MSNBC. “I think everybody needs to understand Silicon Valley is not monolithic.”

After users download Apple’s most recent software update for iPhones and iPads, released on March 29, their devices prominently display a message that Apple believes “privacy is a fundamental human right.” Fred Sainz, an Apple spokesman, said the update, which has been in the works for months, is designed to better inform users on its data practices and comply with Europe’s new data-privacy rules that take effect May 25 — not taunt Facebook.

When asked if it was worried about regulations for the industry stemming from new scrutiny of Facebook, Apple referred to recent comments Mr. Cook made to MSNBC. He said he typically believes “the best regulation is no regulation” but “I think we’re beyond that here.”

Amazon, for its part, has mirrored Google’s approach, staying silent despite the frequent attacks President Trump has made against the company on Twitter. Drew Herdener, an Amazon spokesman, declined to comment.

Amazon uses shoppers’ purchase history to target ads, though Forrester Research estimated its advertising revenue last year was $2.5 billion, versus $39.9 billion for Facebook and $95.4 billion for Google.

Privacy advocates are also concerned about the tens of millions of Amazon Echo smart speakers and other voice-controlled devices that have put microphones in people’s homes.

Amazon’s top competitors for that business? Google and Apple.

Many tech companies understand that Washington’s renewed focus on privacy is likely to reach them soon, said Dean Garfield, head of the Information Technology Industry Council, a trade group representing the largest tech companies.

“The tide has shifted,” he said. “I don’t think this is passing us by.”

Continue reading the main story

DealBook Briefing: Congress Grilled Mark Zuckerberg. But How Will It Regulate Facebook?


Elsewhere in Facebook news: Elon Musk thinks social media needs regulations. Brian Chen’s reaction to what data Facebook had collected about him: “Yikes.” How the company targets you for advertising. Craig Newman argues in Another View that companies should be graded on their data security. And Cambridge Analytica’s interim C.E.O. is stepping down.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.

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Tom Brenner/The New York Times

Businesses will miss Paul Ryan in Washington

The House speaker’s unexpected plan to retire has upended Republican politics in many ways, as the midterm elections approach. But it will also remove a voice for the business community in D.C.

Mr. Ryan has long been a champion for the kind of tax cuts favored by corporate chieftains like the Kochs, who in turn have donated to his efforts. Mr. Ryan was one of the biggest fund-raisers in the G.O.P., amassing $54 million for this year’s midterms alone. It’s unclear whether the claimants to his position can match that.

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China Stringer Network/Reuters

Jack Ma on what a trade war would cost the U.S.

The Alibaba Group co-founder asserted in a WSJ op-ed today that the U.S. risked throwing away a huge opportunity to make money in China, because his home country may soon become an enormous consumer. From his piece:

“It is therefore ironic that the U.S. administration is waging a trade war at a time when the largest potential consumer market in the world is open for business.”

Yet economists point out that China is still an offender on intellectual-property theft and restricting its market to foreign companies — even as they worry that tariffs will backfire. (The Fed is worried, too.) But Larry Kudlow has urged calm, even as he didn’t rule out tariffs coming before negotiations with Beijing.

Elsewhere in trade: While the U.S. wants a Nafta deal by next month, Mexican negotiators are still balking at some Washington demands.

The political flyaround

• Robert Mueller corner: President Trump discussed firing Rod Rosenstein, who as deputy attorney general is the special counsel’s boss, again yesterday. Steve Bannon is urging the White House to do so. The Senate Judiciary Committee plans to vote on a bill to protect the special counsel in coming weeks.

• Why the publisher of the National Enquirer became entangled in the investigations into Michael Cohen: multiple accusations of payouts protecting Mr. Trump.

• The Fed and the Office of the Comptroller of Currency have proposed loosening the “supplemental leverage” ratio for big banks, potentially letting them hold less capital in reserve, but regulators were divided. (WSJ)

• Mike Pompeo, nominated for secretary of state, didn’t disclose last year that he owned a Kansas business that imported equipment from China. (McClatchy)

• Something must have mellowed John Boehner’s opposition to marijuana legalization: He’s joining the board of Acreage, a cannabis producer. (Bloomberg)

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Kevork Djansezian/Getty Images

Is Les Moonves’s job in danger if CBS resists a Viacom deal?

CBS shares fell yesterday after CNBC reported that Shari Redstone has considered replacing the company’s much-lauded C.E.O. if merger talks with his corporate siblings collapse.

She seems to be trying to dial back that threat: National Amusements, the Redstone family holding company that controls CBS and Viacom, said in a statement that it has “tremendous respect” for Mr. Moonves, “and it has always been our intention that he run a combined company.”

But in a deal process that is playing out unusually publicly, consider the gantlet thrown.

Elsewhere in Viacom: John Paulson’s hedge fund has become a top-25 shareholder there.

Elsewhere in media: A British regulator says Disney must bid for all of Sky if its deal with 21st Century Fox goes through. As Fusion Media Group faces steep budget cuts, Penske Media and IAC are reportedly circling some of its properties. AT&T pushed back on the Justice Department’s star witness at the Time Warner deal trial. Netflix withdrew from the Cannes film festival, after a rule change penalizing streaming films, and was sued by a shareholder over bonuses.

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Toru Hanai/Reuters

Is SoftBank playing soccer?

After the NYT reported that a group of Middle Eastern and Asian investors has sought to essentially buy two new soccer tournaments from FIFA, the FT reports that one of the potential investors is Masa Son’s Japanese tech giant. What?

Through its $100 billion Vision Fund, SoftBank has pushed into businesses as wide-ranging as augmented reality, online commerce and dog walking. But the rationale for an investment like this one appears more elusive, other than being a play for lucrative sports content.

In other SoftBank news: Reuters points out that Mr. Son doesn’t have long to complete new merger talks between Sprint, which he controls, and T-Mobile USA — a wireless spectrum auction begins in November.

Elsewhere in deals: Starboard Value criticized Carl Icahn’s settlement with Newell Brands and touted its own board candidates. The parent of British Airways may bid for all of Norwegian Air Shuttle. Toys “R” Us has gotten several bids of more than $1 billion each for its Asian business. MuleSoft investors have sued to block the company’s $6.9 billion sale to Salesforce. FirstGroup, the owner of the Greyhound bus service, has rejected a takeover bid by Apollo Global Management. Zuora, a billing software maker, raised $154 million in its I.P.O.

The tech flyaround

• WeWork’s purchase of Naked Hub, a Chinese co-working space start-up, signals its ambitions to expand in China. (Bloomberg)

• Tesla faced criticism for blaming the driver of a Model X that crashed last month while its driver-assistance program was on. (Bloomberg)

• The S.E.C. is reportedly preparing a crackdown on initial coin offerings. (Fox Business)

• Why Chinese ecommerce companies are building physical stores. Pinduoduo, a Chinese group-buying discount site, has reportedly raised $1 billion from existing investors like Sequoia Capital China at a $15 billion valuation. And the NYT Magazine’s Letter of Recommendation extols the pleasures of AliExpress.

• Revolut, a popular payments app, has reportedly raised money from DST Global at a $1.4 billion valuation. (Recode)

• JPMorgan Chase has invested in AccessFintech, a start-up offering software to improve banks’ trading. And OneChronos, whose founders include a former Goldman Sachs trader, wants to use A.I. to create complex trades more cheaply.

• Japan has a new source of rare earth metals, used in batteries and electric vehicles: deposits in its waters. (WSJ)

• Reddit’s C.E.O. said that racist posts weren’t against the company’s rules. Outcry ensued. (The Verge)

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Israel Hernandez

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Stephen Crowley/The New York Times

Revolving door

• HNA Group has hired Israel Hernandez, a former Commerce Department official in the Trump administration, as its head of international corporate affairs. (FT)

Andrew Tyrie, a former British lawmaker, has been appointed the head of the Competition and Markets Authority. (FT)

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John Paulson

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Fred R. Conrad/The New York Times

Quote of the day

“It is safe to say it is one of the largest tax bills on earned income in history.”

— Henry Bregstein of the law firm Katten Muchin Rosenman, on the $1 billion John Paulson owes the I.R.S. for his hugely profitable bet against subprime mortgages.

The speed read

• China is emerging as a world leader in cell therapies, which could help its biotechnology industry challenge the U.S. (FT)

• Elizabeth Holmes has written to Theranos shareholders asking for more money and saying the company may have to default on a $100 million loan from Fortress Investment Group. (BuzzFeed)

• Fidelity Investments is making its advice fees more transparent. (WSJ)

• Trading in volatility may be creating a feedback loop that makes markets more unstable. (FT)

• A start-up, Truework, aims to take on Equifax in the business of answering verification requests on behalf of employers. (NYT)

• A California court has awarded a woman $6.4 million in a revenge porn case, one of the biggest such judgments ever. (NYT)

• The $105 billion blunder at Samsung Securities continues to rock markets in South Korea and the government has been petitioned to ban short selling after employees sold the so-called “ghost stock” they were issued. (Bloomberg)

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You can find live updates throughout the day at nytimes.com/dealbook.

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

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The Shift: Facebook Is Complicated. That Shouldn’t Stop Lawmakers.


“It’s never an issue of the members being able to do it — their staff is often incredibly dedicated and can dig into these issues,” said Ashkan Soltani, a former chief technologist at the Federal Trade Commission. The challenge, Mr. Soltani said, is that there’s a “lost in translation” problem of trying to condense complex, multifaceted issues into easily digested sound bites that will play well with constituents.

“This isn’t just about news,” Mr. Soltani said of Facebook’s issues. “It’s not just about privacy and commercialization, it’s not just about political speech. It’s all of those things and more.”

If Congress wants to rein in Facebook’s enormous power — and the questions lawmakers asked left little doubt that it does — then the first step is identifying what, specifically, they think is wrong with Facebook.

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Offices at the Facebook campus in Menlo Park, Calif. Congressional hearings this week proved that a groundswell of support is building on Capitol Hill to regulate Facebook and other internet companies.

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Jason Henry for The New York Times

Is it that Facebook is too cavalier about sharing user data with outside organizations?

Is it that Facebook collects too much data about users in the first place?

Is it that Facebook is promoting addictive messaging products to children?

Is it that Facebook’s news feed is polarizing society, pushing people to ideological fringes?

Is it that Facebook is too easy for political operatives to exploit, or that it does not do enough to keep false news and hate speech off users’ feeds?

Is it that Facebook is simply too big, or a monopoly that needs to be broken up?

All of these are concerns lawmakers brought up during this week’s hearings, and they would all require different and narrowly tailored regulatory solutions.

For example, Congress’s goal may be to stop outside companies from getting access to people’s Facebook data — avoiding another scandal like the one involving Cambridge Analytica, the political consulting firm that improperly obtained data on up to 87 million Facebook users. Lawmakers could propose a bill that would prevent large social media platforms from opening themselves up to outside developers. (They should note, though, that Facebook has already limited the data available to outside companies, so this would not necessarily have the intended effect.)

Congress could address the issue of data collection by adopting European-style data protection policies, requiring stronger user controls for personal information or requiring social networks to delete certain types of user data automatically after a given time.

If it wanted to, Congress could address the issue of hateful content by adopting strict hate speech laws like the ones that exist in Germany, which make social platforms liable if they fail to remove hate speech in a timely manner.

It could address the problem of transparency in political ads by passing the Honest Ads Act, a bill that would subject online political ads to similar disclosure standards as TV and radio political ads. (Mr. Zuckerberg has already indicated that he supports the measure, so this should be an easy one.)

Or, if it decides that Facebook is just too darn big, Congress could spearhead an effort to break it up.

All of these are theoretically possible outcomes, depending on which of Facebook’s many issues lawmakers decide to address. Lawmakers do not need to be computer scientists, or to come up with an omnibus bill to address all of Facebook’s flaws in one fell swoop. It could pick off one issue at a time, consult with the experts and take a piecemeal approach.

But first, it needs to understand which pieces need fixing, and how to carry out fixes without creating unintended consequences. And it needs to demonstrate that it has the political resolve to push these changes through, even as the tech industry furiously lobbies against them, as it undoubtedly will.

Perhaps the most dispiriting exchange all week was when Senator Lindsey Graham, Republican of South Carolina, asked Mr. Zuckerberg about Facebook’s market power, and the notion that it is too dominant for any other social network to compete with.

“Is there an alternative to Facebook in the private sector?” Mr. Graham asked.

Mr. Zuckerberg dodged the question, saying that people use lots of apps to communicate.

“You don’t feel like you have a monopoly?” Mr. Graham wondered.

“It certainly doesn’t feel that way to me,” Mr. Zuckerberg said.

By raising the issue of Facebook’s lack of competition, Mr. Graham was circling around an important point. Facebook has, indeed, taken steps to acquire or crush multiple apps that have posed a competitive threat. It even runs a service called Onavo, which allows it to keep tabs on which other apps its users are using and functions as a kind of early-warning system for possible competitors.

But when it came time to draw the conclusion his questions had been leading to — that Facebook’s primary problem was its size, and that regulation should address its anticompetitive tendencies — Mr. Graham pulled his punches, even asking Mr. Zuckerberg for advice about regulating his own company.

“Would you work with us in terms of what regulations you think are necessary in your industry?” Mr. Graham asked.

This week’s hearings proved that a groundswell of support is building on Capitol Hill to regulate Facebook and other internet companies. But until Congress stops asking these companies how they want to be regulated and starts making its own decisions about what problems it wants to fix, its targets will continue to slip through its fingers.

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Zuckerberg Faces Hostile Congress as Calls for Regulation Mount


“The American people are concerned about how Facebook protects and profits from its users’ data,” Mr. Walden said. “Does Congress need to clarify whether or not consumers own or have any real power over their online data?”

Whether Congress can actually mobilize to put new controls into place is an open question. This week, two privacy bills were introduced to coincide with the hearings. One would make it harder to collect data on students who use classroom technology like tablets and laptops. Another would require companies to obtain clear permission from users before collecting and sharing their data.

At least three lawmakers have said privately that they are drafting new privacy laws for internet companies. Representative Marsha Blackburn, Republican of Tennessee, for instance, is pushing a bill she introduced last year that would require broadband providers and internet companies like Facebook to get permission before sharing user data. And late Wednesday, Facebook said it would no longer back the opposition to the California Consumer Privacy Act, a state ballot measure meant to offer consumer protections for personal information.

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Mark Zuckerberg, Facebook’s chief executive, testified before the House Energy and Commerce Committee on Wednesday, a day after appearing before a joint Senate committee.

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Lawrence Jackson for The New York Times

House members repeatedly pummeled Facebook over its user settings, many of which are currently set to share information — and not to keep that data private — by default. By contrast, European rules that will take effect next month are expected to push companies to make privacy the default option.

On Wednesday, Ms. Blackburn pressed Mr. Zuckerberg about whether he would support her legislation, asking: “Who do you think owns an individual’s presence online? Who owns their virtual you? Is it you or is it them?”

With more contrition and promises to work harder to protect consumers, Mr. Zuckerberg stayed close to the prepared talking points he has used since the breach came to light. “It will take some time to work through all of the changes we need to make, but I’m committed to getting it right,” he said.

Mr. Zuckerberg also revealed that his own personal data had been compromised by third-party actors, though he did not identify which company was responsible. He said Facebook was considering legal action against Cambridge Analytica.

His testimony did little to mollify lawmakers, who called for new regulations that would limit Facebook’s ability to collect data on users without permission and to make privacy policies clear to better empower consumers.

“This incident demonstrates yet again that our laws are not working,” said Representative Frank Pallone Jr. of New Jersey, the top Democrat on the House committee.

Despite the consensus that legislation is needed, there is no clear path forward on any of the proposals. The regulation most likely to pass after the hearings is a Senate bill that would require social media companies to disclose funding of political ads on their sites.

Facebook and Twitter have recently announced their support of the bill, called the Honest Ads Act, which is modeled after disclosure rules for broadcasters. Several internet companies, including Facebook, had lobbied aggressively to defeat any new rules for online political ads, but have since changed their positions.

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Representative Greg Walden of Oregon, who leads the House Energy and Commerce Committee, grilled Mr. Zuckerberg over the company’s handling of sensitive data.

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Lawrence Jackson for The New York Times

For many lawmakers, even defining what Facebook is and how to place it within the regulatory ecosystem was a challenge.

“What exactly is Facebook?” Mr. Walden asked, listing industries like advertising, publishing and even telecommunications, asking whether the company was a “common carrier in the information age.”

The definitions matter. If Facebook is viewed as a telecommunications service that is more like a utility, it may be regulated by the Federal Communications Commission. If lawmakers define Facebook as a publisher, it could also fall under regulations at that agency.

Mr. Zuckerberg was careful not to put his company in a clear regulatory category.

“I consider us to be a technology company,” Mr. Zuckerberg replied. Facebook should be responsible for what it publishes, he said, but it was not a news media company. “The primary thing we do is have engineers that write code and build services for other people.”

But the hearings helped create a foundation for new rules in the future, experts said. Congress showed an increasing ease — particularly from important Republicans in both chambers — to regulate Silicon Valley.

“Longer term, we saw growing comfort on both sides of the aisle for privacy legislation,” said Alan Davidson, a former internet policy official in the Obama administration and a former executive at Google. “So this is not the last we’ve heard from Washington.”

For Mr. Zuckerberg, who has been warmly welcomed by world leaders in China and India, it was clear that Facebook had few friends in Washington, particularly in the House. The company has invested heavily in its lobbying of Congress and the administration. Lobbying expenditures in 2017 increased 32 percent to $11.5 million from the previous year. But it has struggled to shake impressions among some Republicans that the site and its employees have a liberal bias. Democrats who were once close to Silicon Valley have become vocal critics of social media platforms for allowing fake political news and foreign interference in the 2016 presidential election.

On Wednesday, House lawmakers from both parties took an aggressive stance toward Mr. Zuckerberg, pointing fingers, interrupting and chastising him for repeated failures — and apologies — over privacy.

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Mr. Zuckerberg, composed but noncommittal about making sweeping privacy changes, acknowledged during the hearing that it was “inevitable that there will need to be some regulation.”

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Lawrence Jackson for The New York Times

Representative Jan Schakowsky, Democrat of Illinois, used a sizable chunk of her limited speaking time to list Mr. Zuckerberg’s past apologies.

Representative Bobby L. Rush, Democrat of Illinois, repeatedly pointed a finger at Mr. Zuckerberg when asking, in a raised voice, “Why is the onus on the user to opt in to privacy and security settings?”

Representative John Sarbanes, Democrat of Maryland, cut off Mr. Zuckerberg several times as he tried to answer a question about Facebook employees who sit with political campaigns as “embeds” and seek to get the campaigns to use the site for advertising.

The second day of marathon hearings came after more subdued questioning from the Senate. But some key Republican senators also signaled a desire for regulations on Silicon Valley.

Senator Lindsey Graham, Republican of South Carolina, said after the hearing on Tuesday that Facebook was a “virtual monopoly” and that “continued self-regulation is not the right answer when it comes to dealing with the abuses we have seen on Facebook.”

The hearings also revealed lingering suspicion of Facebook among Republicans. Out in the hall during a break in the hearing, Representative Billy Long, Republican of Missouri, expanded on his remarks about Facebook’s treatment of Diamond and Silk, two pro-Trump video personalities who have complained about being censored by the platform. The online personalities were brought up numerous times on Wednesday.

“It seems like they take down a lot more conservative content than they do liberal,” Mr. Long said.

Mr. Long said that he needed more answers about the particular situation, and that he hoped Mr. Zuckerberg could ensure that the company’s thousands of moderators were not biased against conservatives.

“He better hope he does it, not us,” Mr. Long added. “Or Congress is going to get involved, and regulate a private industry.”

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Lawmakers Grill Mark Zuckerberg Over Facebook: Live Coverage


• While Tuesday’s Senate hearing contained tough questions, the lawmakers were generally deferential to Mr. Zuckerberg. That is less the case in the House, where lawmakers have repeatedly pointed their fingers at Mr. Zuckerberg and expressed their “disappointment” with his answers.

• Mr. Zuckerberg, wearing a blue suit and tie, has remained calm and respectful in answering the questions. However, he has more frequently told lawmakers he is unsure what their question means when being asked to give direct answer.

California Democrat Anna Eshoo asked Mr. Zuckerberg bluntly: “Are you willing to change your business model to protect users’ privacy?”

“Congresswoman, I’m not sure what that means,” Mr. Zuckerberg said.

• Mr. Zuckerberg was accompanied by Facebook’s top legal and policy staff. Facebook’s general counsel, Colin Stretch, and Joel Kaplan, vice president of global public policy, resumed their seats behind Mr. Zuckerberg.

Regulating the use of private data

Representative Greg Walden, Republican of Oregon and chair of the Energy and Commerce Committee, kicked off the hearing by declaring that “while Facebook has certainly grown, I worry it has not matured.”

Mr. Walden floated the prospect of regulation, saying that “I think it is time to ask whether Facebook may have moved too fast and broken too many things.”

Later in the hearing, Mr. Zuckerberg said regulation was “inevitable.” But he repeated that the right kind of regulation mattered and he pointed out that some regulation could only solidify the power of a large company like Facebook, which could hurt start-ups.

On Tuesday, several senators sounded a similar tune, saying Facebook couldn’t be trusted with the vast amounts of data being collected, much of which was being done without users’ full understanding.

“Most Americans have no idea what they are signing up for because Facebook’s terms of service are beyond comprehension,” Mr. Graham said in a statement after the hearing.

He called Facebook a “virtual monopoly” and said “continued self-regulation is not the right answer when it comes to dealing with the abuses we have seen on Facebook.”

Three senators introduced privacy legislation on Tuesday that would require users’ permission to collect and share their data.

Mr. Zuckerberg repeatedly said he was open to regulations but that it would have to be the “right” regulations with the right details. On Wednesday, Mr. Zuckerberg was asked to agree to privacy legislation that requires permission for data collection. Mr. Zuckerberg demurred and did not express support for any specific legislative proposal.

Video

Facebook’s ‘User Agreement Sucks,’ Senator Says. We Explore.

A Facebook leak allowed Cambridge Analytica to obtain the data of 87 million users, and has led to serious pushback for Mark Zuckerberg, including from Senator John Kennedy, who told the chief executive his company’s user agreement “sucks.”


By SHEERA FRENKEL and GRANT GOLD on Publish Date April 11, 2018.


Photo by Chip Somodevilla/Getty Images.

Watch in Times Video »

Europe’s Privacy Laws as a Model

Last week, Mr. Zuckerberg made a promise. He said that Facebook planned to give users worldwide the same privacy controls required by a tough new data protection law which will go into effect in the European Union next month.

This morning, Rep. Gene Green, a Texas Democrat, and Jan Schakowsky, an Illinois Democrat, pressed him repeatedly on the issue. And Mr. Zuckerberg repeated his commitment to give all users those controls.

But European regulators and privacy advocates said over the last week that a number of Facebook’s current practices seemed violate the new law, called the General Data Protection Regulation.

For one thing, the European law requires privacy by design and default. European experts said that, in their view, that would require Facebook turn off a number of advertising and privacy settings which are currently set to sharing should be turned off — and instead ask user permission to turn them on.

Mr. Zuckerberg answered the legislators’ questions by saying that the company plans to put a tool “at the top of everyone’s app” where users will be able to make privacy and sharing choices. But the company may not offer affirmative consent — asking users to explicitly opt-in — in every country, depending on legal issues, he said.

Mr. Green also asked Mr. Zuckerberg if Facebook planned to comply with the provision in the European law that allows individuals to obtain a copy of the data companies hold about them. That data would include both the messages, posts and photos that an individual posted as well as details a company may have collected about them, European regulators said.

Facebook currently allows users to download a copy of their personal data like their messages, likes and posts.

But Rep. Green wanted to know if Facebook would comply with the European law — and extend those protections to users worldwide — by providing individuals with the complete records and profiles the Facebook has compiled on them. That would include any data the company collected about its users by tracking them on other websites, and any data the company bought or acquired from third parties about users, and any categorizations or algorithmic scores Facebook created about users, regulators said.

Mr. Zuckerberg said he believed all of the data is available.

That isn’t true for the moment — at least for a couple of reporters who recently downloaded their Facebook data. But Facebook has about six weeks to figure out how to give users a copy of their algorithmic scores, Web tracking data and other records the social network has compiled before the law goes into effect in Europe.

Cambridge Analytica and Russia’s election interference

Senators pressed Mr. Zuckerberg on why Facebook didn’t inform users about the harvesting of user data by Cambridge Analytica, a political consulting firm with ties to the Trump campaign, in 2015, when it was informed of the data abuse.

Mr. Zuckerberg did not admit that the company explicitly decided to withhold that information from consumers, but he said the company made a mistake in not telling users.

Several lawmakers have pointed out to Mr. Zuckerberg, repeatedly, that the Obama campaign used a Facebook app to also scrape data from users and their friends in 2012.

But those lawmakers have failed to mention one very important distinction between the Obama campaign’s app and Cambridge Analytica’s app: The Obama app was actually on Facebook itself, and it was very clear about who and what the data would be used for.

The app used to scrape data for Cambridge Analytica was accessed through a personality questionnaire hosted on a site outside of Facebook, and it appeared to users to be for academic research, not for a political data company owned by a wealthy Republican donor and dedicated to reshaping the American electorate.

Asked whether Facebook will sue the researcher who created the app, Aleksandr Kogan, or Cambridge Analytica, Mr. Zuckerberg said “it’s something we’re looking into.”

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Mark Zuckerberg, Facebook’s founder and chief executive, testified before the House Energy and Commerce Committee on Wednesday.

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Lawrence Jackson for The New York Times

Partisan bias and Facebook’s responsibility as a publisher

Representative Joe Barton, Republican of Texas, zeroed in on a line of questioning that his Texas counterpart in the Senate, Ted Cruz, also asked, pressing Mr. Zuckerberg on why Facebook has been allegedly censoring content from conservative organizations and Trump supporters such as Diamond and Silk.

Mr. Barton also asked Mr. Zuckerberg if he would agree that Facebook would work to ensure it is “a neutral public platform,” a question also asked by Mr. Cruz.

“I do agree that we should give people a voice,” Mr. Zuckerberg said.

Republican lawmakers returned several times to the issue of bias on Facebook.

Steve Scalise of Louisiana questioned whether Facebook’s newsfeed algorithms tamp down conservative news in favor of more left-leaning outlets, to which Mr. Zuckerberg responded that “there is absolutely no directive” to have “any kind of bias in anything we do.”

After Cathy McMorris Rodgers of Washington asked about a recent ad from a Catholic university featuring an image of Jesus on a cross, which Facebook briefly rejected before approving, Mr. Zuckerberg cautioned against overgeneralization.

“I wouldn’t extrapolate from a few examples that the overall system is biased,” Mr. Zuckerberg responded.

When he offered to explain changes made to Facebook’s algorithms, Ms. McMoriss Rodgers opted to move on to her next question.

The proliferation of so-called fake news has put Mr. Zuckerberg in an awkward spot, as the company promises to do a better job of weeding out propaganda and falsehoods but insists it cannot police free speech.

At Tuesday’s hearing, Senator Ted Cruz, Republican of Texas, grilled Mr. Zuckerberg on allegations that Facebook had censored content from Trump supporters and conservatives.

And Democrats expressed concerns about the inflammatory stories that were published on the platform by the Internet Research Agency, a private company with Kremlin ties.

Lawmakers Not Friending Zuckerberg

Finger-pointing, accusations of filibustering, interrupting the witness and weariness over past apologies: Mr. Zuckerberg is facing a more hostile crowd in his second day of hearings.

The feeling is bipartisan.

“I can’t let you filibuster,” Marsha Blackburn, a Republican of Tennessee, said interrupting Mr. Zuckerberg’s answer to her question about where privacy ranks in priorities at Facebook.

Janice Schakowsky, a Democrat of Illinois, used a sizable chunk of her limited speaking time to read out a list of Mr. Zuckerberg’s past apologies.

The combative questioning is different from the Senate, where lawmakers pressed Mr. Zuckerberg but generally refrained from trying to embarass or accuse him of evading their answers.

Representative John Sarbanes of Maryland cut off Mr. Zuckerberg several times as he tried to answer a question about Facebook employees who sit with political campaigns as “embeds” and try to sell them advertising.

How Facebook Works

Mr. Walden foreshadowed a line of questioning for Mr. Zuckerberg on how Facebook works and if the social media site has become a publisher or utility service that deserves regulation.

“What exactly is Facebook?” Mr. Walden asked, listing industries like advertising, publishing and even telecom, or “common carrier in the information age.”

The definitions matter. If Facebook is viewed as a telecommunications service that is more like a utility, it may be regulated by the Federal Communications Commission. If lawmakers define Facebook as a publisher, it could also fall under regulations at that agency.

“I consider us to be a technology company,” Mr. Zuckerberg answered. “The primary thing we do is have engineers that write code and build services for other people.”

Facebook, he said, is not a software company, despite creating software. It is not an aerospace company, even though it builds planes. It is not a financial institution, although it offers payment tools for users.

“Do we have a responsibility for the content people share on Facebook? I think the answer to that question is yes,” Mr. Zuckerberg said.

The Senate hearing made clear that lawmakers aren’t quite sure what Facebook’s business model is or how it works, including what the difference is between selling user data to advertisers and allowing advertisers to target ads to an aggregated slice of Facebook users.

The technological gap between Silicon Valley and Washington was apparent when Senator Roger Wicker, a Republican of Mississippi, asked about internet regulation.

Mr. Zuckerberg explained that when thinking about regulations, government officials need to differentiate between internet companies like his and broadband providers, the companies that build and run the “pipes” that carry internet traffic, like AT&T and Comcast.

The difference is at the heart of net neutrality, a hotly debated regulation that was overturned last year. The rules prevent internet service providers from favoring the flow of all internet content through their pipes.

“I think in general the expectations that people have of the pipes are somewhat different from the platforms,” Mr. Zuckerberg said.

“When you say pipes, you mean?” Mr. Wicker asked.

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