AS WELCOMING UP.
WE'VE GOT A BIG TWO HOURS COMING
UP.
WE KICK IT OFF WITH THIS,
INVESTORS AND LAWMAKERS ARE
WATCHING FACEBOOK.
THE STOCK REBOUNDED AFTER THE
FEDERAL TRADE COMMISSION
CONFIRMED THEY ARE INVESTIGATING
FACEBOOK'S DATA PRIVACY
PRACTICES.
THE ANNOUNCEMENT SENT THE STOCK
DOWN MORE THAN 5% TO LEVELS NOT
SEEN SINCE JULY OF LAST YEAR.
WE'RE SEEING A LITTLE SETTLING
OF IT THIS MORNING.
JOINING US TO WEIGH IN IS THE
FORMER FTC CHAIRMAN AND LAW
PROFESSOR WILLIAM KOVACIK.
GOOD TO SEE YOU.
THANK YOU FOR JOINING US.
>> GOOD MORNING.
THANK YOU FOR HAVING ME.
>> MARIA: THANK YOU FOR JOINING
US.
YOU WERE WITH THE AGENCY WHEN
FACEBOOK WAS FIRST UNDER
INVESTIGATION OVER CLAIMS IT
MISLED USERS BY MAKING PRIVATE
DATA PUBLIC.
THE FTC AND FACEBOOK ANNOUNCED A
SETTLEMENT IN 2011.
TELL ME WHAT YOU THINK THE FTC
IS MOST INTERESTED IN LOOKING AT
NOW WITH REGARD TO FACEBOOK AS
YOU SEE IT.
>> AT A HIGH LEVEL, THE
COMMISSION'S GOING TO BE LOOKING
AT WHETHER OR NOT ITS EFFORT IN
2011 AND 2012 TO SET A TESTIMONY
2011 AND 2012 TO SET A TESTIMONT
2011 AND 2012 TO SET A TESTIMONM
2011 AND 2012 TO SET A TESTIMONL
2011 AND 2012 TO SET A TESTIMONT
2011 AND 2012 TO SET A TESTIMONE
FOR PRIVACY IN THE INFORMATION
SERVICES SECTOR IS WORKING.
THERE'S A FAIRLY POWERFUL CLAUSE
IN THAT SETTLEMENT THAT SAYS
THAT FACEBOOK WILL ESTABLISH A
SYSTEM DESIGNED TO ENSURE THAT
DATA PROTECTIONS BUILT INTO ITS
COMMITMENTS ARE FULFILLED, THAT
THIRD PARTIES RESPECT THOSE
COMMITMENTS, AND THAT THE
INFORMATION THAT ITS USERS
PROVIDE IS HELD CONFIDENTIAL.
IN A FUNDAMENTAL WAY, THIS IS A
TEST OF WHETHER OR NOT THAT
APPROACH IS WORKING WITH SOME
FAIRLY POWERFUL SANCTIONS BUILT
INTO THE BACKGROUND.
>> MARIA: THEY HAVEN'T DONE ANY
OF THAT, RIGHT?
WHEN YOU SEE WHAT'S BEEN TAKING
PLACE, ALL THESE THIRD PARTY
COMPANIES CAN COME IN AND GET
ACCESS TO YOUR DATA AND THE WAY
THAT THINGS MOVE SO FAST, CAN
THIS COMPANY BE REGULATED OR IS
DATA GOING IN AND GOING OUT TOO
HARD TO TRACK?
>> THIS IS A REAL TEST OF
WHETHER THE APPROACH THAT THE
FTC ADOPTED AT THE BEGINNING OF
THE DECADE IS ADEQUATE TO
FULFILL THAT TASK.
BECAUSE THE FTC ASSUMED THAT THE
COMBINATION OF THE BROAD
OVER-ARCHING PROMISE TO PROVIDE
A SYSTEM FOR COMPLIANCE AND
MONITORING WOULD WORK.
IT ENLISTED THE HELP OF A THIRD
PARTY OUTSIDER TO AUDIT THIS
SYSTEM EVERY TWO YEARS.
THERE ARE OTHER COMMITMENTS THAT
ARE BUILT INTO THE AGREEMENT.
I THINK WHAT THE FTC IS GOING TO
BE LOOKING AT IN A BASIC WAY,
BEYOND THE TECHNICAL ISSUES
ABOUT WHETHER FACEBOOK VIOLATED
THE LAW, WHETHER THE ENTIRE
APPROACH TO DATA PROTECTION IS
WORKING.
>> KRISTIN TATE HERE.
FACEBOOK SEEMS TO BE ON THE
DECLINE, SEPARATE FROM
REGULATION.
I THINK THERE COULD BE A FREE
MARKET APPROACH TO THIS.
PEOPLE ARE ABANDONING THE SITE
AS THEY REALIZE HOW THEIR
INFORMATION IS BEING USED.
ELON MUSK SAID HE WANTS NOTHING
TO DO WITH WITH IT NOW.
DO YOU THINK THIS IS THE
BEGINNING OF THE END FOR
FACEBOOK?
>> I DOUBT IT.
I USED TO HAVE A SUPERVISOR WHO
PUT THINGS IN THREE CATEGORIES,
THE GOOD, THE BAD, THE DON'T
OVER-REACT.
I WOULD PUT THIS IN THE THIRD
CATEGORY, DON'T OVER-REACT.
IT'S BEEN A POWERFUL AND
ATTRACTIVE SERVICE FOR SO MANY
INDIVIDUALS.
IT WOULD BE HARD TO IMAGINE AN
IMMEDIATE DECLINE IS POSSIBLE.
THERE WILL BE A DEEP AMOUNT OF
RES
REVIEW, TO SEE WHY
REVIEW, TO SEE WHETHER THE
MECHANISM THEY THEY PUT PROMISES
TO THEIR USERS WILL BE
FULFILLED.
>> DAGEN: I BELIEVE IN A FREE
MARKET.
THE FREE MARKET ISN'T WORKING.
I SAID LAST WEEK, A FORMER
FACEBOOK EMPLOYEE QUOTED IN THE
WALL STREET JOURNAL, THEY SAID
THEIR METHOD OF ENFORCEMENT WAS
CALLING PEOPLE ON THE PHONE AND
YELLING AT THEY'LL.
OH, MY GOD, I CAN'T BELIEVE YOU
TOOK PEOPLE'S DATA THAT YOU
SHOULDN'T HAVE, YOU SHOULDN'T DO
THAT, STOP IT.
YOU'RE INVITING REGULATORS INTO
YOUR FRONT DOOR WHEN YOU TREAT
CUSTOMERS AND USERS THAT WAY.
>> I THINK REGULATION MIGHT BE
NECESSARY.
WHAT'S FUNNY IS THAT A LOT OF
THESE YOUNG PEOPLE ABANDONING
FACEBOOK ARE GOING TO INSTAGRAM
WHICH IS OWNED BY FACEBOOK.
THEIR INFO IS BEING USED IN THE
SAME EXACT WAY.
>> MARIA: THAT'S A REALLY GOOD
POINT.
DO YOU THINK REGULATORS
UNDERSTAND THAT, THAT IT'S NOT
JUST FACEBOOK AND THE 2 BILLION
USERS THERE, THEY OWN INSTAGRAM.
DO YOU THINK THEY'RE LOOKING
THROUGHOUT THE COMPANY IN TERMS
OF PRACTICES AT ALL OF THEIR
BUSINESSES?
>> I THINK THIS IS GOING TO BE
AN OCCASION FOR THE FTC TO DO
EXACTLY THAT.
BECAUSE ONE OF THE BASIC
COMMITMENTS, THE PHILOSOPHY
EMBODIED IN THE ESTIMATE IN
2011, 2012, WOULD THERE WOULD BE
A COMPANY-WIDE SYSTEM PUT IN
PLACE TO ENSURE THAT PROMISES
ARE FULFILLED.
SO I THINK THIS IS A CHANCE FOR
THE COMMISSION, AND I THINK THEY
WILL TAKE IT, TO LOOK AT A BASIC
WAY ABOUT HOW PRIVACY POLICY IS
IMPLIED INSIDE THE COMPANY AND
WHETHER THE AGENCY NEEDS A
RETHINK ABOUT HOW IT'S DOING
BUSINESS HERE.
>> I'M CURIOUS TO ASK YOU HOW DO
YOU ACTUALLY THINK REGULATION
MIGHT LOOK IN A WORLD WHERE
CONSUMERS WANT TO OWN THEIR DATA
A AND HAVE THE RIGHT TO MOVE IT
FROM FACEBOOK TO ANY OTHER
PLATFORM BUT AT THE SAME TIME
WANT THE SECURITY AND PRIVACY OF
THE COMPANY THAT THEY SHARE IT
WITH NOT THEN ABUSING IT.
I MEAN, IS IT NOW FACEBOOK'S
RESPONSIBILITY?
IS IT THE THIRD PARTY COMPANY
THAT THEY AUTHORIZED TO ACCESS
THE FACEBOOK DATA?
HOW DO YOU CONTROL THAT?
WHAT DOES THE REGULATION LOOK
LIKE FOR THAT?
>> I THINK YOU START BY ASKING
WHO IS IN THE BEST POSITION TO
CARRY OUT THAT MONITORING AND
OVERSIGHT FUNCTION.
IS THE BEST PLACE TO PUT THAT
RESPONSIBILITY ON THE PLATFORM
OWNERS?
AND TO SAY IT'S YOUR JOB TO PICK
YOUR AGENTS, YOUR THIRD PARTY
PARTNERS VERY CAREFULLY.
THAT'S THE PHILOSOPHY OF THE
EXISTING FRAMEWORK, THAT IS, THE
FACEBOOKS OF THE WORLD ARE IN
THE BEST POSITION TO DO THAT
KIND OF MONITORING AND
OVERSIGHT.
THE INQUIRY THAT'S GOING ON NOW
IS AN OPPORTUNITY TO TEST
WHETHER OR NOT THAT ASSUMPTION
IS SOUND.
>> MARIA: LET ME ASK YOU --
>> DAGEN: I WANT TO ADD, I THINK
YOUNG PEOPLE AND THE AMERICAN
PEOPLE AND EVEN PEOPLE AROUND
THE WORLD HAVE BEEN SOLD A
STEAMING SACK OF GARBAGE BY
FACEBOOK IN SOME WAY.
AGAIN, THEY WERE ASKING PEOPLE
TO BECOME DEEPER -- GO DEEPER
AND DEEPER INTO THEIR LIVES,
CHECKING MORE AND MORE DATA FROM
THESE INDIVIDUALS, PROMISING A
BETTER SOCIAL EXPERIENCE.
LIKE WE'RE DOING THIS FOR YOU.
THEY'RE THIS BENEVOLENT GIANT --
>> MARIA: SHARE WITH YOUR
FRIENDS.
>> DAGEN: I NEED TO KNOW WHERE
MARIA IS EVERY DAY OF THE WEEK
VIA FACEBOOK.
>> MARIA: I DON'T NEED YOU TO
KNOW THAT.
>> DAGEN: YOUR LOCATION SERVICE
IS TOTALLY OFF ON YOUR PHONE.
>> MARIA: THANK YOU.
>> DAGEN: FOR EVERYTHING.