{"id":7843,"date":"2020-02-08T00:00:00","date_gmt":"2020-02-08T00:00:00","guid":{"rendered":""},"modified":"2020-02-08T00:00:00","modified_gmt":"2020-02-08T00:00:00","slug":"impact-and-solutions-to-facebooks-privacy-scandal","status":"publish","type":"post","link":"https:\/\/www.ukessays.com\/essays\/communications\/impact-and-solutions-to-facebooks-privacy-scandal.php","title":{"rendered":"Impact and Solutions to Facebook’s Privacy Scandal"},"content":{"rendered":"

\n\t\t\t\tEXECUTIVE SUMMARY <\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tThis report critically analyses the case of the well renowned social media company \u2013 Facebook. It discusses the profile of the company by describing about the company, its structure, capacity and organizational hierarchy. It further describes and chronologically analyzes the incident of Cambridge Analytica Scandal. The report further leads to the business model of Facebook and critically discuss its Corporate Accountability. It shows how Facebook was rigid and was not keen to change its business model. It accentuates both the internal and external analysis of facebook wherein the report uses models such as PESTEL analysis which discusses the political, economic, socio-cultural, technological, environmental and legal factors that affect the growth and development of Facebook as a company. Facebook prepared a six point plan so as to avoid the occurrence of such a scandal in the future. The report discusses the six point plan and highlights in postulates what steps were taken by Mark Zuckerberg to avoid the Cambridge Analytica Scandal and what happened with Kogan. The report further discusses in detail the strengths, weaknesses, opportunities and threats of Facebook by doing a SWOT analysis.\n\t\t\t<\/p>\n

\n\t\t\t\tFor a company to be successful operationally and financially, its strategy and the top management team that takes decisions is of paramount importance. The most vital part of this report is the Strategic leadership part wherein various models such as open bound business model, resource based view and Top Management Team Models have been discussed.\n\t\t\t<\/p>\n

\n\t\t\t\tLastly, my interpretation and conclusion has been stated based on the case and the logical analysis done on the series of events that happened during and after the scandal occurred.\n\t\t\t<\/p>\n

\n\t\t\t\tFacebook- Can Ethics Scale in the Digital Age?<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\t\u2018The problem is the hijacking of the human mind\u2019 \u2013 former Google ethicist<\/em>\n\t\t\t<\/p>\n

\n\t\t\t\tINTRODUCTION<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tProfile of the case company<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tFacebook is a well-known social media for connecting people across the globe. Facebook was founded by Mark Zuckerberg in the year 2004. It compares with other tech companies like Amazon, Apple, and Google. Till 2018 it had more than 2.3 billion active users. (“Facebook – Corporate Governance”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tFacebook earned huge profits in the year 2017 amounting of almost $40.7 billion. The major source of earning profits for Facebook has been mobile advertisements. (ARGUS, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tCambridge Analytica scandal<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tThe controversy involving Facebook that happened in the early 2018 called as Facebook\u2013Cambridge Analytica data scandal. <\/em>It was a huge scam, wherein the Cambridge Analytica, a political consulting firm, misused the personal data of millions of Facebook users profile without obtaining their permission for the same.\n\t\t\t<\/p>\n

\n\t\t\t\t This app namely \u201cthisisyourdigitallife\u201d in 2014 was created to collect data from the users without their consent. This data was then used by Cambridge Analytica towards political Campaign for Donald Trump. (“Here’s everything you need to know about the Cambridge Analytica scandal”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tMark Zuckerberg subsequently accepted his mistake and apologized in public for not being able to prevent Facebook from misusing the private data: \u201cIt was my mistake, and I\u2019m sorry. I started Facebook, I run it, and I\u2019m responsible for what happens here.\u201d(“Facebook, Social Media Privacy, and the Use and Abuse of Data | United States Senate Committee on the Judiciary”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tThe enormity of the whole scandal was that it raised privacy issues which had the capacity to take down the entire organization\/company. Campaigns like #Deletefacebook were undertaken by several personalities including Whatsapp\u2019s cofounder Brian Acton, wherein Elon Musk, entrepreneur and Tesla\u2019s CEO also joined. This scandal resulted in a loss of %100 billion or 18% decline in share price of Facebook within 10 days. It even eroded the user\u2019s trust over facebook (A Riedel &Knoop, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tFacebook- business model<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tFacebook also considered a subscription-based approach as a business model to overcome privacy issues and in interest of its users. However, if this business model was adapted by facebook it would require facebook to substitute the advertising revenue business model leading to a loss (amounting to $40 billion in 2017) with subscriptions.\n\t\t\t<\/p>\n

\n\t\t\t\tTo recover this loss, Facebook would have to charge each subscriber approximately 84.41 dollars, which was the average revenue it was earning per user through the advertisement model. (“Why Facebook Will Never Change Its Business Model”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tNow the question arose that \u2013 How many facebook users will be willing to pay this amount? An online survey conducted on whether people would be willing to pay for Facebook without Ad\u2019s, revealed that only 23% were willing to pay. (“How much would you pay for Facebook without ads?”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tAnalysis of the Corporate Accountability<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tInterestingly, Facebook promises on its official website \u2013 \u2018It\u2019s free and always will be.\u2019<\/em>\n\t\t\t<\/p>\n

\n\t\t\t\t\"\"\n\t\t\t<\/p>\n

\n\t\t\t\tWhile Facebook was committed to provide free access to its users, it also was accountable to protect their privacy. (“Why Facebook Will Never Change Its Business Model”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tBrief outline<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tFacebook, after the Cambridge Analytica scandal, became a subject of innumerable investigations, lawsuits and inquiries around the world and many agencies undertook investigations. (A Riedel &Knoop, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tHowever he upheld his view that he want to connect people through an easily affordable platform and for the purpose he adapted advertising media as a business model to fund it. (“Why Facebook Will Never Change Its Business Model”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tBODY<\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tExternal Analysis of the implications of the scandal<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tWhile entire incident\/scandal got a huge publicity causing a huge loss of reputation to Facebook, it was quick enough to accuse and put the blame on Cambridge Analytica. However, the fact remained that operating model of Facebook it self supported such a misuse. The impact of the scandal was that it harmed the Users\/subscribers as well as the Society. There was undoubtedly an exploitation of the users\u2019 data. Zuckerberg had issued a statement saying that: \u201cThis was a breach of trust between Kogan, Cambridge Analytica and Facebook. But it was also a breach of trust between Facebook and the people who share their data with us and expect us to protect it. We need to fix that.\u201d<\/em>(“Facebook’s Zuckerberg sorry for ‘major breach of trust'”, 2019). The scandal also adversely impacted the interest of Shareholders through a loss of 18% of the share price. (“Cambridge Analytica denies accessing data on 87M Facebook users\u2026claims 30M \u2013 Tech Crunch”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tThe magnitude of Cambridge Analytica scandal had the potential to shut down the company. The scandal highlighted the business responsibilities of companies is to uphold trust of its stakeholders.\n\t\t\t<\/p>\n

\n\t\t\t\tPESTEL MODEL<\/u>\n\t\t\t<\/p>\n

\n\t\t\t\tThe PESTEL Analysis model analyses political, economic, social, technological, environment & legal factors of a company\u2019s external environment in which it operates. It is also used to analyze and monitor the marketing environment of a company for SWOT Analysis.\n\t\t\t<\/p>\n

\n\t\t\t\tIn the case of Facebook, the political stability across various countries and the various government\u2019s support across nations towards globalization, increasing regulatory support for free Wi-Fi, improving patent laws worldwide were a major factors towards ensuring its success. Socio-cultural external factors included enhanced incomes in the hands of masses and a preference for technological devices (“Facebook Inc. PESTEL\/PESTLE Analysis & Recommendations – Panmore Institute”, 2019).\n\t\t\t<\/p>\n

\n\t\t\t\tThe Pestel analysis of Facebook helps us to understand what and how external factors are affecting Facebook. PESTEL analysis lists the components that make up the elements of a given environment and influences the dependent variables. It further lays emphasis on strategic reforms to be adapted by a Company to protect it from external threats (Eisenlauer, 2013).\n\t\t\t<\/p>\n

\n\t\t\t\tFacebook\u2019s response to the Scandal<\/u><\/strong>\n\t\t\t<\/p>\n

\n\t\t\t\tIn order to overcome crises and do the damage control, as well as to prevent abuse of platform in future, Mark Zuckerberg put forth a six point plan. This plan considered of the following (“Zuckerberg’s letter to MPs in full: Six-point plan over data use”, 2019):\n\t\t\t<\/p>\n

    \n
  1. \n\t\t\t\t\tReview our platform;\n\t\t\t\t<\/li>\n
  2. \n\t\t\t\t\tTell people about data misuse;\n\t\t\t\t<\/li>\n
  3. \n\t\t\t\t\tTurn off access for unused apps;\n\t\t\t\t<\/li>\n
  4. \n\t\t\t\t\tRestrict Facebook Login data;\n\t\t\t\t<\/li>\n
  5. \n\t\t\t\t\tEncourage people to manage the apps they use;\n\t\t\t\t<\/li>\n
  6. \n\t\t\t\t\tReward persons who highlighted weaknesses.\n\t\t\t\t<\/li>\n<\/ol>\n

    \n\t\t\t\tCertain further steps were taken by Mark Zuckerberg for Facebook like: Safeguarding the platform, to make sure that easy access was not given to developers and building better controls for its users (United States Senate, 2019).\n\t\t\t<\/p>\n

    \n\t\t\t\tIn quarter one of the year 2018, further steps were also taken to secure data which included deleting millions of fake accounts and enhancing the role of Company\u2019s Audit Committee towards privacy oversights (“Facebook shuts down 583 million fake accounts in first three months of 2018”, 2019).\n\t\t\t<\/p>\n

    \n\t\t\t\tResource Based View<\/u><\/strong>\n\t\t\t<\/p>\n

    \n\t\t\t\tRBV brings management focus on internal resources of a company including its assets, manpower, capabilities and other resources which the company can use to enhance competiveness. (“Can Social Media Marketing Improve Customer Relationship Capabilities and Firm Performance? Dynamic Capability Perspective”, 2017).\n\t\t\t<\/p>\n

    \n\t\t\t\tThe biggest asset for the Facebook is its billions of users worldwide resulting into huge database for advertisers. With the functionality introduced by Facebook that allowed advertiser\u2019s websites to entrench the preference of the users based on its feature of like button, (Kessler, 2012) facebook is able to make billions.\n\t\t\t<\/p>\n

    \n\t\t\t\tInspite of various threats, Facebook\u2019s consistent efforts towards development have helped the company build resources and capabilities and score over competitors (Kakkar, 2012).\n\t\t\t<\/p>\n

    \n\t\t\t\tSWOT ANALYSIS<\/u><\/strong>\n\t\t\t<\/p>\n

    \n\t\t\t\tRegardless of the major controversies, position of Facebook remained unchanged. Strength of the Facebook is depicted through the rising number of users being over 2 billion and is still rising (Frue, 2019).\n\t\t\t<\/p>\n

    \n\t\t\t\tFacebook is the second best social media platform for advertising after Google. It strengths are connected with its opportunities. It has an aggressive strategy which emphasizes on exploiting the available opportunities and using internal resources to score over competitors (“Facebook \u2013 SWOT analysis”, 2019).\n\t\t\t<\/p>\n

    \n\t\t\t\tThe foremost major strength of Facebook is its capability to invest in marketing development and research. Owing to its vast resources Facebook acquired other social media platforms like Whatsapp, Instagram, etc\n\t\t\t<\/p>\n

    \n\t\t\t\tThe second foremost strength of Facebook is its billions of users spread worldwide.\n\t\t\t<\/p>\n

    \n\t\t\t\tWeaknesses<\/u>\n\t\t\t<\/p>\n

    \n\t\t\t\tSince billions of users share their personal information on Facebook which could be prone to abuse by unsocial and unethical people\/group of people, data breach and privacy is a major reason of concern. Though Facebook has taken up various steps to protect the privacy of information of users there are always chances of data leakage and risk of hacking. Users also feel that an informed consent is not taken by Facebook from them.\n\t\t\t<\/p>\n

    \n\t\t\t\tOpportunities for Facebook:<\/u>\n\t\t\t<\/p>\n

    \n\t\t\t\tAfter acquiring Whatsapp and Instagram, Facebook has a huge database and an opportunity to reach maximum users. Further the measures taken by it towards enhancing transparency and data protection has helped build lost trust among users.\n\t\t\t<\/p>\n

    \n\t\t\t\tThreat<\/u>\n\t\t\t<\/p>\n

    \n\t\t\t\tFacebook has a global business functioning beyond states with varying and fluctuating politics and concepts of privacy and online rights. Different laws in different states might drag Facebook into trouble.\n\t\t\t<\/p>\n

    \n\t\t\t\tCompetition is another major threat to Facebook, as there may be other similar social networking sites being developed.\n\t\t\t<\/p>\n

    \n\t\t\t\tWith recent scandal pertaining to breach of privacy and the fact that its membership is increasing, Facebook will now also be susceptible to cybercrime.\n\t\t\t<\/p>\n

    \n\t\t\t\tLegal, Ethical and economic issues faced by Facebook<\/u><\/strong>\n\t\t\t<\/p>\n

    \n\t\t\t\tLegal compliances, transparency and ethics ensure a business entity earns a reputation and consequently the profits surge. However lack of the same also sees a company\u2019s downfall. Genuine transparency should be maintained that informs the users that how the data collected by firms will be used. In the case of Facebook, since it erred on the ethical ground it had to face a huge loss, be it in terms of reputation or loss of revenue (“Kinds of Social Responsibility: Legal, Ethical, Economic, Solved Questions”, 2019).\n\t\t\t<\/p>\n

    \n\t\t\t\tStrategic Leadership & how strategic leaders should make decision<\/u><\/strong>\n\t\t\t<\/p>\n

    \n\t\t\t\tStrategic Leadership refers to the management of the company as a whole. Basically it states that certain practical decisions are to be taken for the effective functionality of the Company which should be beyond personal relationships. (Finkelstein and Hambrick, 2009).\n\t\t\t<\/p>\n

    \n\t\t\t\tFor a better understanding, CEO-TMT interface models are as follow (along with their key features):\n\t\t\t<\/p>\n