New Facebook Data Sharing Scandal Could Result in Misguided Regulation

Recent disclosures about Facebook’s data sharing with Chinese cell phone maker Huawei is getting close scrutiny from Congress, mostly for all of the wrong reasons.

But the problem congressional intervention could easily result in significant regulations on the technology industry despite the fact that such regulations will almost certainly be misguided and unnecessary. If hastily enacted the regulations will almost certainly hurt everyone involved without actually helping privacy, nor will they help solve any problems arising from Facebook’s data sharing with Chinese mobile companies.

It’s important to know that Facebook’s data sharing with of this started nearly a decade ago. In those days cell phone companies were having trouble getting their Facebook apps to work properly. This is because proprietary mobile operating systems were the rule then, rather than the exception.

Mobile internet browsers were much more rudimentary than they are now, so Facebook users depended on apps created by the phone makers. Facebook in turn produced code and provided it to the phone makers so they could make their apps work.

The code provided by Facebook gave users of the social networking app access to their data and to the data of their friends. Depending on how the code was implemented, more or less data was available when users looked at it. Some apps, for example, didn’t necessarily pay attention to data sharing or privacy limits.

During the period leading up to 2010, Facebook provided code to some 60 phone makers. One of those phone makers was Huawei. The other 60 or so were companies ranging from Apple and Blackberry to Samsung and Motorola. Some of those phone makers, including Apple, still use those proprietary apps. Others, including Microsoft, don’t, because they don’t make phones any more.

There were four Chinese companies that got code and access from Facebook. They were Huawei, Lenovo, Oppo and TCL. Despite the alarmist statements coming from Congress, ZTE apparently was not one of the companies that got the code and the access. Huawei has said in a statement that it never used Facebook data, even though Facebook has admitted to providing it.

So why all the fuss? Two reasons. The first is Cambridge Analytica, which has raised concerns about misuse of customer data and the company name “Huawei” which apparently is enough to frighten random members of Congress. Taken together, it’s enough to manufacture a full-blown scandal.

Unfortunately, there’s hardly a reason for a scandal. The apps that the cell phone companies of the day created simply used the code provided by Facebook to provide access to the social network. The practice at the time was not as privacy centric as it is today, so users accessing Facebook with their phones could look at personal information belonging to their friends and others. There was nothing unusual about this at the time and similar practices existed with other networks besides Facebook.

The situation with Huawei was no different than it was with other phone makers and there’s nothing to indicate that their was any special relationship, special deal or anything nefarious going on. A decade ago Facebook was trying everything it could do to build its user base and that included helping phone makers make mobile web apps.

For its part, Facebook is doing a great job of being its own worst enemy. Rather than responding with the full and accurate information immediately, it did the same thing that has gotten it in trouble before. The company didn’t respond for more than 24 hours after a report on the data sharing first appeared in the New York Times.

When the company finally did respond, it declined to disclose the full list of device makers that it worked with. This made it appear as if Facebook had something to hide, which resulted in this whole thing being labeled a secret arrangement.

Congress, meanwhile, is calling on the Federal Trade Commission to investigate Facebook’s misuse of data. The FTC already has an investigation in progress regarding Cambridge Analytica. It’s not clear whether the FTC will actually add the Huawei situation to its investigation, nor whether it will ever say has unless it decides to take action.

So what’s really going on here? The answer is simple. Look at the calendar. Exactly five months from the day this is written, on Nov. 6, the entire US House of Representatives and a third of the U.S. Senate will be up for election. The Democrats hope that they will be able to find a way to win a majority in both houses, and they see this as an issue that the public might support.

While it’s unlikely that the Republican majority in Congress will be in a rush to find ways to slap a round of privacy regulations on the tech industry, it could happen if they see this becoming an issue that could cost them votes in November.

If so, any such privacy regulations will likely be rushed to a vote, will be poorly understood and poorly crafted. Such regulations could significantly hurt the tech industry. This is not to suggest that some sort of privacy regulation is a bad thing. It could help the industry that’s currently lurching from one privacy scandal to the next. But new rules should be written carefully and with the idea that services such as Facebook need at least some access to personal information.

The problem, unfortunately, is that Facebook’s cluelessness when it comes to user concerns, privacy and dealing with lawmakers could easily translate into rules that seem draconian. This doesn’t help anyone.