The Technology 202: Ron Wyden says Zuckerberg is 'racking up the Pinocchios'

Wyden told me in an interview yesterday that he believes that Facebook chief executive Mark Zuckerberg and Facebook Chief Operating Officer Sheryl Sandberg weren’t entirely truthful in their statements to Congress in which they argued consumers are in the driver's seat when it comes to controlling how their data is used and who has access to it. 

“Practically every week something comes out that indicates otherwise,” Wyden said. Zuckerberg is “racking up the Pinocchios.”

The senator was referring to new revelations in a Tuesday New York Times report revealing Facebook has struck deals to share users' personal data with dozens of other technology companies, giving these partners much broader access than the company has publicly disclosed. Facebook never sold user data, but it did benefit from the arrangements because they helped the social media giant bring in new users and drive up advertising revenue. The company put out a lengthy defense of its partnerships with third parties yesterday.

Wyden wants Zuckerberg and Sandberg to come back to testify on Capitol Hill. He criticized Sandberg for not telling Americans what information Facebook shares with companies that have strong ties to China and Russia when he pressed her on it during a hearing this year. The Times detailed that Facebook's sharing arrangements included the Chinese company Huawei and the Russian search company Yandex,  raising security concerns.

“I don’t believe Congress and the American people got straight answers,” Wyden said about Sandberg’s testimony before the Senate Intelligence Committee on Facebook’s dealings with companies tied to foreign adversaries.

Wyden has long been one of the most ardent privacy advocates in Congress, and as Democrats eye a comprehensive national privacy law in 2019, the Democrat is pushing for a bill including “serious penalties,” possibly even the prospect of jail time, for chief executives caught lying to the federal government about their privacy policies.

Lying to Congress is a federal crime, as the Michael Cohen case recently illustrated. But Wyden says the country needs a law that explicitly spells that out because Cohen's guilt plea marked the rare case  in which perjury before lawmakers was prosecuted given the special circumstances surrounding special counsel Robert S. Mueller III's probe into Russian election interference.

The senator compared misleading statements by tech executives about privacy issues to an incident earlier in his career, when he pressed tobacco executives under oath on whether nicotine was addictive.

They all said no — even though internal company information proved otherwise, Wyden said. Even though the incident was referred to the Justice Department, statutes of limitations and the difficulty of such a prosecution resulted in lack of legal action.

In another instance, Wyden asked former director of national intelligence James R. Clapper Jr. whether the government was collecting data on millions of Americans. Clapper said no, an inaccurate statement later exposed by the Edward Snowden revelations. Clapper was also never prosecuted in that example.

Passing tough privacy legislation will be no easy task in next year's divided Congress. Though there is bipartisan interest in establishing a national privacy law, it remains to be seen whether the two parties can reach consensus on tough penalties.

Many Democrats blasted Facebook on Wednesday in the wake of the New York Times report. Republicans were not as harsh in their criticism, but Senate Commerce Committee John Thune (R-S.D.) and  second-ranking Republican Sen. Roger Wicker (Miss.) said the reports underscore the need for a national privacy law.

“I anticipate this will be a major focus during the next Congress,” Wicker told me in a statement.

To Wyden, a tough law is a matter of national security, and the only way to break the cycle of companies offering insincere “face-saving” exercises instead of meaningful change in the wake of the controversies.

One of the key questions following the Times's report on Facebook’s data partnerships is whether the company violated a 2011 consent agreement with the Federal Trade Commission, which required Facebook to disclose its data practices more transparently to users. Facebook denies that these partnerships violated the consent decree.

The Times reported that four former FTC officials and employees briefed on its findings “said the data-sharing deals likely violated the consent agreement.”

“Facebook may be in some really hot water here,” Wyden said.

Wyden’s bill aims to give greater powers to the Federal Trade Commission, which seems to sorely need them.

The attorney general on Wednesday the District of Columbia brought the first U.S. lawsuit against Facebook in connection to the Cambridge Analytica scandal,  when a whistleblower came forward nine months ago to sound the alarm that the company allowed third parties to improperly access users data.

My colleagues Tony Romm, Brian Fung, Aaron C. Davis and Craig Timberg reported that some privacy advocates were concerned that the action was taken by a local official and not the federal government's top privacy cop. They're worried about the agency's track record and lack of firepower at a time when lawmakers and the general public are ratcheting up pressure for regulators to do more. 

Wyden believes the FTC is woefully understaffed and inadequately resourced to take on Big Tech.

“It'd be like going up against an NBA all-star team with a few people who got some JV time,” Wyden said.

Wyden still has more questions for Facebook after reading the Times report, especially about the revelation that Facebook allowed Netflix and Spotify to read users’ messages.

“I think users really deserve to know how their data is being used,” Wyden said. “I don’t think Mark Zuckerberg ever said anything resembling, ‘Hey, Facebook is allowing Spotify and Netflix to read user messages.’ ”

Facebook shared more details about its messaging partnerships Wednesday, saying that its partners could only access users' messages if they used Facebook Login. Facebook said it publicly disclosed the practice, linking to this 2014 article describing how users could send Facebook messages through Netflix. The article does not describe the scope of message data Netflix received from Facebook, or mention the word “privacy.” A Netflix spokeswoman said the partnership was one of the company's experiments to make Netflix more social and it was never very popular so it shut down in 2015.

"At no time did we access people's private messages on Facebook, or ask for the ability to do so," she said in a statement. 

Dear Readers: The Technology 202 is taking a break for the holidays starting on Monday, Dec. 24. We will see you back in your inboxes ready to go for 2019 on Jan. 7. Thanks for reading this past year and we hope you, your family and friends have a relaxing and happy holiday season and new year.

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— Wyden wasn't the only Democrat concerned about the report. Here's what others were saying about the latest Facebook privacy scandal:

From Sen. Amy Klobuchar (D-Minn.):

From Sen. Richard Blumenthal (D-Conn.):

From Sen. Mark R. Warner (D-Va.):

From Rep. David N. Cicilline (D-R.I.):

— Privacy groups also piled on:

From the Electronic Frontier Foundation:

— The revelations restarted discussions about deleting Facebook: 

From NBC News's Kasie Hunt:

BITS: Facebook faces its first major lawsuit from regulators in the United States in connection with the Cambridge Analytica scandal. Karl A. Racine, the attorney general for the District of Columbia, “targeted Facebook mainly for its entanglement” with the political consultancy that gathered vast amounts of data about tens of millions of Facebook users without their consent, The Washington Post's Tony, Brian, Aaron and Craig reported.

Racine said in a statement that the company “failed to protect” its users' privacy and misled them about how their data was used. “Facebook put users at risk of manipulation by allowing companies like Cambridge Analytica and other third-party applications to collect personal data without users’ permission,” Racine said. “Today’s lawsuit is about making Facebook live up to its promise to protect its users’ privacy.”

Officials also said additional charges could be added to the lawsuit if more allegations about Facebook's data collection practices emerge, according to my colleagues. Racine said that although there is no multistate lawsuit against Facebook, his team has “had discussions with a number of other states that are similarly interested in protecting the data and personal information of their consumers.”

NIBBLES: Local officials have offered tech giants like Amazon and Apple tax incentives to expand their offices beyond their West Coast headquarters. But some experts say those perks don't actually play a fundamental role in a company's decision to expand, Wired's Paris Martineau reported. 

Greg LeRoy, executive director of Good Jobs First, said labor costs, raw materials, transportation and other factors weigh more heavily when companies choose a location. “The trouble is we've had this system created in America that allows companies to control the narrative, and get paid to do what they would have done anyway based on the business basics,” LeRoy told Wired. (Amazon founder and chief executive Jeffrey P. Bezos owns The Post.)

Nathan Jensen, a professor at the University of Texas at Austin, said that Apple, which recently announced a new campus in Austin, would probably have decided to expand in the area regardless of incentives. Austin already has the largest number of Apple employees outside Silicon Valley. “Apple has grown by thousands in recent years,” Jensen told Wired. “And now they are getting a new abatement to grow by a few thousand more.”

BYTES: Third-party sellers on Amazon are turning to unforgiving tactics  s they compete against one other — even framing other businesses to get them suspended, according to the Verge's Josh Dzieza. One strategy is to purchase fake reviews for a competitor. “A handful of glowing testimonials, preferably in broken English about unrelated products and written by a known review purveyor on Fiverr, can not only take out a competitor and allow you to move up a slot in Amazon’s search results, it can land your rival in the bewildering morass of Amazon’s suspension system,” the Verge reported.

A new industry has emerged as a result: People whose businesses have been suspended can hire consultants to appeal the decision. “They are like lawyers, only their legal code is the Amazon Terms of Service, their court is a secretive and semiautomated corporate bureaucracy, and their jurisdiction is an algorithmically policed global bazaar rife with devious plots to hijack listings for novelty socks and plastic watches,” Dzieza reported.

— Saudi Arabia’s Public Investment Fund, or PIF, and Abu Dhabi’s Mubadala Investment Co., which are key investors in SoftBank's tech fund, aren't so sure that a plan to invest $16 billion in WeWork is the right way to go, the Wall Street Journal's Liz Hoffman, Eliot Brown and Maureen Farrell reported, citing people familiar with the matter. “Some of the people said that PIF and Mubadala have questioned the wisdom of doubling down on WeWork, and have cast doubt on its rich valuation,” according to the Journal. “The company is on track to lose around $2 billion this year, and the funds have expressed concern that WeWork’s model could leave it exposed if the economy turns down, some of the people said.”

— Matt Chasen hopes that the Hexa, which my colleague Peter Holley described as an “electric-powered vertical-takeoff-and-landing aircraft,” will one day help remedy traffic congestion by letting people ride in air taxis. Chasen, who is the chief executive of LIFT Aircraft and a former Boeing engineer, said he thinks commuters will eventually be drawn to the idea of riding in such aircraft. “Today’s regulatory environment does not allow for a transportation use of these aircraft — yet,” Chasen told my colleague. “We’ll build public trust in the technology. Once that happens, it’s inevitable that people will want to use it for certain types of commuting flights.”

— Lighthouse, a start-up making security cameras equipped with artificial intelligence features, is closing shop, according to the Verge's Nick Statt. The company had to contend with much larger competitors such as Google and Amazon. “I am incredibly proud of the groundbreaking work the Lighthouse team accomplished - delivering useful and accessible intelligence for our homes via advanced AI and 3D sensing,” Lighthouse chief executive Alex Teichman said in a statement on the company's website. “Unfortunately, we did not achieve the commercial success we were looking for and will be shutting down operations in the near future.”

— More technology news about the private sector:

Pinterest Readies Itself for Early 2019 IPO (The Wall Street Journal)

Google denies altering YouTube code to break Microsoft Edge (The Verge)

Amazon’s Grocery Push Keeps Stumbling After Whole Foods Purchase (Bloomberg)

— Chinese authorities control content that users post on WeChat and other platforms and censor what they deem out of bounds, but at the moment Beijing seems to be making an exception when it comes to criticism of the Trump administration, according to BuzzFeed News's Craig Silverman, Megha Rajagopalan, Scott Pham and William Yang. BuzzFeed News reviewed a sample of WeChat public posts about a speech by Vice President Pence that criticized China, the U.S. midterms and the trade dispute between both countries and found that the “platform is today home to a range of snarky and often mocking content about” the United States.

— More technology news from the public sector:

The Pentagon Doesn’t Know All the Software on Its Networks—And That’s a Problem (Nextgov)

— Israeli Prime Minister Benjamin Netanyahu said at a business conference in Jerusalem that the country's tech sector needs to hire foreign workers to continue flourishing, Bloomberg News's Yaacov Benmeleh reported. “In Silicon Valley they’re doing it: You hear Hindi and Hebrew on the streets,” Netanyahu said.

— More news about tech workforce and culture:

Tinder fires its head of comms, following her participation in a $2 billion lawsuit against Match (The Verge)

Then one foggy Christmas eve, reindeers got connected (Associated Press)

Macaulay Culkin is Home Alone again in this fantastic Google Assistant ad (TechCrunch)

With Alexa and Siri for the office, complaining at work is going to get a lot more dangerous (CNBC)

Amazon error allowed Alexa user to eavesdrop on another home (Reuters)

Gates Among Billionaires Backing Alphabet Energy Spinoff (Bloomberg News)

Coming soon

• Transportation Secretary Elaine Chao delivers a speech at the CES technology show in Las Vegas on Jan. 9, 2019.

Watch Obama surprise patients at D.C. children’s hospital:

Bush's dog, Sully, ready for a return to service:

Trump's most awkward moments of 2018: