Status update: How Facebook is dealing with a year's worth of publicity fails

By Irina Ivanova

/ MoneyWatch

A full year after the Cambridge Analytica scandal pushed Facebook's data-gathering practices into the spotlight, the social network is still struggling to show it can take users' privacy seriously while maintaining substantial profits — $22 billion on $56 billion in revenue last year — that rely on selling user access to advertisers. Investigations that started in the wake of Cambridge continue, and legal challenges have multiplied, accusing Facebook of ignoring its most controversial impacts on society in a push to boost its bottom line.

Here is a running update of Facebook's status on matters of data privacy and its various legal dealings with state, federal and private parties.

Someone at Facebook knew about Cambridge

This illustration picture shows the US social media Facebook logo displayed on a tablet in Paris on February 18, 2019. Lionel Bonaventure / AFP/Getty Images

Court documents on Friday cast into doubt Facebook's narrative that the company was just as much a victim of Cambridge Analytica's unsavory data practices as the 50 million user who the company manipulated. At least some Facebook employees were aware of Cambridge's data practices and warned Facebook about them, court documents filed last week reveal.

The warning supposedly happened in September 2015, whereas Facebook executives maintain that they first learned about Cambridge's data scraping months later, in December 2015. Facebook spokespeople acknowledged the September warning to CBS News, but dismissed it as "speculation."

The revelations came as part of a lawsuit filed by the Washington, D.C. attorney general. The suit claims that Facebook had a misleading privacy policy in the runup to the 2016 elections.

Still not good with data

Facebook Chief Operating Officer Sheryl Sandberg speaks during a Facebook Community Boost event at the Knight Center on December 18, 2018 in Miami, Florida. The event is the last of a 50 city tour across the U.S. and is put on by the social media company to give people access to in-person training programs, which includes free workshops and networking designed to help small businesses. / Getty Images

Facebook on Thursday admitted it had stored millions of user passwords in plain text for years. The announcement comes after security researcher Brian Krebs posted about the issue online.

The company said that it discovered the flub "as part of a routine security review" last month. The un-encrypted passwords were stored on internal company servers and not accessible to outsiders, the company said. It also said there is no evidence that employees "abused or improperly accessed" the data. But the incident reveals a huge oversight for the company amid a slew of bruises and stumbles in the last couple of years.

The security blog KrebsOnSecurity said some 600 million Facebook users may have had their passwords stored in plain text. Facebook said it would likely notify "hundreds of millions" of Facebook Lite users, millions of Facebook users and tens of thousands of Instagram users.

At least one thing is settled

Facebook settled a lawsuit this week that accused the company of enabling discrimination in housing, job and credit ads, which is against the law. The settlement involves the largest overhaul of Facebook's advertising system since its inception.

That targeted advertising system is the company's major revenue driver. Under the settlement, which took 18 month to reach, Facebook will no longer allow ads for jobs, housing or credit to target users by their gender, ZIP code or age, and will include other protections for characteristics including race, national origin and sexual orientation.

The company still faces an administrative complaint filed by the U.S. Department of Housing and Urban Development in August over its housing ads.

Company consolidates while others talk breakups

Some early supporters of Facebook are now speaking out against the company. Roger McNamee, an early backer who says the investment has earned him millions, now holds that the social network is "terrible for America." In his book "Zucked," published in January, McNamee calls for breaking up the company (a position that's been echoed up by several 2020 presidential contenders).

At the same time, Facebook is making moves that would make a breakup of the company more difficult, according to privacy advocates. The company announced it would consolidate Facebook Messenger, WhatsApp and Instagram under one messaging system, in what it describes as a pivot to one-on-one and private messaging. However, privacy advocates are skeptical of the company's motivations.

"I think they're doing it to try to fend off regulation in both the competition and privacy areas," Christine Bannan, consumer protection counsel at the Electronic Privacy Information Center, previously told CBS News.

Facebook also faces an executive brain drain as part of the pivot. Its chief product officer, Chris Cox, and the head of WhatsApp, Chris Daniels, both announced their departure in the wake of Facebook's refocus on private messaging.

Federal probes and penalties

It's not just Cambridge Analytica. In addition to that scandal, many of Facebook's data-collection practices have come under scrutiny.

The New York Times reported this month that federal prosecutors are looking into Facebook's data-sharing deals with technology companies. In those agreements, which the Times revealed in December, Facebook gave developers deeper access to users' data than it publicly said it did. The full scope of the investigation is unknown, but a New York grand jury subpoenaed records from two smartphone makers, according to the Times.

Meanwhile, the criminal and civil investigations launched in the wake of Cambridge Analytica remain unresolved. The Department of Justice, Securities and Exchange Commission and Federal Trade Commission are all investigating Facebook's agreements.

In a statement, Facebook confirmed "that there are ongoing federal investigations, including by the Department of Justice. As we've said before, we are cooperating with investigators and take those probes seriously. We've provided public testimony, answered questions, and pledged that we will continue to do so," the company said.

Billion-dollar fines

Separately from its potential criminal liabilities, Facebook is reportedly discussing a multibillion-dollar settlement with the Federal Trade Commission over its Cambridge Analytica deals. The FTC reached an agreement with Facebook in 2012 under which Facebook promised to take safeguards with its users' personal data. Revelations that it had sold millions of users' data without their consent to a purported research, however, put in question whether it was abiding by those terms.

The Washington Post reported last month that the two parties are discussing a fine of several billion, which would be the largest the FTC ever imposed on a tech company. The biggest payment the FTC has ever demanded from a company was $22.5 million, from a 2012 settlement with Google over alleged privacy violations in the Safari browser.

First published on March 25, 2019 / 12:52 PM

© 2019 CBS Interactive Inc.. All Rights Reserved.

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