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LONDON (Reuters) – A researcher at the center of a scandal over the alleged misuse of the data of nearly 100 million Facebook users said on Tuesday the work he did was useless for the sort of targeted adverts that would be needed to sway an election.
Aleksandr Kogan, who worked for the University of Cambridge, is at the center of a controversy over Cambridge Analytica’s use of millions of users’ data without their permission after it was hired by Donald Trump for his 2016 election campaign.
Kogan said it was unlikely Cambridge Analytica had used the data in the Trump campaign, although he also said that its suspended CEO Alexander Nix had lied to a committee of British lawmakers about how the two worked together.
Kogan said that even if the dataset he compiled was used in a political campaign, it would be little use for targeted advertising.
“Quite frankly, if the goal is micro-targeting using Facebook ads, (the project) makes no sense. It’s not what you would do,” he told a parliamentary committee, adding that Facebook itself had better tools for such adverts and that the work was worth “literally nothing”.
“If the use case you have is Facebook ads, it’s just incompetent to do it this way.”
Facebook has said that the personal information of about 87 million users may have been improperly shared with political consultancy Cambridge Analytica, after Kogan created a personality quiz app to collect the data.
Facebook and Cambridge Analytica have blamed Kogan for alleged data misuse, but he has said that he was being made a scapegoat by the companies for the scandal.
Kogan said that former Cambridge Analytica CEO Alexander Nix, who was also a director of the consultancy’s parent firm SCL Group, had previously lied to lawmakers when he said he had not received data from Kogan.
“We certainly gave them data, that’s indisputable,” Kogan told lawmakers. Asked if Nix had lied, Kogan answered: “Absolutely.” A spokesman for Cambridge Analytica declined to comment on Nix’s testimony, noting that he was suspended pending an investigation.
Kogan said Facebook provided him data in an email, and he had not needed to sign an agreement to use it. However, he said that he did not sell the data provided to him by Facebook.
Instead, Kogan said he collected new data through an app for work with SCL, Cambridge Analytica’s parent company.
He hired a market research firm called Qualtrics to recruit 200,000 to 300,000 people to take the quiz to collect the data, resulting in expenses of $ 600,000-$ 800,000. Kogan’s company was paid 230,000 pounds ($ 320,643.00) by SCL for its predictive analysis based on the findings, Kogan said.
In written evidence to parliament, Kogan said that all of his academic work was reviewed and approved by the University’s ethics committees.
However, a letter from 2015, published by the Guardian, shows that the ethics committee rejected one of Kogan’s projects in 2015 and said that Facebook’s privacy project was “not sufficient protection” to address concerns.
Kogan said that the data he collected had now all been deleted, to the best of his knowledge, but he would double check that none remained. Cambridge Analytica also said that it had deleted the data when asked to by Facebook.
“We’re extremely sorry that we ended up in possession of data that clearly had breached Facebook’s terms of service,” spokesman Clarence Mitchell told reporters.
“That’s something that we wouldn’t have wanted to happen. But we have put in place the procedures to begin to rectify it.”
Mitchell also said that the data was not used in the Trump campaign after it had been demonstrated to be ineffective.
“Any suggestion that the GSR Kogan data was used in that campaign is utterly incorrect. Its effective uselessness had already been identified by then,” he said.
Kogan said that he never drew a salary from GSR, the company that he founded to do the research that was wound up last year. Most of the money received from SCL was spent on coding work, acquiring data and legal fees. He was allowed to keep the data he gathered on the project.
Kogan said that GSR had a close relationship with Facebook, and one of his partners at the firm, Joseph Chancellor, now worked for the social media giant.
“This has been a very painful experience, because when I entered into all of this, Facebook was a close ally,” Kogan said.
“I was thinking this would be helpful to my academic career and my relationship with Facebook. It has very clearly done the complete opposite”
($ 1 = 0.7173 pounds)
Reporting by Alistair Smout and Douglas Busvine; Editing by Guy Faulconbridge and Matthew Mpoke Bigg
MENLO PARK, Calif. (Reuters) – Facebook Inc (FB.O) said on Tuesday it would continue requiring people to accept targeted ads as a condition of using its service, a stance that may help keep its business model largely intact despite a new European Union privacy law.
The EU law, which takes effect next month, promises the biggest shakeup in online privacy since the birth of the internet. Companies face fines if they collect or use personal information without permission.
Facebook Deputy Chief Privacy Officer Rob Sherman said the social network would begin seeking Europeans’ permission this week for a variety of ways Facebook uses their data, but he said that opting out of targeted marketing altogether would not be possible.
“Facebook is an advertising-supported service,” Sherman said in a briefing with reporters at Facebook’s headquarters.
Facebook users will be able to limit the kinds of data that advertisers use to target their pitches, he added, but “all ads on Facebook are targeted to some extent, and that’s true for offline advertising, as well.”
Facebook, the world’s largest social media network, will use what are known as “permission screens” – pages filled with text that require pressing a button to advance – to notify and obtain approval.
The screens will show up on the Facebook website and smartphone app in Europe this week and globally in the coming months, Sherman said.
The screens will not give Facebook users the option to hit “decline.” Instead, they will guide users to either “accept and continue” or “manage data setting,” according to copies the company showed reporters on Tuesday.
“People can choose to not be on Facebook if they want,” Sherman said.
Regulators, investors and privacy advocates are closely watching how Facebook plans to comply with the EU law, not only because Facebook has been embroiled in a privacy scandal but also because other companies may follow its lead in trying to limit the impact of opt-outs.
Last month, Facebook disclosed that the personal information of millions of users, mostly in the United States, had wrongly ended up in the hands of political consultancy Cambridge Analytica, leading to U.S. congressional hearings and worldwide scrutiny of Facebook’s commitment to privacy.
Facebook Chief Financial Officer David Wehner warned in February the company could see a drop-off in usage due to the EU law, known as the General Data Protection Regulation (GDPR).
Reporting by David Ingram; Editing by Greg Mitchell and Lisa Shumaker
WASHINGTON (Reuters) – Uber Chief Executive Dara Khosrowshahi said on Wednesday that the ride-sharing company still believes in the prospects for autonomous transport after one of its self-driving vehicles was involved in a fatal crash in Arizona last month.
A 49-year-old woman was killed after being hit by an Uber self-driving sports utility vehicle while walking across a street in Phoenix, leading the company to suspend testing of autonomous vehicles.
Khosrowshahi declined to say when the company might resume testing or what might have gone wrong. He said the company was cooperating with federal investigators and dealing with the incident “very seriously.”
The accident has raised questions about the lack of clear safety standards for such vehicles.
But, speaking at a transport forum, Khosrowshahi said Uber was still betting on the technology in the long-term.
“We believe in it,” he said, adding that Uber considered autonomous vehicles “part of the solution” and in the long-term key to eliminating individual car ownership.
“Autonomous (vehicles) at maturity will be safer,” he said.
The company’s interest in investing in bike sharing and public transit should not be interpreted as a move away from self-driving cars, he added.
The U.S. National Highway Traffic Safety Administration and the National Transportation Safety Board (NTSB) are investigating the incident.
“They are a neutral party,” said Khosrowshahi. “They understand this.”
“We’ll figure out what we do afterwards.”
Arizona’s governor suspended Uber’s ability to test self-driving cars on public roads in the state following the crash. Arizona had been a key hub for Uber’s autonomous project, with about half of the company’s 200 self-driving cars and a staff of hundreds.
Governor Doug Ducey last month called a video of the incident “disturbing and alarming” and the crash “an unquestionable failure.”
NTSB chairman Robert Sumwalt on Tuesday told Reuters he had no update on the investigation.
Reporting by David Shepardson; Editing by Susan Thomas and Rosalba O’Brien
WASHINGTON (Reuters) – Facebook Inc Chief Executive Mark Zuckerberg told Congress on Monday that the social media network should have done more to prevent itself and its members’ data being misused and offered a broad apology to lawmakers.
His conciliatory tone precedes two days of Congressional hearings where Zuckerberg is set to answer questions about Facebook user data being improperly appropriated by a political consultancy and the role the network played in the U.S. 2016 election.
“We didn’t take a broad enough view of our responsibility, and that was a big mistake,” he said in remarks released by the U.S. House Energy and Commerce Committee on Monday. “It was my mistake, and I’m sorry. I started Facebook, I run it, and I’m responsible for what happens here.”
Zuckerberg, surrounded by tight security and wearing a dark suit and a purple tie rather than his trademark hoodie, was meeting with lawmakers on Capitol Hill on Monday ahead of his scheduled appearance before two Congressional committees on Tuesday and Wednesday.
Zuckerberg did not respond to questions as he entered and left a meeting with Senator Bill Nelson, the top Democrat on the Senate Commerce Committee. He is expected to meet Senator John Thune, the Commerce Committee’s Republican chairman, later in the day, among others.
Top of the agenda in the forthcoming hearings will be Facebook’s admission that the personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica.
But lawmakers are also expected to press him on a range of issues, including the 2016 election.
“It’s clear now that we didn’t do enough to prevent these tools from being used for harm…” his testimony continued. “That goes for fake news, foreign interference in elections, and hate speech, as well as developers and data privacy.”
Facebook, which has 2.1 billion monthly active users worldwide, said on Sunday it plans to begin on Monday telling users whose data may have been shared with Cambridge Analytica. The company’s data practices are under investigation by the U.S. Federal Trade Commission.
London-based Cambridge Analytica, which counts U.S. President Donald Trump’s 2016 campaign among its past clients, has disputed Facebook’s estimate of the number of affected users.
Zuckerberg also said that Facebook’s major investments in security “will significantly impact our profitability going forward.” Facebook shares were up 2 percent in midday trading.
Read the full testimony tmsnrt.rs/2IDTHwF
ONLINE INFORMATION WARFARE
Facebook has about 15,000 people working on security and content review, rising to more than 20,000 by the end of 2018, Zuckerberg’s testimony said. “Protecting our community is more important than maximizing our profits,” he said.
As with other Silicon Valley companies, Facebook has been resistant to new laws governing its business, but on Friday it backed proposed legislation requiring social media sites to disclose the identities of buyers of online political campaign ads and introduced a new verification process for people buying “issue” ads, which do not endorse any candidate but have been used to exploit divisive subjects such as gun laws or police shootings.
The steps are designed to deter online information warfare and election meddling that U.S. authorities have accused Russia of pursuing, Zuckerberg said on Friday. Moscow has denied the allegations.
Zuckerberg’s testimony said the company was “too slow to spot and respond to Russian interference, and we’re working hard to get better.”
He vowed to make improvements, adding it would take time, but said he was “committed to getting it right.”
A Facebook official confirmed that the company had hired a team from the law firm WilmerHale and outside consultants to help prepare Zuckerberg for his testimony and how lawmakers may question him.
Reporting by David Shepardson and Dustin Volz; Editing by Bill Rigby
WASHINGTON (Reuters) – A Republican U.S. senator warned on Sunday that Facebook Inc may need to be regulated to address concerns about the company’s privacy and foreign propaganda scandals, saying they may be “too big” for the social media company to solve alone.
“My biggest worry with all this is that the privacy issue and what I call the propagandist issue are both too big for Facebook to fix, and that’s the frightening part,” Senator John Kennedy said on CBS’s Face the Nation.
Asked if lawmakers need to seek regulations on Facebook, Kennedy replied: “It may be the case.”
Facebook Chief Executive Mark Zuckerberg will appear before the U.S. Senate Commerce and Judiciary Committees Tuesday to address questions about how his company handles its users’ data.
While some Democrats have suggested laws may be required to police Facebook’s data privacy practices or limit foreign interference on its platform, Kennedy’s openness is significant because Republicans generally support free-market principles and are loath to regulate U.S. companies.
Kennedy, a member of the Senate Judiciary Committee, said he wanted to ask Zuckerberg on Tuesday if Facebook had the ability to know the identities of the hundreds of thousands of entities that purchase ads on its site.
“I don’t want to hurt Facebook. I don’t want to regulate them half to death,” Kennedy said. “But we have a problem. Our promised digital utopia has minefields in it.”
Facebook on Friday endorsed legislation known as the Honest Ads Act, which is aimed at countering concerns about foreign nationals using social media to influence American politics.
The legislation would expand existing election law covering television and radio outlets to apply to paid internet and digital advertisements.
The legislation, introduced last October but not yet passed, is aimed at countering concerns about foreign nationals using social media to influence American politics, which is part of the investigation into possible Russian meddling during the 2016 U.S. presidential campaign. Russia denies involvement.
Under the act, digital platforms with at least 50 million monthly views would need to maintain a public file of all electioneering communications purchased by anyone spending more than $ 500.
Reporting by Dustin Volz; Editing by James Dalgleish
In an interview with NBC’s Today show, Facebook COO Sheryl Sandberg said that users who wished to entirely stop the social media platform from making money from their personal data would have to pay for the privilege, if the option were to be made available.
“Could you come up with a tool that said, ‘I do not want Facebook to use my personal profile data to target me for advertising.’?” Sandberg was asked by Today’s Savannah Guthrie. “Could you have an opt-out button – ‘Please don’t use my profile data for advertising’?”
“We have different forms of opt-out,” Sandberg replied. “We don’t have an opt-out at the highest level. That would be a paid product.”
There’s no indication that Facebook actually plans to introduce such an option, but Sandberg’s admission makes explicit that Facebook’s revenue depends almost entirely on monitoring its users’ taste and behavior. Taking that option away would require replacing ad sales with subscription revenue.
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In the same interview, Sandberg pushed back against the often-repeated but suddenly fast-spreading notion that user data is Facebook’s primary product – though on largely semantic grounds.
“That’s not true . . . we don’t sell data, ever. We do not give personal data to advertisers. People come on to Facebook, they want to do targeted ads, and that’s really important for small business . . . We take those ads, we show them, and we don’t pass any individual information back to the advertiser.”
That kind of protection, of course, benefits Facebook’s bottom line by maintaining its control over ad targeting. Facebook has taken action to change various features and policies that enabled outside actors, including partners of the election firm Cambridge Analytica, to collect large amounts of personal profile data. For now, researchers and developers can still use a variety of methods to automatically harvest large amounts of public data from Facebook.
In the same interview, Sandberg acknowledged that Facebook should have notified as many as 87 million users impacted by the improper access of data by Cambridge Analytica and its partners, and that the company may discover other, similar breaches.
TOKYO (Reuters) – A Hong Kong-based activist investment fund opposed to Toshiba Corp’s (6502.T) sale of its chip unit to a Bain Capital-led group said the deal should be renegotiated at a valuation of 3.3 trillion yen to 4.4 trillion yen ($ 30 billion-$ 41 billion).
Argyle Street Management said on Friday that the current deal, which values the unit at 2 trillion yen, was agreed upon when Toshiba was desperate for cash. Toshiba is no longer insolvent, and was free to terminate the deal without incurring any penalty because the sale had not closed by a March 31 deadline, it said.
Toshiba should aim to list the unit if the Bain group will not agree to a higher price, it added.
Reporting by Makiko Yamazaki; Writing by Ritsuko Ando; Editing by Edwina Gibbs
(Reuters) – Tesla Inc sought to squash any speculation it might need to raise more capital this year on Tuesday, driving the company’s battered shares higher as it announced it built 2,020 of its cheaper Model 3 sedans in the last seven days.
The company’s reassurance that it does not need extra cash sent a wave of relief through investors who sold shares of the electric carmaker through a week of bad news about its credit rating and semi-autonomous driving technology.
In early trade on Tuesday, Tesla shares jumped as much as 6.9 percent, recouping a third of the past week’s losses. They were up 3.2 percent at $ 260 in midday trade.
Musk’s $ 50-billion dollar venture said it would also churn out 2,000 of the Model 3 cars next week and promised output would climb rapidly through the second quarter.
“Tesla continues to target a production rate of approximately 5,000 units per week in about three months, laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow,” the company said in a filing.
“As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.”
Jefferies analysts had estimated that Tesla needed $ 2.5 billion to $ 3 billion of fresh equity to fund the Model 3 rampup and several other Wall Street brokerages have predicted the company would need more funds this year.
Some analysts said there were signs that the company might have prioritized the cheaper car, seen as crucial to its profitability, over its Model X SUV and more-established and expensive Model S sedan.
Tesla said first-quarter deliveries totaled 29,980 vehicles, out of which 11,730 were Model S and 10,070 were Model X.
Both were lower from the previous quarter and the first quarter a year ago.
“Maybe Elon Musk switched staff from Model S and X to Model 3 to get better production numbers for Model 3,” said analyst Frank Schwope from NORD/LB.
Musk himself has taken direct control of Model 3 production and the company says it already has about 500,000 advance reservations from customers for the car.
The Model 3 is the most affordable of Tesla’s cars to date and is the only one capable of transforming the niche automaker into a mass producer amid a sea of rivals entering the nascent electric vehicle market.
Tesla’s consistent failure to meet its production targets – it had promised 2,500 Model 3s would roll off its assembly lines per week by the end of March – has made Wall Street broadly more skeptical about Musk’s promises.
Several criticized as “tone deaf” an April Fool’s tweet from the billionaire that joked his company, which has $ 10 billion in debt, was “totally bankrupt”.
Tesla shares peaked at $ 389 last September and have been declining steadily since.
Analysts, however, are giving the company the benefit of the doubt as a big bet on the future of high-tech electric and self-driving vehicles.
The production numbers, while short of Tesla’s own target, are far above the 793 Model 3s built in the final week of last year.
“The company appears to be near the point of turning the corner on meeting guidance and production performance,” said William Selesky from Argus Research.
(Corrects to show production was for last seven days, not last seven days of March, in paragraph one)
Reporting By Alexandria Sage and Sonam Rai; Additional reporting by Munsif Vengattil; Editing by Patrick Graham, Bernard Orr
(Reuters) – Spotify Technology SA (SPOT.N) said on Friday it uncovered 2 million users of its free service who had blocked advertising without paying, highlighting a potential revenue risk for the soon-to-be public company.
In an amended version of the share prospectus filed last month, the Swedish company said it continues to be impacted by third-party attempts to gain unauthorized access to its premium service.
The music-streaming company previously included the 2 million users in calculations for some of its key performance indicators, including MAUs, ad-supported users, content hours, and content hours per MAU. More here
Spotify said it currently does not have the data to adjust previously provided key performance indicators, and as a result certain metrics may be ‘overstated’ in its prospectus.
The company had 157 million active users as of Dec. 31, of which about 71 million were paid subscribers who access ad-free versions of the service, according to its website.
Spotify had filed this week for a direct listing of its shares, instead of a traditional IPO.
The direct listing will let investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering.
Reporting by Arjun Panchadar in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta
LONDON/SAN FRANCISCO (Reuters) – Streaming music leader Spotify said on Thursday it has a clear path to profit as it spelled out to investors its growth plans and how it aims to fend off big rivals Apple Inc and Amazon.com Inc ahead of an April 3 listing.
Chief Executive Daniel Ek made a direct pitch to retail investors during a public webcast that stood in place of a traditional closed-door “road show” typically used to woo institutional investors in initial public offerings (IPOs).
The Stockholm-based company’s stock will hit the public markets in a unusual direct listing without traditional underwriters. Spotify must convince investors that its business is sound and that investors who buy shares in the public market debut won’t be hurt by unexpected volatility.
“You won’t see us ringing any bells or throwing any parties,” Ek said. “Since Spotify isn’t selling any stock in the listing, we’re really entirely focused on the long-term performance of the business.”
Ek portrayed Spotify as an underdog not tied to a major technology company. He pointed out that Spotify has more than twice as many paying users as its nearest rival, Apple, and that its strategy is to be an ubiquitous music service across phones, smart speakers and desktops from various makers.
Because the company will not issue any new shares, it did not specify a listing price. Based on private transactions, it is valued at roughly $ 19 billion, according to Reuters calculations. It has hired brokerage Morgan Stanley to match buy and sell orders to set its opening trading price.
Spotify has warned investors it faces a variety of risks.
It says the royalty costs it pays to artists and publishers are so difficult to calculate that in the past it has been unsure how much it owed, prompting what are known as “material weaknesses in internal controls” for each of the past three years with the danger of more in the future.
In addition, its music services are primarily delivered over devices such as Apple’s iPhone and Amazon.com’s Echo series of speakers, which could emphasize their own services over Spotify’s.
“Operating losses have grown with revenue, but the trend towards profitability is clear when you look at operating losses as a percentage of revenue,” the company said in the presentation in New York.
Revenue grew 39 percent to 4.09 billion euros ($ 5.04 billion) in 2017 from 2.95 billion euros in 2016, it said in a securities filing. At the same time, net financing costs of 855 million euros pushed up operating losses to 378 million euros from 349 million euros.
Reporting by Eric Auchard in London and Stephen Nellis in San Francisco; Editing by Susan Thomas and Peter Henderson