Event Recording

Prof. Dr. Heiko Beier - Is it Facebook's End Game? Why Social Networks as we know them Today will not Survive


The real problem behind the recent Facebook scandal is not primarily that a company like Cambridge Analytica has "gained" access to the personal information of millions of Facebook users and misused them for political manipulation. It is the business model of social networks itself: Letting their users deal privacy for some kind of communication convenience, without letting them at any point opt for both: the convenience of using social network services to digitally interact with others as well as control over the usage of their personal information. 

Will such business models survive? Is privacy a disclaimable option or is it a constituent element of our personality? 

I think he will give a pretty Provo talk. Is it Facebook's end game or why social networks, as we know them today will not survive. So I'm curious.
Okay. Thank you.
Okay. Here's the,
Okay. Ts sounds like a tough question. And who am I to, to give an answer on that? Well, definitely I'm not a profit, but I'm here. I think because I'm working in three different fields, which all develop very rapidly. First is machine learning. The second is information security and the third one is media communication and all these three different directions, they come together and they all Mount in the same question at the very end, which is, is our idea of privacy in the digital world, the same as it used to be. So that leads me to the question, whether this is the end of Facebook and from the subline you might guess what my personal opinion is. And principle was plan to have a poll at this step here, but for, for time reasons, maybe you can do that.
Okay. You can do that and we'll look at the results later. Yeah. So maybe just get out your smartphones and try to listen to me and get us your opinion. I'm a confessing series junkie. The scene you are seeing here is from the HBO series Westworld. Some of you might know him and in this series, sport, adults are seeking adventures in an amusement park, shooting figures, shooting the other guests and having fun and well, they are, they're not real, they behavioral, but they are artificial intelligence. So it's a nice play. And up to that point where the AR artificial intelligence turns out and starts objecting to, to this one-sided dictation. And that's really good. UR, what I think for my talk and what we currently perceive because it's the wild west in the sense that the wild west has an unregulated legal vacuum. Those who shop first, those who first claimed a certain strip of land.
They got it. If you look at this unlimited growth of the internet giants, that's quite similar to what happened 150 years ago. Now user data are the new gold nuggets or some others say the new oil. So for a long time, this growth seems to be infinite, their power unbreakable. And actually you see this little dip there and the chart of Facebook, that's actually the erection of the stock market to the Cambridge Analytica data breach. And there was short time panic, but then again, business as usual. So will we have business as usual in the near future? I would say definitely not. And almost needless to say for, for this community here, the main reason, and it has a lot to do with the regulation by this woman and her team GDPR. But I think it's more, it's not only GDPR. It's about privacy and the way we understand privacy in a digital world, I want to confront you with some recent observations. I made things that are happening news around Facebook, and you can see this each day in new headline of, of trouble that Facebook is confronted with. So for instance, this one goes more or less unnoticed. They're receiving a class action suit of its facial recognition practice. Also little attention probably got this news because it was just one day, sorry, just one day after the us court hearing.
Oh, okay. There's one slide missing, sorry. Because in a verdict, the privacy shield arrangement has been ruled to be invalid and not in accordance with the European law. Next problem for mark Zuckerberg, the discussion is heated up by actual scandals like the Cambridge Analytica data breach, of course, but the Washington Washington post writes Facebook is now in the data. Privacy spotlight could Google be the next, it's not about Facebook, but the debate is already much more not about this actual scandal or this certain events. It's about the policy. It's about the way we as a society handle privacy and what needs to be regulated. And in this sense, Facebook is getting increasing pressure from all sides, from the users, from politics, the data protection authorities, which I will quote later, civil rights organizations. Actually, they had this made this suit for, with a verdict I just quoted.
And even the advertisers partially turned back from Facebook because they are in frightened of getting into bad reputation and bad context. And the, you now know the discussion about fake news about filter bubbles and what is means if an algorithms decide what is relevant to people, actually this example here, so German newspaper shows that this is not necessarily a political statement. It doesn't depend on whether your liberal or right wing or left wing in Germany, your caught rule, that Facebook is not allowed to, to delete a comment actually. And this comment was extremely right politically. So, and on the other hand, you need to know that Facebook alone in Germany has hundreds of people working on reading and cleaning sensoring comments on their platforms. Also in reaction to a law in Germany, which requires this because Facebook is responsible for what it publishes. So another big problem for Facebook and no matter what they do, somehow, the risk is how they are doing it wrong.
So we come to key question and again, a slide is missing. The question is whether a media company that builds its power, not on journalistic competence, but on algorithms. It's in principle able to cope with all these challenges, because it's not only just about privacy, it's about credibility, it's about responsibility. And it's also about trust. And that is in principle. It's about all the fundamental persistent values that we have in Western democracies. If you listen to the debates and the EU parliament, we see that the debate has really reached a new level, the real different level. So they talking in terms of aggressive data capitalism, they, they want fight back to gain digital severity. So that's the language we haven't heard in years or on 20 years. So in decades in that the internet was already there. And maybe the last point in the observations, Facebook is also using acceptance by the younger generation significantly.
So you might say, well, maybe not for that reason, because probably Facebook is just, just isn't cool any longer to the young guys, but we know young people are not so traditional. They are much more sensitive and inclined to change their behavior rapidly. And maybe a little comparison. I think most of us would have expected that Volkswagen would severely suffer from the diesel gate affair, but they didn't. The revenue of Volkswagen is still going up. Why is that? Well it's because car buyers are typically well, not young people. And actually they have learned for more than 50 years, that Volkswagen is a great brand. It's reliable. So they go on buying Volkswagen. So the problem will be that probably Volkswagen might have severe problems, hiring young talents and gifted people. And maybe the next generation we're making the decision, which autonomous electro mobile, they would buy. They would opt out from Volkswagen because they have learned something very different. So what will happen? Are we all in a giant bubble? Will it go on like this will it burst? And what last effect will make the bug will burst.
I think historical comparisons can help from time to time. These two guys here, they have a lot in common. The one of them we know all mark Zuckerberg, who's a profiteer of the data rush. The other one, the Americans of you probably know them. The German ones probably don't. He was a big profiteer of the gold rush. He profited from the fact that claiming and owning land and natural resources at that time was not regulated. Interesting enough later on his son founded the media Imperial and Hearst senior himself. He started a second career as a politician. You might have heard that rumors, that mark Zuckerberg, when leaving Facebook might want to go into politics, helping to regulate what needed to be regulated.
I'm convinced that we are seeing typical symptoms of imminent, disruptive change and continue need for regulation. The end of wild west. What are the signs? Well, I really think people don't understand what's going on. Many of you, at least the German ones might have heard about the German new land debate. So this hashtag Newland, actually this refers to our chancellor, Angela Merkel, when in 2013, she said the internet is all new to us. And of course that she received big jokes and sarcasm in the, in, in the media. And honestly, of course, we all wouldn't say that because we are quite familiar with the technology. We think, well, we understand how it's working, but the question is not about technology. It is about the consequences and side effects of this technology to our society.
And the human species takes much more time to adapt to new these kind of developments. We are driven by technology and people don't understand and establishment doesn't understand. That's quite funny here. This is from the us court hearing of mark Zuckerberg and the Senator here asked mark Zuckerberg, probably the only easy to answer question for him, Mr. Zuckerberg, how do you want to build a business model? If your users do not pay for your service? Okay. His simple answer was we are running ads. I think this is yeah, pretty funny, but it's another symptom of forthcoming regulation. Why? Because also traditional and the establishment is beginning to grasp. What's really happening. They are beginning to understand. I perceive that the same happens with most of the people. Many of us might have heard people saying, I don't care for data privacy in the, in the internet.
I don't have anything to hide. And already Edward Snowden stated this year and made a comparison that this is not really true. This is not the right way to see it. I give you another metaphor, which is me. Maybe easier to understand and guides me to what I wanna see this guy of course could say, well, I do not need to wear a helmet. I drive carefully. So I think we would all say that's more or less bullshit. It's not just about him. He's okay. He's responsible to him, but he's responsible to ours. And it's of course the duty of our society to regulate that the problem is people do not understand it. They do not know the technology and believe me, I really have a hard time teaching my students. What is the difference between the internet and the worldwide web? It's all the same to them.
So of course they don't know that for instance, cookies, aren't part of the worldwide web, but they are just an invention. First time by Netscape made in 1994. And it was meant to compensate the stateless nature of the worldwide web. It was meant to make filling out forms more comfortable, but at the end it gave rise to an unlimited and scalable data exchange and data trade. And what's so interesting about this number 1994. That's exactly one year in 1995. That's when the now still valid data protection laws in Europe took effect. So it took almost 25 years, one generation for regulation to adapt to technological developments.
So are people really able to understand judge reflect what is happening in the digital world? I think they are because times are a changing like Bob Dylan sang back in 1964 and was the icon of a peaceful revolution. Look at the tag log. There's so many nice words in there. Face friends are like primarily. So one of he was facing France and now we have the next revolution avoiding unwanted friends and listeners in Facebook because consumers start, start wanting to back, want to have control back when ask whether they will make use of the right to be forgotten more than 80% in this study said likely or highly likely. And the main reason for that was when they get to know that the data was sold or shared with others, consumers are being educated. They can differentiate more than we might think. It's okay for them to give the data about name, the heart, heart, personal data, name, email, date of birth, because they, they take it for granted.
Of course, if you trust someone, if you are in a stable customer relationship, that's okay, but they are not willing to give data. When it comes to browsing history or social media activities, they have started to realize that data tracking and data exchange is overwhelming. You don't see it unless you are using a browser extension. Like the one I used here, which shows you all the data paths, all the dozens and hundreds of data listeners, all that are tracking your internet behavior by users. It has been been unnoticed so far, except for some it elite and for some profiteers in an unregulated environment. Oddly enough, on this very same page, of course I've been asked whether I to accept this service and even if I don't click, okay, of course it's not informed. It's not explicit, but even if I don't click, okay, of course the tracking goes on without even me taking notice of that.
But that's the real world. It's the real world of digital marketing and advertising industry and all these companies, which nobody really has a big, good overview. At least I can tell you that 97% of all the uptake companies, they rely on tracking user data and believe it or not, they're trying to escape the GDPR regulations by stating we have a legitimate interest to track personal data and target users in the internet, even without their consent. Well, why probably they say they have a legitimate interest because they're earning money by the, by it. Yeah, it's their business model. It's legitimate to them, but they dare not even ask the users. So this is standard business for Facebook and thousand of other data trackers and grocery shows it. But who's using Ghostery. Data is trapped specifics, undisclosed. I've got no idea who gets my data.
There will be victims. I hope not lives, but companies of business models that are not in the legitimate interest of the users actually last week, the online business cloud announced to shut down their business. Two years ago, they were bought for a value of 200 million. They actually don't say why they closed down, but have a look at the due date. It's may the 25th. And you might guess why, so what does, and another aspect, what does artificial intelligence mean to all that? It's really complex question and sometimes philosophical, but I don't think that Amazon is, would really be so naive to do that. What is written here? It's not a statement by them, but I kept that because I couldn't believe that because if they do that, I think they would completely ruin their reputation because politics isn't so naive any longer politics wisely has made the extended definition of private data to include also data that indirectly identifies a person or signs it to certain social identity.
And this of course excludes all models, mathematical models, and user audience segmentation don't know whether you ever thought about what this means to GDPR with all the regulations of GDPR actually can go into detail that maybe we have time for discussion later at dinner. So for instance, what happens to audience segments that are built upon illegally acquired data? Do they need to be retrained? Is this differential information still available to, to train the algorithm? Is it biased if these user are dropped out, it's pretty unclear. There are many risks involved. The main risk of causes that studies show will predict that about 50 users, percent of the users will opt out in these kind of web surfing scenarios. Once GDPR is active and one last item regarding privacy, GDPR, and the right to be forgotten.
This actually means that data processors need to report explicitly how and where user data was collected and with what logic it was processed and with what kind of effects. If I have time I will make use of it. So let and let me explain by all the big companies, how exactly the algorithms work, where my data was gotten from. And so on, the reports would be good lesson for my students to learn how to do big data. So yeah, I'm coming to the end. Is it a data? And no, it's definitely rather the start of a new world, the world that we know, and that we trust is the one where we ourselves decide who we talk to. That's what we all do. And what would you say if you enter a bookshop and a nice young lady approaches you and says, hello, so you're looking for crime stories today. Last week you have been searching for sex toys, haven't you? You would probably panic and run out of the shop.
And yeah, the full media industry has been focusing so much on the need to profile and hunt the user that they do not see any alternatives. They are alternatives because cognitive computing allows and me and my team have developed an algorithm that really understands the real time user interest without ever knowing who the real user actually is. So this is the end, which of these worlds will become real. I think it's very likely that now people that they understand it will stick to the roots of privacy they have developed over generations. Or could you imagine entering this shopping mall and reading actually this sign for optimizing your experience upon entering this mall, you agree that your walking path behavior and any communication with malt staff and other guests is tracked recorded, shared to whomever we deem necessary and profiled. I wouldn't. Would you? Thank you.
Thank you.
I think that was a, a very, very insightful perspective. And I think it also relates to a lot of stuff which has been discussed over the past one and a half days regarding GDPR, the impact and other things. And maybe one, one sentence. When we had our consumer identity board conference in Paris last year, November, I did a GDPR workshop and a lawyer was in and relationship with interesting came up and he said, very interesting sentence, which was earning money in the context of GDPR is not a legitimate interest. So with that, I would say, stay in the room. We move to the next big thing today. Thank you again very much.

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