Case Study: Facebook: It’s about money

CIS514 Information and Decision Support

Li Wang

2015. 11. 14
 Commented [mcm1]: Always be sure to include an
1. Perform an ethical analysis of Facebook. What is the ethical dilemma
introduction paragraph. The introduction paragraph should
provide an overview of what will be discussed within the
presented by this case?
body of the document. Be sure to also include a thesis
statement.
Facebook, founded by Mark Zuckerberg, is world’s biggest social networking service

and website. It aims to make the world more open and connected. Users on Facebook

keep connected with their friends and family to perceive what is happening around them

and share and express their feelings and thoughts to a social circle. Facebook’s revenue

mainly comes from advertising. It does not have hot new gadgets or high tech software;

however, it does have user’s personal information and share them to the advertisers

Commented [mcm2]: The format of this in-text citation

(Laudon, 2015, p.142). Based on tons of user information such as age, gender, location,
would indicate that this is a direct quote. If this is indeed a
direct quote, you need to include quotation marks around
education and interests, the advertisers can pinpoint their potential customers. Even
the borrowed text. This, applies to the entire document.

though Facebook helps users more easily keep in touch with their friends, the

information users shared may be used for them or against them.

Currently, in order to keep a decent revenue stream, Facebook has to compromise

the individual user right to flatter its advertisement capabilities. “The more freedom

Facebook had to use the data coming from user profiles and interactions, the more

capabilities they have to create revenues” (Starr, 2014). However, Facebook’s privacy

policy has been challenged in Europe. Its reputation will be undermined when more

lawsuits occur. The ethical dilemma is its free, advertised based business model forces

Commented [mcm3]: It is incredibly important that this is

Facebook to find a balance point among users and other stakeholders including
considered.

shareholders, advertisers, and employees. Commented [mcm4]: Excellent point made within this
final statement.
2. What is the relationship of privacy to Facebook's business model?

“Facebook’s goal is to get its users to share as much data as possible because the more
Facebook knows about you, the more accurately it can serve a relevant advertisement
to you” (Laudon, 2015, p.142). Facebook implements a free, advertised based business
model. Facebook provides a free social media platform allows users stay connected
with friends and share photos, videos, thoughts and feelings to them. In turn, Facebook
sells advertising based on what they have learned from those users. The more
information users post on the Facebook, the more valuable users meant to Facebook.
Facebook definitely wants users to browse and share as many as possible so that the
advertisement tied to user interests will generate more revenue; by contrast, if users are
not active enough, they are less profitable to Facebook. In a nutshell, user privacy and
Facebook’s business model are contradictory. Even though it’s reasonable for Facebook
wanting to make more money, it should be responsible for the personal data of hundreds
of millions of users.
3. Describe the weaknesses of Facebook's privacy policies and features. What
people, organizations, and technology factors have contributed to those
weaknesses?
The weakness of Facebook’s privacy policy is that it is “more difficult to comprehend
than government notices or typical bank credit card agreements” (Laudon, 2015, p.143)
that the customers can hardly understand it. Facebook is taking advantage of users’
“implied consent”. “93% of people polled believe that Internet companies should be
forced to ask for permission before using your personal information, and 72% want the
ability to opt out of online tracking” (Laudon, 2015, p.143). However, there are still
many people sharing sensitive details of personal information on the Facebook because
Commented [mcm5]: Too casual.
Commented [mcm6]: Management: Ninety-three
percent of people polled believe that Internet companies
should be forced to ask for permission before using their
personal information. Seventy-two percent want the ability
to opt out of online tracking. Executives and managers must
develop policies and procedures that address those
concerns at the same time they are developing a
competitive strategy to effectively use personal information
to increase the company’s value to advertisers. Privacy
advocate groups such as the Electronic Privacy Information
Center want Facebook to restore its more robust privacy
settings from 2009. If it does that, some of its value to
advertisers will diminish.
Organization: Facebook’s value and growth potential is
determined by how effectively it can leverage the personal
data that’s aggregated about its users to attract advertisers.
It also stands to gain from managing and avoiding the
privacy concerns raised by its users and government
regulators.
Technology: Facebook does not have a good history when it
comes to privacy violations and missteps that raise doubts
about whether it should be responsible for the personal
data of hundreds of millions of people. It has settled
lawsuits with the Federal Trade Commission in which they
were barred from misrepresenting the privacy or security of
its users’ personal information. It was charged with
deceiving its users by telling them they could keep their
information on Facebook private, then repeatedly allowing it
to be shared and made public. It has also come under fire
for collecting information about users who are not even
logged into Facebook or have accounts with the company. It
keeps track of activity on other sites that have “Like”
buttons or “recommendations” widgets, and records the
time of your visit and your IP address when you visit a site
with those features, regardless of whether or not you click
on them.
they don’t realize their data will be collected and transmitted.

Facebook currently stands to gain managing and avoiding the privacy concerns

raised by its users and government regulators, but it should be more responsible with

this data collection processes, “whether by its own volition or because it is forced to do

so” (Landon, 2015, p.143). The executives should consciously realize the importance

of protecting customers’ personal information. Investors and regulators should

scrutinize its collection processes.

“The United States has allowed businesses to gather transaction information

generated in the marketplace and then use that information for other marketing purposes

without obtaining the informed consent of the individual whose information is being

used. An opt-out model of informed consent permits the collection of personal

information until the consumer specifically requests that the data not be collected.”

(Laudon, 2015, p.126). Facebook is also taking advantage the US law by not initiatively

providing users an opt-out model. In 2012, however, Facebook agreed to allow users to

opt in to its Sponsored Stories service (Laudon, 2015, p.126).

4. Will Facebook be able to have a successful business model without invading

privacy? Explain your answer. Are there any measures Facebook could take

to make this possible?

If Facebook keeps implementing a free, advertised based business model without

invading users’ personal privacy, it is impossible for Facebook to be successful.

“In 2013, Facebook made $4.2 billion in advertising revenue, which constituted 85%

of its total revenue” (Laudon, 2015, p.142). Facebook’s revenue mainly comes from
advertising because it has tons of users’ information and the advertisers highly

appreciate its “unprecedented trove of personal information” (Laudon, 2015, p.142). If

advertisers don’t have the access to the personal information, they cannot finely target

subsets of users; instead, advertisers are only able to throw in traditional types of

advertising.

Could Facebook avoid violating customer privacy by informing them that their

personal information would be collected and transmitted? While there are 150 million

American users on the Facebook, only “4.8 million are willingly sharing information

that could be used against them in some way” (Laudon, 2015, p.143). With the

Commented [mcm7]: Avoid the use of first person.

consideration of privacy and self-security, I think most of the users would click “No”

when Facebook asks them to share information.

The highly customized advertisement is the backbone of Facebook’s business

model. Quitting invading privacy will definitely paralyze Facebook’s business

operating. So I don’t think Facebook will be able to have a successful business model

without invading privacy.

Although Facebook continues to invade privacy, I also don’t think it will be

profitable forever. “Facebook’s ad revenue in 2012 grew by 32% over the previous year,

driven mostly by adding new users. Existing users are not clicking on more ads”

(Laudon, 2015, p.142). When the market reaches saturation, and there are few new

Commented [mcm8]: Always be sure to include a

customers, Facebook will not be favored by advertisers anymore.
conclusion paragraph. The conclusion paragraph should
provide a review of what has been discussed. No new
information should be presented in the conclusion
paragraph.
 Reference

Commented [mcm9]: This list would need to be placed in

Starr Biven (March 2014). Facebook: Friend or Foe? Retrieved from
alphabetical order.

https://prezi.com/bgl5q3irsvs7/facebook-friend-or-foe/

Laudon, K. C., & Laudon, J. P. (2015). Essentials of management information

systems (11th Ed.). Boston, MA: Pearson.

CIS514 Information and Decision Support

Assignment 1: Facebook: It's About the Money

Resources

 Chapter 4
Introduction
Read the Business Problem-Solving Case at the end of Chapter 4 titled
Facebook: It's About the Money.

Activity Instructions

Address the below statements/questions in a well-constructed essay:

1. Perform an ethical analysis of Facebook. What is the ethical

dilemma presented by this case?

2. What is the relationship of privacy to Facebook's business model?

3. Describe the weaknesses of Facebook's privacy policies and

features. What people, organizations, and technology factors have
contributed to those weaknesses?

4. Will Facebook be able to have a successful business model without

invading privacy? Explain your answer. Are there any measures
Facebook could take to make this possible?

Writing Requirements (APA format)

 Title and Reference page

 Times New Roman, 12-point font
 1-inch margins
  Use of, at minimum, two scholarly sources
 3-4 pages (300 words approximately, per page
not including the title page or reference page)
 Double-spaced pages

Grading and Assessment

This assignment will be graded using the Written Analysis Grading
Rubric (in Course Documents).

Course Learning Outcomes: 1, 2, 3, 4

1. Define and apply concepts in information systems to ethical and
social issues in organizations and society.

2. Analyze information technology infrastructure and current trends in

information technology and information systems.

3. Evaluate the use of information systems to improve business

processes, decision-making, and knowledge distribution.

4. Evaluate the broad impact of Information and Communication

Technologies on individuals, organizations and society and anticipate
the implications for their responsible use and development.

Due Date: By 5:55 pm ET on Wednesday

Written Analysis Grading Rubric
CRITERIA Outstanding Above Average Satisfactory Below Average Insufficient
1. Throughout the whole Throughout most of the Throughout a Throughout some of the Throughout little to none of
Analysis work, work, considerable amount of work, the work,
 evidence is organized  evidence is organized the work,  evidence is organized  evidence is organized
and synthesized to and synthesized to  evidence is organized and synthesized to and synthesized to
35 reveal insightful patterns, reveal insightful patterns, and synthesized to reveal insightful patterns, reveal insightful patterns,
differences, or similarities differences, or similarities reveal insightful patterns, differences, or similarities differences, or similarities
related to focus related to focus differences, or similarities related to focus related to focus
related to focus

2. Throughout the whole Throughout most of the Throughout a Throughout some of the Throughout little to none of
Support work, work, considerable amount of work, the work,
 sentences in each  sentences in each the work,  sentences in each  sentences in each
paragraph compellingly paragraph compellingly paragraph compellingly paragraph compellingly
35 explain the main idea explain the main idea explain the main idea explain the main idea
  claims are supported
with detailed and
persuasive examples
3. States a conclusion that is a
Conclusions logical extrapolation from
the inquiry findings
20
4. Throughout the whole
Grammar, work, the text
Mechanics,  is free of major errors in
and Style grammar, spelling,
punctuation, and citation
(where applicable)
10  is clear and concise
 is effectively fitted to
format and purpose
 uses language
appropriate for intended
audience
 demonstrates strong
word choice and
sentence variety
Analysis-.35 X 92.5 = 32.38
Support – .35 X 90 = 31.50
Conclusions- .20 X 90 = 18
Grammar, Mechanics, and Style- .10 X 95 = 9.5
 claims are supported
with detailed and
persuasive examples
States a conclusion that is
an extrapolation from the
inquiry findings but needs to
strengthen the logical
connections
Throughout most of the
work, the text
 is free of major errors in
grammar, spelling,
punctuation, and citation
(where applicable)
 is clear and concise
 is effectively fitted to
format and purpose
 uses language
appropriate for intended
audience
 demonstrates strong
word choice and
sentence variety
 sentences in each  claims are supported  claims are supported
paragraph compellingly with detailed and with detailed and
explain the main idea persuasive examples persuasive examples
 claims are supported
with detailed and
persuasive examples
States a conclusion States a general conclusion States an ambiguous,
focused solely on the that, because it is so illogical, or unsupportable
inquiry findings. The general, also applies conclusion from inquiry
conclusion arises beyond the scope of the findings
specifically from and inquiry findings
responds specifically to the
inquiry findings
Throughout a Throughout some of the Throughout little to none of
considerable amount of work, the text the work, the text
the work, the text  is free of major errors in  is free of major errors in
 is free of major errors in grammar, spelling, grammar, spelling,
grammar, spelling, punctuation, and citation punctuation, and citation
punctuation, and citation (where applicable) (where applicable)
(where applicable)  is clear and concise  is clear and concise
 is clear and concise  is effectively fitted to  is effectively fitted to
 is effectively fitted to format and purpose format and purpose
format and purpose  uses language  uses language
 uses language appropriate for intended appropriate for intended
appropriate for intended audience audience
audience  demonstrates strong  demonstrates strong
 demonstrates strong word choice and word choice and
word choice and sentence variety sentence variety
sentence variety
91.38%