Benner on Tech: Facebook's Data Fail and Media Execs in Trouble

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
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People are Talking About…

If you’re on Facebook, then at some point over the past two weeks you got a little note from the company saying, “It’s been a great year! Thanks for being a part of it.” And then you saw your “Year in Review,” a collection of things that the company’s algorithms decided were your most important moments. The items were likely chosen because they showed up a lot in your stream or they garnered a lot of comments or they were shared. And that single feature, as many users pointed out, led to “inadvertent algorithmic cruelty.” Facebook pushed in our faces photos of loved ones who died and other heartwrenching moments from 2014.

Anyone inclined to use the service as more than a carefully curated, fake, happy-all-the time repository of our most emotionally manicured selves were put on notice. You can express genuinely sad things on Facebook, and they’ll be handled with all the sensitivity that only a bot can provide. It’s been a great year (when your family was torn apart)! Thanks for being a part of it.

Anyone who is human and who interacts with other humans could have seen this coming a mile away. But maybe no one at Facebook HQ has bad years? Or maybe this year was just particularly good? The stock did, after all, gain 47 percent. (The company of course apologized after the fact.)

This upsetting moment should give us pause, not just because it was idiotic and we continue to give our data to this company that continually does idiotic things. But because so much of our lives and our security is in the hands of the algorithms that, like Facebook, try to draw connections between the trails of data we leave online. Advertisers are trying to sell us products based on the profiles they can build with our online lives. Insurance companies are trying to find ways to alter their business models with the information they glean from our posts. The NSA has collected vast amounts of data on citizens who have been accused of no wrongdoing in an effort to map out where on the spectrum of criminality we fall.

Formulas and humans try to infer meaning in those connections. Facebook’s failure is insensitive, easy to ridicule and easy to forget. But that doesn't mean that the data we leave about and the inferred connections that people make don’t have real consequences when they’re wrong.

** The most important read of the day: Spiegel lays out how the NSA has been waging war on Internet security.

Ventureland

Aereo will be allowed to auction off its streaming technology assets, Re/code reports.

Bitcoin isn’t dead, but it may be mortally wounded, according to my Bloomberg View colleague Mark Gilbert. It was the worst performing currency of 2014, beating out the Russian ruble and the Ukrainian hryvnia. Re/code’s James Temple points out that newspapers, taxi medallions and camera film (remember cameras?) were all better investments than the crypto currency.

Pinterest, the image-based social network that’s valued at about $5 billion, says that a plan to push ads to users is showing promising results, Re/code reports. The company will roll out ads widely in on Jan. 1.

Uber is meeting with Delhi’s transport authority in the hopes of working out a regulatory framework for taxi-hailing apps, Tech in Asia reports. The app was banned a few weeks ago after a driver with a criminal record allegedly raped a female passenger.

Xiaomi confirmed that it raised $1.1 billion and that it’s now valued at $45 billion. Bloomberg reports that investor Yuri Milner, who also invested in Facebook and Alibaba, believes the smartphone maker’s valuation could hit $100 billion.

People and Personnel Moves

Bob Iger is turning Disney into a tech company, claims Fortune’s Michal Lev-Ram. Square CEO and Disney board member Jack Dorsey tells the magazine:

Disney has always been about building technologies, not just applying technologies. But I think Bob is rekindling that relationship with technology in a way Disney hasn't seen for some time.

Marissa Mayer is the subject of yet another glass-cliff discussion. This time, New York Magazine’s Annie Lowrey argues that if Yahoo’s decline is a fait accompli no matter who’s at the helm, then Mayer shouldn't bear the blame for the company’s failure. To do so “might cement the stereotype that women are worse managers and executives than men, all because they are asked to manage worse businesses then men.”

Saar Gur, a VC at Charles River Ventures, talks to StrictlyVC about how to market your firm and lessons from BrightRoll.

Companies

Amazon…

** Entrepreneur Jonathan Low explains why the smartphone may hurt Jeff Bezos' plans for global domination.  

Apple…

** Britain's banks are uncomfortable with the amount of personal data that Apple wants to collect on customers who use Apple Pay, the Telegraph reports. The payment service could come to the region in the first half of 2015.

Facebook…

** The New York Times wants to know if the days of managing one’s "marital brand” on the site are over.

Google…

** China is blocking access to Gmail, Mashable reports.

Yahoo…

Goodbye Yahoo Directory. Search Engine Land says that the once-core product has officially shut down.

Cybercrime Blotter

Lizard Squad Strikes Sony’s PlayStation and Microsoft's Xbox Live, taking them offline on Christmas day, CNN reports.

** Lizard Squad’s members tell the Daily Dot that they hacked the consoles “to exploit the ‘incompetence’ of Microsoft and Sony.”

They would have better luck if they actually hired someone who knew what they were doing. Like, if they went around prisons and hired people who were convicted for stuff like this, they would have a better chance at preventing attacks.

** A Lizard Squad member said in a Q&A with the Washington Post that the group was also involved in the massive Sony Pictures Entertainment hack.

** Brian Krebs pieces together the identities of Lizard Squad’s anonymous members.

North Korea has blamed the U.S. for its recent Internet outage and for encouraging Sony Pictures to release "The Interview," the Wall Street Journal reports.

Goodbye fingerprint biometrics? A hacker with the Chaos Computer Club says that he cloned a German defense minister’s fingerprint using nothing more than news photos of her hand and commercially available software, the BBC reports.

Media Files

David Carr lists media executives in the hot seat, including MSNBC’s Phil Griffin, Time Inc.’s Joe Ripp and his own chief executive Mark Thompson of the New York Times Company.

“The Interview” made $15 million in the first four days of its release from online sales and rentals, and it made $2.8 million from movie theater ticket sales, Deadline reports. (The New York Times says the movie’s initial theater run made $2.9 million in theaters.) The movie is available on YouTube, Google Play, iTunes, Microsoft’s Xbox Live network and the website SeeTheInterview.com.

** Related: If you made it through “The Interview,” you probably noticed that it can’t hold a candle to “Team America,” that other movie about taking down a North Korean leader. iO9 talks about why Trey Parker, Matt Stone and Pam Brady succeeded where Seth Rogen and Evan Goldberg failed.  

Serial disappointed Rabia Chaudry, the woman who led Sarah Koenig on her Adnan Syed goose chase.

News and Notes

Venture capitalist and Y Combinator co-founder Paul Graham argues that a broken U.S. immigration policy could jeopardize the country’s status as a technology superpower.

An early morning encounter with an Uber driver engages Om Malik in a winding, Jarmusch-ian conversation that leads him to conclude that Silicon Valley is the current magnet for get-rich-quick dreamers.

Today, whether we like it or not, Silicon Valley is now the focus of attention. People see it as the fastest way to riches — after all the narratives around successes like WhatsApp, Uber, Twitter, Instagram and Facebook only reinforce that notion. Start an app, and you can be a star. Silicon Valley is the new Hollywood and apps are the new “scripts.” I don’t know if this is the bubble, or not. I do know that people outside our little bubble have noticed what is happening here. They want a piece of it. They don’t know how to get some for themselves.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.