Good morning. David Meyer here in Berlin, filling in for Alan.
Facebook’s shares fell by almost 3% at one point yesterday after the Wall Street Journal reported the firm had “uncovered” emails showing Mark Zuckerberg was connected to “potentially problematic privacy practices at the company.” The emails in question were dug up as part of the Federal Trade Commission’s probe into whether or not Facebook broke its 2012 privacy consent decree with the regulator.
Now, it’s still not clear what these emails entail. And Facebook is still maintaining that “at no point did Mark or any other Facebook employee knowingly violate the company’s obligations under the FTC consent order.”
But, bearing that in mind… seriously?
The consent decree banned Facebook from misrepresenting “in any manner” its privacy and security practices, from the level of control users have over their data, to the ways in which Facebook collects that data, to the level of access third parties have to that data, to “the steps [Facebook] takes or has taken to verify the privacy or security protections that any third party provides.”
The Cambridge Analytica data-scraping scandal alone led Zuckerberg to grovel before users and regulators about Facebook’s “breach of trust.” Then there was the kerfuffle around Facebook’s secret data-sharing deals with Amazon, Apple, Microsoft and others. And the time Facebook misled European antitrust regulators and the public by claiming it wouldn’t merge WhatsApp data into the mothership’s systems, which of course it did (result: $122 million EU fine.) And the way in which it systematically misled users about how their data would be used for commercial practices (result: $11 million fine from the Italian competition regulator.) The list goes on and on and on.
Either Zuckerberg has his head in the clouds to a remarkable degree for a founder who still has unbreakable control over his company, or he was personally connected to these “potentially problematic” practices. These are not slip-ups by underlings; they’re the results of fundamental business choices.
The Journal reports that Facebook worries these newly-unearthed emails could prove a PR problem, but in all likelihood they will only put flesh on the bones everyone can already plainly see.
More news below.
Train your eyes on the Middle East again. The U.S. Navy and Iranian search and rescue teams have both sent assistance to two oil tankers that were attacked in the Gulf of Oman. The oil price has surged and Gulf stock markets are down. Initial reports say at least one of the tankers was hit by a torpedo, and its crew was rescued by the Iranians. It’s not yet clear whether there is a connection to alleged limpet-mine attacks against tankers off the UAE last month—the U.S. claimed that episode was Iran’s work. Sky News
The founder of the encrypted messaging app Telegram claims the service has come under massive cyber-attack from China. Pavel Durov said the denial-of-service attacks were timed to coincide with protests in Hong Kong, which have been partly coordinated via Telegram. Bloomberg
Ford has issued four recalls including one for 1.2 million Explorer SUVs. The company says it doesn’t know of any injuries, but in theory a defect could fracture the rear suspension and cause steering issues. Another one of the recalls is an expansion of an earlier one for F-150 pickups that apparently have a transmission flaw. Fortune
Eurozone industrial output fell in April, marking its second consecutive month of contraction. Again, Germany was the chief culprit, though Italy also suffered a small decline. Reuters
Around the Water Cooler
Sanders vs Dimon
Bernie Sanders has lashed out at Jamie Dimon after the JPMorgan Chase chief said it would be a “huge mistake” for the U.S. to go the socialist route. “I didn’t hear Jamie Dimon criticizing socialism when Wall Street begged for the largest federal bailout in American history—some $700 billion from the Treasury and even more from the Fed,” Sanders tweeted. Fortune
President Trump has said that, if a foreign government quietly offered him damaging information about a presidential rival in next year’s elections, “there isn’t anything wrong with listening.” “It’s not an interference, they have information—I think I’d take it,” he told ABC News. “If I thought there was something wrong, I’d go maybe to the FBI—if I thought there was something wrong.” ABC News
As lawmakers from the U.K.’s Conservative Party engage in the first round of voting for the next party leader and prime minister, how ready are British businesses for the possibility of the no-deal Brexit that some candidates are planning? “Not even close,” according to figures seen by the BBC, which suggest less than a tenth of companies that would need a special status to ease imports have applied for it. BBC
EU Power Play
Want a primer on how Franco-German tensions will affect the upcoming selection of the EU’s new leaders? The Financial Times has one. Taster: “The alliance remains what academics call the world’s most institutionalised bilateral relationship. But in recent months, some unwritten rules—the avoidance of surprises, co-ordination of positions before big decisions, the need to keep disputes private—have been swept aside by a burst of Gallic vigor.” FT