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Facebook under fire

Facebook CEO Mark Zuckerberg

Good morning! This Thursday, Facebook knows a lot more about its users than it admits, DoorDash is suing New York yet again, Tencent does a lot of online charity (for better or worse), and Adobe is working on a payment system because why not?

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The Big Story

Another Facebook scandal

For the last three days, The Wall Street Journal has published a series of damning scoops about Facebook's internal research. The big takeaway: Almost everything Facebook has denied knowing — whether it's about viral content, the way people perceive themselves online, how politicians get special treatment — the company and its leaders actually did know, and probably had studied.

The WSJ is calling its series "The Facebook Files," which appear to come from a compilation of files leaked to the paper from a whistleblower who is also speaking with Congress and the SEC. Here are the most important takeaways from each of the stories so far.

The company whitelists VIP accounts in a program called XCheck, allowing high-profile figures to post without moderation or continue to post despite violating rules that would get "ordinary" users punished.

  • The WSJ reported that the company reviewed the program internally and found that it allowed people to consistently get away with bad behavior.
  • While XCheck was reportedly initially designed to create "quality control" measures for moderation issues on high-profile accounts, many prominent, famous and powerful people have instead been allowed to repeatedly violate Facebook's rules and given extra time and special permission to fix their rule violations without consequences.

Instagram makes some teenage girls feel worse about their bodies. Internal Facebook research into Instagram found that for girls who already feel badly about their bodies, about one-third of them feel worse after spending time on Instagram.

  • The company said in internal presentations that it knew teenagers blame Instagram for exacerbating anxiety and depression, and that the site makes teenagers feel worse about their bodies and social status.
  • Both Mark Zuckerberg and Instagram CEO Adam Mosseri have publicly denied that Instagram has negative social effects for teenagers, and the company has refused to turn over its own research on the issue, instead citing researchers who show more positive effects of social media in its communications with Congress.
  • Despite this research, the company has done little to implement changes that could make the platform less toxic; one employee is quoted as saying: "Isn't that what IG is mostly about?"

A shift away from news made the platform worse. The third WSJ story, published yesterday, revealed that when Facebook tried to shift its timeline to focus more on "meaningful social interactions" and less on news, the platform got more negative and divisive. (While the documents reveal Facebook's own knowledge here, this particular story is the one that most people probably know quite well.)

  • After the algorithm change, internal Facebook researchers discovered that publishers were now producing inflammatory, partisan and extremist content to increase engagement, and that users in general were engaging less on the platform.
  • When researchers and data scientists proposed fixes to reduce the pattern, Zuckerberg apparently was unwilling to embrace any that might also lower user engagement.

As a whole so far, these stories paint a picture of a company well-aware that its critics are often right, and yet it remains unwilling to admit it. But as one former researcher told the WSJ: "We're standing directly between people and their bonuses." If user engagement is directly tied to people's paychecks, is anyone really surprised?

— Anna Kramer (email | twitter)

A MESSAGE FROM FACEBOOK

Facebook supports updated regulations, including four areas where lawmakers can make quick progress:

  • Reforming Section 230
  • Preventing foreign interference of our elections
  • Passing federal privacy law
  • Setting rules that allow people to safely transfer data between services

Learn more

People Are Talking

Box's Aaron Levie is pleased with the California's recall election outcome:

  • "And wow, what a waste of time."

Ex-Theranos employee Erika Cheung thought the company risked patient safety:

  • "I left Theranos because I was uncomfortable processing patient samples [using company technology]."

Good leaders have high IQs. Nike's Phil Knight says Tim Cook has more than that:

  • "What separates the good from the great are intangibles such as character, compassion, courage — adjectives that apply to Tim."

In response to The Facebook Files, California Rep. Ro Khanna says social media needs regulation:

  • "We can start out with some very basic things: They should basically have to get any person's consent before collecting data."

Making Moves

Pagaya Technologies plans to go public via SPAC. The deal values the fintech startup at roughly $9 billion.

David Hijirida is Acorns' new president. He's a former Amazon exec and led the digital bank Simple Finance before it flopped.

Discord raised $500 million, and is now worth $15 billion. That's more than double its last valuation.

Jacqueline Beauchere is joining Snap as its first global head of platform safety. Beauchere worked at Microsoft as chief online safety officer.

Nina Gregory is leaving NPR for Clubhouse, where she'll work as its first head of news and media publishers. She worked as the senior editor at NPR's Arts Desk.

Marcela Martin joined Chegg's board. She's the CFO of Squarespace.

In Other News

  • DoorDash is suing New York City (again) over a law that requires delivery companies to give restaurants more customer data. DoorDash called the bill unconstitutional and said it hurts city residents' privacy.
  • An OpenSea employee was front-running NFT sales. They were buying items they knew were going to hit the front page of the website, effectively guaranteeing the price would go up. OpenSea said it's investigating.
  • Brazil shot down new social media rules. President Bolsonaro wanted to make it illegal to take down certain kinds of posts, including misinformation, but the Senate and Supreme Court nixed the idea.
  • On Protocol: The FTC has a lot more information on Big Tech's small acquisitions. The commission released details of the companies' purchases that have flown under the government's radar, among other findings.
  • On Protocol | China: Tencent does a lot of online charity, but that's not always a good thing. The platform runs a massive annual event that dominates the philanthropy world, but it's also left the company responsible for the charity of countless other groups.
  • Forget your password: Microsoft doesn't think you need it anymore. Instead, you can sign in to a Microsoft account using Microsoft Authenticator app, Windows Hello, a security key, or an SMS or email verification code.
  • Robinhood is taking a college road trip. The company is launching a nationwide marketing campaign this fall that aims to bring in more college students as customers.
  • Adobe is working on a payment system. The company said it'll add payment services to its ecommerce platform by the end of the year, and it's working with PayPal to process a few payment types.
  • Kazakhstan is homing in on foreign social media use. The country's parliament approved a bill that requires foreign social media companies to establish offices in the country. If they don't, they risk being blocked.

One More Thing

'Bezosism' and the future of online commerce

What's that word for Amazon's signature management style? Oh right, it's called "Bezosism," at least according to Wall Street Journal reporter Christopher Mims, who wrote about it in his book "Arriving Today."

The new book gets into everything that happens before a package arrives at your door: what technology was used to ship it, and what management style keeps the delivery moving toward you. Machines and humans are working together to get that practice down to a science, and, according to Mims, it's only just getting started.

A MESSAGE FROM FACEBOOK

Communication around elections has changed a lot in the last 25 years—the last time comprehensive internet regulations were passed. That's why Facebook supports updated internet regulations—like the DETER Act, to help protect election integrity against foreign interference.

Learn more

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