Facebook is under pressure from many quarters and the company’s CEO and founder, Mark Zuckerberg, would have us all believe from his recent open letter on privacy and vision, that he can combine his Instagram, WhatsApp and Facebook Messenger platforms with “end-to-end” encryption to create the ultimate privacy-protecting platform. But what’s the actuality and will it help him?
Zuckerberg’s new privacy-first vision letter called for a transparent, open process to set system policy.
The truth is, Mr Zuckerberg is trying to “preserve Facebook’s $10-20 billion annual revenue from spying on us", according to one cryptocurrency and fintech industry pioneer who has gone public himself on the matter.
That folks is the view of David Chaum, who is widely recognized as the inventor of digital cash (aka cryptocurrency) back in the 1980’s and has been dubbed “The Godfather” of cryptocurrency, who recently offered to assist Zuckerberg - if he was “serious about privacy.”
According to “Crypto and Blockchain for Beginners”, Chaum described eCash as “an anonymous cryptographic electronic money or electronic cash system, which could be used to transfer funds anonymously.”
His comments, which I have seen, came as Facebook’s stock was trading this Wednesday (March 20) on Nasdaq at 1.11pm in New York at $163.27 - up $1.70 (1.05%), implying a market capitalization of $466.03 billion. This puts it 25.3% ($55.35) lower than its 52-week high of $218.62 reached on July 25 2018, but $40.35 (24.7%) higher than its 52-week low of $123.02 witnessed on December 21 last year.
Currently leading the Elixxir project to provide scalable digital sovereignty, David Chaum, who has a PhD in Computer Science from UC Berkeley and taught at NYU Graduate School of Business and the University of California, is known for other fundamental innovations in cryptography, including privacy technology and secure election systems.
It is understood that Dr Chaum, whose Elixxir messaging and payment platform is currently rolling out its BetaNet, wrote a letter to Zuckerberg offering help and passed it to what is described as “a very influential mutual friend” in order to deliver to the CEO.
The billionaire founder of the social media platform, who is ranked as 8th top on Forbes’ rich list with a real-time wealth of $61.8 billion (as of March 16, 2019), has apparently failed to respond thus far. Or, perhaps he declined to respond or felt there was no need unless it was from the American regulators.
But then again he might have had a lot on his plate what with scrutiny from various regulators from the U.S. Securities & Exchange Commission (SEC) to Britain’s Digital, Culture, Media and Sport Committee (DCMS) at the Palace of Westminster, the Information Commissioner’s Officer, the U.K.’s independent authority set up to uphold information rights in the public interest, as well as a recent outage on the company’s platforms.
Then of course there was the situation late last year around the Pikini app, a failed app that located photos of users in swimsuits, whereby the DCMS got hold of sealed Californian court documents of sensitive internal Facebook records after they were leaked to the British parliamentary committee by one of the founders of the app company after he was in London. (Note: This case relates to Six4Three LLC v. Facebook Inc., CIV533328, the California Superior Court, San Mateo County (Redwood City)).
Facebook though has recently been trying to boost staff numbers in its blockchain-related activities, as evidenced by the company’s careers website listing 20 job openings earlier this March in a wide variety of roles related to the technology (e.g. threat investigator, data scientist, brand strategy, global security strategic partner).
In reaction though to this radio silence, Dr Chaum wrote a letter on the matter and in particular why Zuckerberg wrote his privacy letter and “why it won’t help him” according to the crypto veteran.
“He [Zuckerberg] is trying to do this by fooling those, mostly young people, that he says are moving off Facebook’s News Feed to messaging, into believing that end-to-end encryption means privacy,” wrote the crypto pioneer in his letter earlier this month.
Foreign Parliaments Exerting Pressure
But it is not the first time Mr Zuckerberg has been somewhat evasive. It was November 16, 2018, that the Digital, Culture, Media and Sport Committee in Britain wrote a letter to Zuckerberg asking him - even if he was “not able to attend in London” in late November (Facebook/Zuckerberg’s words) - would he “be amenable to giving evidence via video link instead?”
The DCMS correspondence stated that there were “important issues to be discussed” and Zuckerberg was the appropriate person to answer them.
“We call on you once again to take up your responsibility to Facebook users, and to speak to their elected representatives,” stated the DCMS letter, which was signed by the DCMS’ chair, Damian Collins, MP for Folkestone and Hythe, as well as representatives of foreign parliaments and Bob Zimmer, chair of the Canadian Standing Committee on Access to Information, Privacy & Ethics.
At the time of that correspondence (November 16) Facebook had declined the request by five parliaments - including Australia, Brazil, Britain, Latvia and Singapore - for Zuckerberg to attend a hearing of an “International Grand Committee” in London on 27 November last year.
Metadata Is The Key
“Metadata,” which Zuckerberg says Facebook will of course keep access to, is “key to this dangerous deception”, the crypto godfather contended.
“Metadata is everything except the exact words you use - who you message, how long each message is, precisely when each message is sent - combined with all the other data that Facebook captures and buys about you and your friends, including location monitoring," explained Dr Chaum, who has led a number of breakthrough projects as well as founding the International Association for Cryptologic Research, the cryptography group at the Center for Mathematics and Computer Science in Amsterdam, DigiCash, amongst other initiatives. So, we’re not exactly talking about a lightweight here.
But without protecting the metadata, end-to-end encryption may turn out to be a “ruse worse than no encryption at all” he argues. “We don’t need spies, whether government or corporate, in our "digital living rooms", which is how Mr Zuckerberg “techsplained messaging” [an Internet colloquialism] in his letter,” the Elixxir CEO stated.
“It does not matter whether the spies can understand every word; and it's probably even worse if they can't, since they’ll start inferring things from all the other data,” Dr Chaum added.
“And, make no mistake, those who maintain that they themselves have nothing to hide, or that the dangers of “terrorism” are now so extreme that people should not be protected in their private informational lives, or that evil-doers will foolishly reveal their plans on insecure platforms, are themselves providing cover for the more insidious danger to our freedoms,” he said.
Elephant In The Room
The elephant in the room is the huge damage already done, the executive contended. Fortunately, people are waking up to the reality that they have no digital privacy. But unfortunately and in the absence of alternatives, “this awareness itself has an enormous and profound negative impact”, it was pointed out.
“It is what privacy advocates have been most concerned about for decades, and which I have personally observed in totalitarian regimes - what is called the “chilling effect, he posited.
Referring to “Security Without Identification: Card Computers to make Big Brother Obsolete”, which was published in 1985 - years before the web - and revised subsequently in 1992 in Scientific American that famous scientists including Albert Einstein have contributed articles to, Dr Chaum wrote that he “predicted how the Internet would ultimately lead to a company like Facebook that would take harvesting metadata to its logical conclusion.”
Information service providers and other major interests, for example, could retain control over various information and media distribution channels, while synergistically consolidating their position with sophisticated marketing techniques that rely on gathering far-reaching information about consumers.
“Computerization has already allowed these and other organizations to grow to unprecedented size and influence; if computerization is continued along current lines, such domination might be further increased,” his letter asserted.
Pivoting to Privacy & Is There Hope?
“It’s easy to understand why Zuckerberg has likely not genuinely pivoted to privacy,” the crypto pioneer further ventured. “Exploiting user data and metadata generates the bulk of his company’s revenue. And, as long as there is a strong financial incentive, and weak oversight with regards to user privacy, any publicly traded, centralized company can be expected to exercise its fiduciary responsibility and make the same choices.”
The only real hope according to Dr Chaum is to “find a better incentive” and have the public “set the policy.”
“Privacy solutions are not years off, as Zuckerberg falsely suggests,” he stated. “In fact, though it is somewhat awkward for me to have to say here, I was the first to propose and deploy over the last decades privacy-protecting technologies, such as ‘end-to-end’ encrypted, metadata-protected messaging, anonymous digital currency, and vote-selling-proof online voting, among others.”
Turning to the recent new venture, Elixxir, Dr Chaum noted: “At Elixxir we’re already running an Alpha version of a new platform on blockchain that implements breakthrough improvements in these original technologies, smartphone to smartphone.” He claimed that the platform will have “full democratic user governance”, thereby making it “impossible for a central authority to seize control or censor communications.”
He revealed in his correspondence to the Facebook CEO that it was last week that he “extended an invitation” to Mr Zuckerberg to take part in testing this platform. “Despite my letter being delivered by a mutual friend, I have yet to receive a response," the Elixxir executive stated.
All this reminds me of when the chair of the UK's DCMS wrote to Zuckerberg this time last year asking him to testify over catastrophic failure of process exhibited by Facebook related to the Cambridge Analytica data breach debacle. Showing it is not letting up delving into social media networks, just yesterday (March 19) the Committee under its chair Damian Collins was taking evidence from Snapchat as part of its “Immersive and Addictive Technologies” inquiry. Ahead of the proceedings MP Collins stated: “Social media companies have a responsibility to cooperate with law enforcement agencies to protect their users.”.
Zuckerberg failed to respond to Collins’ in early 2018 to a letter sent to the company’s headquarters at 1 Hacker Way, Menlo Park, California, and Facebook representatives subsequently responded by saying that another executive would speak to the Committee at Westminster in London.
Instead, Mike Schroepfer, Facebook’s Chief Technology Officer would answer at the hearing investigating the impact of social media on recent elections. One might think that if Zuckerberg has nothing to hide then appearing to give evidence would not be such a problem.
Now according to The Observer, Facebook was facing fresh questions in recent days over data harvesting and what senior executives actually knew of Cambridge Analytica’s abuse around the data of users. Facebook has repeatedly declined to say when senior executives - including Zuckerberg - learned of the data breach by Cambridge Analytica.
Decentralized Platforms
“The beauty of a decentralized platform, however, is that it doesn’t really matter whether he accepts the invitation or not,” Dr Chaum explained further. “This technology is moving forward regardless, and for the first time it enables a scalable business model that requires neither centralized control nor access to sensitive data.”
So, what then is this new business model? Well, instead of a centralized, one-sided model that “preys on the public” by extracting and exploiting the information that defines their digital lives, he explained that: “We’ve created a decentralized, two-sided model that creates true value - and pays for itself - by empowering decentralized applications known as dApps [Decentralized Applications ] to provide services to users.”
One might well ask here what are dApps. Just think of having your car working away, transporting people whilst you’re at work, or having your computer using its spare capacity to serve businesses and people across the globe. Some posit that such a world is not that far away.
Furthermore, instead of things like payments, identity and contracts being the exclusive province of mediating institutions (intermediaries), dApps can be authored by anyone and made securely available to users without the need for a trusted authority.
Dr Chaum added: “Instead of nation states or huge corporations setting policy that is done by the users. And, beyond the basics, dApps can unleash all manner of informational services, such as pseudonymous reputations, superior trading platforms, and transparent “smart” contracts that execute themselves.”
As opposed to controlling apps and extracting 30% off the top of apps, a fee which is typically the standard percentage app stores take of income, Elixxir uses “my new privacy-protecting currency”, which in Dr Chaum’s letter noted “will prove technically second to none, to charge dApps solely for computing services.”
“In this way we expect the platform to release a growing torrent of entrepreneurial creativity. The same currency will be the basis of our consumer payment system, seamlessly integrated with instant messaging, with all the speed and convenience of existing privacy-less platforms,” the crypto pioneer contended.
Concluding his own letter with something that could be akin to a heaven or hell scenario going forward, Dr Chaum stated: “Mr. Zuckerberg’s false solution notwithstanding, today as the Internet turns thirty, we are at a crossroads in its development. We can continue down the path of Facebook and the other tech giants, leading to a more and more surveilled, yet less and less secure society - or we can choose the decentralized and democratic alternative and begin to realize the full potential of the Internet.”
That is where Elixxir is headed, he asserted, adding: “We aim to empower your digital sovereignty, and we invite you to join us.”
Facebook: Analyst Recommendations
Based on 40 analysts offering recommendations on Facebook’s stock over the last three months according to broker Markets.com, the overall consensus is a “Strong Buy”, with 85% (34 of them) rating it a “Buy”, 5% (2) a “Sell” and 10% (4) having a “Hold” stance.
Among these analysts, the average 12-month price target (PT) on the stock currently is $191.58 (a 17.3% upside at the time of writing), with the high PT being $225 (a 37.8% upside), and the low target at $115 (29.6% downside).
More information about the Elixxir platform and its project can be viewed in this video.
