mark warner
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Income share agreements (ISAs) rose to public awareness this year — if measured in press articles and discussion on “VC Twitter” — after several years of niche experimentation among a small community of education advocates. An ISA in a financing model where the student participates in an education program without paying tuition, then pays a certain percentage of their income for a set period of time in return.
As I mentioned in my analysis of ISAs back in April, there is rapid growth in ISA pilots by traditional universities in the US and by vocational training programs but there’s also a lot of regulatory uncertainty. This isn’t a scenario where private sector leaders are seeking less regulation and activists wanting more: private sector leaders are actively lobbying more regulation so there are protections against discrimination and predatory behavior — many fear one bad actor ruining the reputation of the entire movement — and are seeking legal clarity on a range of issues like the tax implications of an ISA on all parties involved.
The ISA Student Protection Act is currently making its way through Congress with bipartisan sponsorship from Senators Todd Young (R-IN), Marco Rubio (R-FL), Mark Warner (D-VA), and Chris Coons (D-DE). The Department of Education’s Diane Auer Jones said the department is planning to pilot an ISA program, to which Senator Elizabeth Warren issued a letter demanding detailed explanation of the plan and the potential negative impacts.
I asked several of the entrepreneurs, investors, and policy experts at the forefront of ISAs to share their perspectives on the current state of the ISA movement:
Here’s what they had to say…
Tonio DeSorrento, Founder & CEO of Vemo Education
“What’s been really fascinating, in recent years, is the innovation that is occurring at colleges and universities that are using ISAs to support and improve student success.
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Facebook has changed its story after initially trying to downplay how it targeted teens with its Research program that a TechCrunch investigation revealed was paying them gift cards to monitor all their mobile app usage and browser traffic. “Less than 5 percent of the people who chose to participate in this market research program were teens” a Facebook spokesperson told TechCrunch and many other news outlets in a damage control effort 7 hours after we published our report on January 29th. At the time, Facebook claimed that it had removed its Research app from iOS. The next morning we learned that wasn’t true, as Apple had already forcibly blocked the Facebook Research app for violating its Enterprise Certificate program that supposed to reserved for companies distributing internal apps to employees.
It turns out that wasn’t the only time Facebook deceived the public in its response regarding the Research VPN scandal. TechCrunch has obtained Facebook’s unpublished February 21st response to questions about the Research program in a letter from Senator Mark Warner, who wrote to CEO Mark Zuckerberg that “Facebook’s apparent lack of full transparency with users – particularly in the context of ‘research’ efforts – has been a source of frustration for me.”
In the response from Facebook’s VP of US public policy Kevin Martin, the company admits that (emphasis ours) “At the time we ended the Facebook Research App on Apple’s iOS platform, less than 5 percent of the people sharing data with us through this program were teens. Analysis shows that number is about 18 percent when you look at the complete lifetime of the program, and also add people who had become inactive and uninstalled the app.” So 18 percent of research testers were teens. It was only less than 5 percent when Facebook got caught. Given users age 13 to 35 were eligible for Facebook’s Research program, 13 to 18 year olds made of 22 percent of the age range. That means Facebook clearly wasn’t trying to minimize teen involvement, nor were they just a tiny fraction of users.
WASHINGTON, DC – APRIL 10: Facebook co-founder, Chairman and CEO Mark Zuckerberg testifies before a combined Senate Judiciary and Commerce committee hearing in the Hart Senate Office Building on Capitol Hill April 10, 2018 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)
Warner asked Facebook “Do you think any use reasonable understood Facebook was using this data for commercial purposes includingto track competitors?” Facebook response indicates it never told Research users anything about tracking “competitors”, and instead dances around the question. Facebook says the registration process told users the data would help the company “understand how people use mobile apps,” “improve . . . services,” and “introduce new features for millions of people around the world.”
Facebook had also told reporters on January 29th regarding teens’ participation, “All of them with signed parental consent forms.” Yet in its response to Senator Warner, Facebook admitted that “Potential participants were required to confirm that they were over 18 or provide other evidence of parental consent, though the vendors did not require a signed parental consent form for teen users.” In some cases, underage users merely had to check a box to claim they had parental consent, and there was no verification of users’ ages or that their parents actually approved.
So to quickly recap:
Facebook targeted teens with ads on Instagram and Snapchat to join the Research program without revealing its involvement
The contradictions between Facebook’s initial response to reporters and what it told Warner, who has the power to pursue regulation of the the tech giant, shows Facebook willingness to move fast and play loose with the truth when it’s less accountable. It’s no wonder the company never shared the response with TechCrunch or posted a blog post or press release about it.
Facebook’s attempt to minimize the issue in the wake of backlash exemplifies the trend of of the social network’s “reactionary” PR strategy that employees described to BuzzFeed’s Ryan Mac. The company often views its scandals as communications errors rather than actual product screwups or as signals of deep-seeded problems with Facebook’s respect for privacy. Facebook needs to learn to take its lumps, change course, and do better rather than constantly trying to challenge details of negative press about it, especially before it has all the necessary information. Until then, the never-ending news cycle of Facebook’s self-made disasters will continue.
Below is Facebook’s full response to Senator Warner’s inquiry, and following that is Warner’s original letter to Mark Zuckerberg.
Additional reporting by Krystal Hu
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In response to TechCrunch’s investigation of Facebook paying teens and adults to install a VPN that lets it analyze all their phone’s traffic, Senator Mark Warner (D-VA) has sent a letter to Mark Zuckerberg. It admonishes Facebook for not spelling out exactly which data the Facebook Research app was collecting or giving users adequate information necessary to determine if they should accept payment in exchange for selling their privacy. Following our report, Apple banned Facebook’s Research app from iOS and shut down its internal employee-only workplace apps too as punishment, causing mayhem in Facebook’s office.
Warner wrote to Zuckerberg, “In both the case of Onavo and the Facebook Research project, I have concerns that users were not appropriately informed about the extent of Facebook’s data-gathering and the commercial purposes of this data collection. Facebook’s apparent lack of full transparency with users – particularly in the context of ‘research’ efforts – has been a source of frustration for me.”
Warner is working on writing new laws to govern data collection initiatives like Facebook Research. He asks Zuckerberg, “Will you commit to supporting legislation requiring individualized, informed consent in all instances of behavioral and market research conducted by large platforms on users?”
Meanwhile, Senator Richard Blumenthal (D-CT) provided TechCrunch with a fiery statement regarding our investigation. He calls Facebook anti-competitive, which could fuel calls to regulate or break up Facebook, says the FTC must address the issue and that he’s planning to work with congress to safeguard teens’ privacy:
“Wiretapping teens is not research, and it should never be permissible. This is yet another astonishing example of Facebook’s complete disregard for data privacy and eagerness to engage in anti-competitive behavior. Instead of learning its lesson when it was caught spying on consumers using the supposedly ‘private’ Onavo VPN app, Facebook rebranded the intrusive app and circumvented Apple’s attempts to protect iPhone users. Facebook continues to demonstrate its eagerness to look over everyone’s shoulder and watch everything they do in order to make money.
Mark Zuckerberg’s empty promises are not enough. The FTC needs to step up to the plate, and the Onavo app should be part of its investigation. I will also be writing to Apple and Google on Facebook’s egregious behavior, and working in Congress to make sure that teens are protected from Big Tech’s privacy intrusions.”
And finally, Senator Edward J. Markey (D-MA) requests that Facebook stop recruiting teens for its Research program, and notes he’ll push his “Do Not Track Kids” act in Congress:
“It is inherently manipulative to offer teens money in exchange for their personal information when younger users don’t have a clear understanding how much data they’re handing over and how sensitive it is. I strongly urge Facebook to immediately cease its recruitment of teens for its Research Program and explicitly prohibit minors from participating. Congress also needs to pass legislation that updates children’s online privacy rules for the 21st century. I will be reintroducing my ‘Do Not Track Kids Act’ to update the Children’s Online Privacy Protection Act by instituting key privacy safeguards for teens.
But my concerns also extend to adult users. I am alarmed by reports that Facebook is not providing participants with complete information about the extent of the information that the company can access through this program. Consumers deserve simple and clear explanations of what data is being collected and how it being used.”
The senators’ statements do go a bit overboard. Though Facebook Research was aggressively competitive and potentially misleading, Blumenthal calling it “anti-competitive” is a stretch. And Warner’s questioning on whether “any user reasonably understood that they were giving Facebook root device access through the enterprise certificate” or that it uses the data to track competitors oversteps the bounds. Surely some savvy technologists did, but the question is whether all the teens and everyone else understood.
Facebook isn’t the only one paying users to analyze all their phone data. TechCrunch found that Google had a similar program called Screenwise Meter. Though it was more upfront about it, Google also appears to have violated Apple’s employee-only Enterprise Certificate rules. We may be seeing the start to an industry-wide crack down on market research surveillance apps that dangle gift cards in front of users to get them to give up a massive amount of privacy.
Warner’s full letter to Zuckerberg can be found below:
Dear Mr. Zuckerberg:
I write to express concerns about allegations of Facebook’s latest efforts to monitor user activity. On January 29th, TechCrunch revealed that under the auspices of partnerships with beta testing firms, Facebook had begun paying users aged 13 to 35 to install an enterprise certificate, allowing Facebook to intercept all internet traffic to and from user devices. According to subsequent reporting by TechCrunch, Facebook relied on intermediaries that often “did not disclose Facebook’s involvement until users had begun the signup process.” Moreover, the advertisements used to recruit participants and the “Project Disclosure” make no mention of Facebook or the commercial purposes to which this data was allegedly put.
This arrangement comes in the wake of revelations that Facebook had previously engaged in similar efforts through a virtual private network (VPN) app, Onavo, that it owned and operated. According to a series of articles by the Wall Street Journal, Facebook used Onavo to scout emerging competitors by monitoring user activity – acquiring competitors in order to neutralize them as competitive threats, and in cases when that did not work, monitor usage patterns to inform Facebook’s own efforts to copy the features and innovations driving adoption of competitors’ apps. In 2017, my staff contacted Facebook with questions about how Facebook was promoting Onavo through its Facebook app – in particular, framing the app as a VPN that would “protect” users while omitting any reference to the main purpose of the app: allowing Facebook to gather market data on competitors.
Revelations in 2017 and 2018 prompted Apple to remove Onavo from its App Store in 2018 after concluding that the app violated its terms of service prohibitions on monitoring activity of other apps on a user’s device, as well as a requirement to make clear what user data will be collected and how it will be used. In both the case of Onavo and the Facebook Research project, I have concerns that users were not appropriately informed about the extent of Facebook’s data-gathering and the commercial purposes of this data collection.
Facebook’s apparent lack of full transparency with users – particularly in the context of ‘research’ efforts – has been a source of frustration for me. As you recall, I wrote the Federal Trade Commission in 2014 in the wake of revelations that Facebook had undertaken a behavioral experiment on hundreds of thousands of users, without obtaining their informed consent. In submitted questions to your Chief Operating Officer, Sheryl Sandberg, I once again raised these concerns, asking if Facebook provided for “individualized, informed consent” in all research projects with human subjects – and whether users had the ability to opt out of such research. In response, we learned that Facebook does not rely on individualized, informed consent (noting that users consent under the terms of the general Data Policy) and that users have no opportunity to opt out of being enrolled in research studies of their activity. In large part for this reason, I am working on legislation to require individualized, informed consent in all instances of behavioral and market research conducted by large platforms on users.
Fair, robust competition serves as an impetus for innovation, product differentiation, and wider consumer choice. For these reasons, I request that you respond to the following questions:
1. Do you think any user reasonably understood that they were giving Facebook root device access through the enterprise certificate? What specific steps did you take to ensure that users were properly informed of this access?
2. Do you think any user reasonably understood that Facebook was using this data for commercial purposes, including to track competitors?
3. Will you release all participants from the confidentiality agreements Facebook made them sign?
4. As you know, I have begun working on legislation that would require large platforms such as Facebook to provide users, on a continual basis, with an estimate of the overall value of their data to the service provider. In this instance, Facebook seems to have developed valuations for at least some uses of the data that was collected (such as market research). This further emphasizes the need for users to understand fully what data is collected by Facebook, the full range of ways in which it is used, and how much it is worth to the company. Will you commit to supporting this legislation and exploring methods for valuing user data holistically?
5. Will you commit to supporting legislation requiring individualized, informed consent in all instances of behavioral and market research conducted by large platforms on users?
I look forward to receiving your responses within the next two weeks. If you should have any questions or concerns, please contact my office at 202-224-2023.
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In a letter addressed to Canadian Prime Minister Justin Trudeau, Senators Mark Warner and Marco Rubio make a very public case that Canada should leave Chinese tech and telecom giant Huawei out of its plans to build a next-generation mobile network.
“While Canada has strong telecommunication security safeguards in place, we have serious concerns that such safeguards are inadequate given what the United States and other allies know about Huawei,” the letter states. The senators warn Canada to “reconsider Huawei’s inclusion in any aspect of Canada’s 5G development, introduction, and maintenance.”
The outcry comes after the head of the Canadian Centre for Cyber Security dismissed security concerns regarding Huawei in comments last month. The Canadian Centre for Cyber Security is Canada’s designated federal agency tasked with cybersecurity.
Next generation 5G networks already pose a number of unique security challenges. Lawmakers caution that by allowing companies linked to the Chinese government to build 5G infrastructure, the U.S. and its close allies (Canada, Australia, New Zealand and the U.K.) would be inviting the fox to guard the henhouse.
As part of the Defense Authorization Act, passed in August, the U.S. government signed off on a law that forbids domestic agencies from using services or hardware made by Huawei and ZTE. A week later, Australia moved to block Huawei and ZTE from its own 5G buildout.
Due to the open nature of intelligence sharing between the U.S. and its closest allies, the Canadian government would be able to obtain knowledge of any specific threats that substantiate the U.S. posture toward the Chinese company. “We urge your government to seek additional information from the U.S. intelligence community,” the letter implores.
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