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Mark Zuckerberg Marcio Jose Sanchez/Associated Press
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| Big questions over Facebook’s privacy pivot |
| Facebook plans to start shifting people toward private messaging and away from the public broadcasting on which its business has been built, Mike Isaac of the NYT reports: |
| • Mark Zuckerberg said yesterday that the company “would focus on private and encrypted communications, in which users message mostly smaller groups of people they know.” |
| • “Unlike publicly shared posts that are kept as users’ permanent records, the communications could also be deleted after a certain period of time.” |
| • “He said Facebook would achieve the shift partly by integrating Instagram, WhatsApp and Messenger so that users worldwide could easily message one another across the networks.” |
| • That, Mr. Zuckerberg said, would make Facebook a “living room,” rather than a “town square.” |
| Facebook’s declining public perception, fueled by fake news and data privacy scandals, is driving the shift. “Frankly we don’t currently have a strong reputation for building privacy protective services,” Mr. Zuckerberg said. To grow, and roll out new technologies like its reported cryptocurrency, the company needs to regain trust. |
| But plenty of questions remain: |
| • What’s the business model? Most of the company’s current profits come from openly sharing content and displaying targeted ads, which doesn’t fit with the privacy push. Mr. Zuckerberg argued that there were “all kinds of different commerce opportunities” available in a shift to privacy, but didn’t elaborate. |
| • Should its platforms be integrated? It’s not clear that users want Instagram, WhatsApp and Messenger to be combined. And Facebook could find itself facing allegations of anti-competitive behavior by tying them together. |
| • When will it happen? Mr. Zuckerberg had promised to improve Facebook’s privacy in the past and then was painfully slow to act. (A “Clear History” tool announced last year still hasn’t arrived.) |
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| Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London. |
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| Huawei sues the U.S., citing Constitutional violations |
| Huawei sued the U.S. government yesterday over a ban on government agencies using the Chinese telecom giant’s products because they could violate American national security. |
| The U.S. says Huawei products are a security threat, and could be used by Chinese authorities to spy on telecom networks — though it has yet to produce supporting evidence. Washington has pushed wireless carriers to avoid using the company’s equipment, and urged other countries to follow suit. |
| The lawsuit will force Washington to show its hand. “The U.S. Congress has repeatedly failed to produce any evidence to support its restrictions on Huawei products,” Guo Ping, Huawei’s rotating chairman, said in a statement. |
| Huawei also claims it’s being unfairly singled out in an unconstitutional bill of attainder — where legislation singles out a person or entity for punishment without trial. Mr. Guo said that Congress was acting as “judge, jury and executioner.” |
| But the strategy is risky. Its business practices and relationship with Beijing will be put under the microscope. And legal experts say the lawsuit on its own is unlikely to succeed: The Russian cybersecurity firm Kaspersky Lab lost a similar lawsuit two years ago. |
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The Federal Reserve Building in Washington Erik S Lesser/EPA, via Shutterstock
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| Washington eases its big bank rules |
| Federal regulators plan to roll back regulations on the country’s largest banks and financial firms, making it easier for them to gain approval to raise dividends or buy back their shares. |
| The Fed will reboot its “stress tests” that banks undergo each year. In particular, the Fed won’t give “pass” or “fail” grades for the portion of the tests that measure banks’ ability to keep lending during an economic crisis. |
| Big non-bank firms will also get an easier ride. A federal oversight panel will scrap the “systemically important financial institution” designation, which subjects non-bank firms like insurers and asset managers to intrusive oversight. (It’s largely symbolic: Only four firms had been labeled systemically important and all have successfully argued to shed that status.) |
| This is part of the Trump administration’s effort to relax financial regulations imposed in the wake of the 2008 financial crisis. Officials have sided with the banking industry in arguing that Obama-era rules stifled lenders’ ability to make loans and continue to grow. |
| But critics say it’s risky, and could lead to a less safe, less transparent financial system. Dennis Kelleher of Better Markets, a financial industry watchdog, told the NYT, “The markets are not going to have the full picture.” |
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