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News Release

Last modified: Wednesday, May 16, 2012

IU law professor: Facebook IPO will be 'selling little bits of each of us'

FOR IMMEDIATE RELEASE
May 16, 2012

BLOOMINGTON, Ind. -- Facebook's founders and investors stand to make billions of dollars as the company proceeds with an expected initial public offering (IPO) on Friday. But one Indiana University Maurer School of Law professor noted that behind the astronomic financial projections lies an overlooked fact: Facebook is going to get rich off its users.

"When Facebook investors and founders rake in billions of dollars on Friday, they are making that money by selling little bits of each of us," said Fred H. Cate, a Distinguished Professor and director of the IU Center for Applied Cybersecurity Research. "What Facebook is selling is us. They're selling data, but data that more than 900 million of us volunteer on a daily basis.

"There is an old saying in Silicon Valley that if you are not paying for the product, you are the product," Cate said. "The Facebook IPO is just the most recent evidence of how true that is. Under the guise of enjoying 'free' services, millions of us volunteer the most intimate details of our lives to complete strangers. We let them listen in on our conversations, read our email, scan our pictures and ultimately take all of that information and package it for marketers."

Anyone who has ever posted anything to Facebook will get some idea on Friday of what such data are worth. The company, founded in 2004, has transformed the way people connect and share personal information. But, Cate noted, most users don't give enough thought to what they're actually sharing.

"When we share pictures, emails and other things with our friends and family, we're also sharing them with third parties who are not our friends," he said. "In fact, a number of recent studies have shown that even when we aren't aware we are sharing data, we probably are -- for example, sharing location and other personal information with iPhone and iPad app creators, sharing browsing information with Facebook just by visiting a website displaying a Facebook 'like' button. And if companies have your data, the government can get it with a simple subpoena, a National Security Letter or, as recent disclosures have shown, just by asking for it."

Cate, the author of "The Internet and the First Amendment and Privacy in the Information Age," argued that users -- notorious for ignoring privacy policies and user agreements -- don't fully take the time to understand what information they're providing or what companies can do with it once handed over.

"We have few opportunities to control our data," Cate said. "And even when we exercise them, for example, opting out of being tracked on websites, companies like Google have been shown to have developed code to go around our expressed preferences and collect the information anyway. Or companies change their privacy policies, resetting our privacy preferences or changing our rights. Facebook has been called on the carpet for this by its users repeatedly, the same users whose data it is about to turn into billions of dollars in equity."

Cate is available at fcate@indiana.edu or 812-855-1161.

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