What is Facebook’s Relationship with China and How Has U.S. Data Been Exposed?

CCIOS.fwby James Scott, Sr. Fellow, Institute for Critical Infrastructure Technology (ICIT), Center for Cyber Influence Operations Studies (CCIOS)

In addition to the questions that Facebook must answer concerning its relationship with Cambridge Analytica and the breach of privacy and security on its platform, legislators must also inquire about its relationship with China and how the self-proclaimed “Social Network” is empowering the Social Credit System. China has been using Facebook to target US citizens with malvertising and influence operations through the Facebook platform. It is imperative that meaningful action and profound questions bring Facebook’s interactions with China into the public domain. Members of the House and Senate committees set to question Facebook CEO Mark Zuckerberg on April 10, 2018 and April 11, 2018 are some of the largest recipients of campaign contributions from Facebook employees and from a political action committee funded by the employees. Zuckerberg will face questions on April 10, 2018 at 2:15 pm from a joint hearing of the Senate Commerce, Science, and Transportation Committee and the Senate Judiciary Committee. Members of the Senate Commerce, Science, and Transportation Committee have received $369,000 from Facebook employees or affiliates since 2007. Members of the Senate Judiciary has likewise received $235,000 in Facebook contributions since 2007. Similarly, the House Energy and Commerce Committee will question Mark Zuckerberg on April 11, 2018 at 10 am. Members of the House Energy and Commerce Committee received nearly $381,000 in contributions tied to Facebook since 2007. Of the 55 members on the committee, all but nine have received Facebook contributions in the past decade. The average Republican received $6,800 while the average Democrat received $6,750. Committee Chairman Greg Walden, R-Ore., received $27,000, while Rep. Frank Pallone of New Jersey, the top-ranking Democrat, got $7,000 [1].

China was already beginning to leverage artificial intelligence, machine learning, and dragnet surveillance to influence the thoughts and actions of its people through the dystopian Social Credit system. President Xi established an ambitious plan to dominate in AI by 2030, overtaking the U.S. It would see the gross output from China’s AI industry increase 10-fold within the next three years, to 150 billion renminbi ($24 billion), and to 1 trillion renminbi by 2030. The influence that Cambridge Analytica exerted on the American and European populations by leveraging data obtained from Facebook could embolden China and others to continue development in manipulative AI-driven systems, and the case could inform their research as to what data is the most influential in controlling the thoughts, actions, and beliefs of a population. Further, China may already have directly and indirectly incorporated Facebook into its influence operations. Mark Zuckerberg needs to clarify precisely how Facebook plans to interact with China, where data will be stored, what information has already been shared, and how Chinese advertisers have influenced foreign markets [2].

According to a government transcript released in the fall of 2014, Lu Wei, director of China’s State Internet Information Office, said that  “foreign Internet companies entering China must at the base level accord to Chinese laws and regulations. First, you can’t damage the national interests of the country. Second is you cannot hurt the benefits of Chinese consumers. If China’s laws and regulations are respected, we welcome all of the world’s Internet companies to enter the Chinese market” [3]. The Facebook platform has been blocked in China since July 2009 following the Urumqi riots [4] [5]. Convincing half of China’s 668 million internet users to use Facebook would increase the platform by 20% and serve as a lucrative market for advertising and publishing. However, the China Cybersecurity Law and the recent rules from the State Administration of Press, Publication, Radio, Film, and Television follow nearly a decade of China restricting the internet freedom of foreign tech companies and their attempts to monitor and restrict the activities of journalists, critics, and online dissidents [6]. To operate in China, Facebook may need to share the location data of activists, journalists, whistleblowers, etc. Chinese authorities censor social media and the Internet through the Great Firewall and control over the Internet and media companies. These companies are forced to use algorithms to identify and prevent the spread of posts with sensitive or unfavorable content. Teams of human censors likewise flag and remove content unfavorable to the CCP. For instance, LinkedIn employs both algorithms and in-house censors to remove unfavorable Chinese content with the “aid” of two Chinese venture capital firms that funded its expansion. To re-enter China, Facebook would have to create the most expansive and sophisticated censorship apparatus on Earth [7]. At a minimum, Facebook would have to localize communities and content to ensure that China did not lose control of its people to the global community. Facebook could create its own Great Firewall within the localized platform, which would enable interactions between Chinese users and the outside world. In effect, the former would be algorithmically prevented from seeing some of the posts and pages created outside of China.

Stored data pertaining to Chinese citizens must be stored in China. The government can access the systems and data at its discretion. Facebook currently stores its user data in Oregon, North Carolina, Texas, and Sweden. It regularly complies with government requests for data as stated in its privacy policy:

“We may access, preserve and share your information in response to a legal request (like a search warrant, court order or subpoena) if we have a good faith belief that the law requires us to do so. This may include responding to legal requests from jurisdictions outside of the United States where we have a good faith belief that the response is required by law in that jurisdiction, affects users in that jurisdiction, and is consistent with internationally recognized standards.”

If Facebook stores any US citizen data in China, connects to any US databases or connects to any US systems, China will have the opportunity to either collect data or deploy malware that can laterally traverse the network and exfiltrate the information [6]. Facebook is not alone in potentially jeopardizing its users’ data by operating in China. In August 2014, Apple began storing user data from China in a local data center managed by China Telecom. Uber, LinkedIn, Evernote, Qualcomm, Microsoft, and numerous other companies have done the same. In fact, the Chinese government often requires that foreign companies “partner” with domestic counterparts. Even when data is not compromised, China leverages these unions as a means to increase the technological acumen of its companies and to further the Thirteenth Five-Year Plan.

Facebook has tried a multi-vector approach to gain reentry into the Chinese market. In 2016, Facebook Inc. developed a censorship tool that suppresses posts from appearing in news feeds in specific geographies. To most users, this “feature” was presented as a decision to downgrade publishers in Facebook’s newsfeed in response to the negative reputation the company received after various influence operations during the 2016 election. In actuality, the tool was likely introduced to secure Facebook reentry in China and to secure its position in Russia and Turkey [6]. Consider that most fake news shared on Facebook may have been disseminated by users, not publishers; yet, the newsfeed was censored in response to the spread of fake news [6].

Facebook insisted that the software would enable a third party to monitor the popularity and visibility of stories as they were shared across the network. The third-party partner would have full control to decide whether the monitored posts appeared in users’ feeds. Reports indicate that Facebook discussed offering the software exchange for reentry to the market; however, there is no indication that an actual offer was made to the authorities in China [5].

In 2016, Facebook spokesperson Arielle Aryah said, “We have long said that we are interested in China, and are spending time understanding and learning more about the country….However, we have not made any decision on our approach to China. Our focus right now is on helping Chinese businesses and developers expand to new markets outside of China by using our ad platform.” Facebook actively partners with Chinese companies to sell ads to Facebook users outside of China [8]. In light of the Cambridge Analytica scandal, Facebook altered its Privacy policies; however, how much US consumer information was already shared with Chinese firms that are subject to the Communist Party of China (CCP) and that work to further the Thirteenth Five-Year Plan? It is worth noting that every company that operates in China is required to have a CCP “liaison” at the executive level. This representative has full administrative control over IT systems and could easily harvest data to pass outside the network or plant malware to distribute down the supply chain. Even seemingly innocuous meta-targeting data used in advertising could be used to devastating effect in phishing and malvertising campaigns or influence operations.

In 2016, Zuckerberg met with the Chinese propaganda minister, who said he hoped Facebook could “share experiences and improve mutual understanding” with China’s internet companies. In context, the messaging meant to regain a foothold in China, Facebook needed to partner with a Chinese firm with strong ties to the state. In 2017, Facebook worked with Xiaomi in China to develop the Mi VR headset, which is modeled after Facebook’s Oculus Go. The real motivation behind development may have been to give Facebook a foothold in China [4]. In fact, Facebook’s vice president of VR Hugo Barra is a former Xiaomi executive who oversaw the Chinese firm’s rapid international expansion. Since 2010, Xiaomi has become one of the largest manufacturers of smartphones, tablets, fitness trackers, and apps [8] The brand has been criticized for spreading malware and spyware on its devices and for secretly stealing user data without their knowledge or consent [9] [10] [11].

Despite being banned in China, Facebook generates more than $1 billion a year, or about 4 percent of total revenues, from Chinese advertisers. According to a Mizuho report, “The Chinese government has been pushing for the globalization of Chinese brands so what FB does for Chinese advertisers is also strategic in order to get the license into China” [12].  Besides earning from advertisements paid by entities linked to the Chinese government, Facebook is also earning from online shops sourcing from AliExpress, an online retail service owned by Alibaba [13]. While China denies its people access to Facebook, it does use the platform to spread state-sponsored propaganda to foreign nations, including the United States. In fact, despite not having access to the Chinese population, Facebook’s biggest advertising market is Asia. Facebook pages dedicated to China Central Television (CCTV) and Xinhua, China’s leading state-owned broadcast network and official news agency respectively, reveal hundreds of posts intended for an English-speaking audience. Every quarter, Chinese government state agencies spend hundreds of thousands on Facebook ads. Chinese advertisements promote Chinses technology and products or stress the stability and prosperity of China compared to the “chaos and violence” of the rest of the world. For instance, they might use the platform to place stories of the idyllic Chinese countryside or iconic pandas next to coverage of a mass shooting in the United States because the contrast perceived by the viewer exploits a vulnerability in their perception and implants a favorable subliminal impression of China. China heavily focuses influence operation pages towards Internet users from developing regions such as Africa. Articles, which are presented as an alternative to the “horrors” of Western media, often focus around criticisms of the West, even when the content appears innocuous [14].

China has developed a big data Social Credit System that leverages networked databases, mass surveillance, and every meaningful economic and social interaction of its citizens into a utility of dragnet surveillance and unprecedented control. The system scores its citizens on metrics such as online purchases, daily behavior, personal connections and interactions, loyalty to the party, etc. Development of the system began in 2014, and it is already partially in effect. Starting May 1, 2018, Chinese citizens with poor “social credit” scores will not be permitted to travel by airline or train for up to a year. Offenses that can earn such a ranking include, but are not limited to, “spreading false information,” “causing trouble on a plane,” “using expired tickets,” “giving an insincere apology,” or even “parking a bicycle in a walkway.” The Social Credit system is far more insidious than something torn from George Orwell’s “1984.” It is a massive nefarious social network that incorporates minute behavioral data, facial recognition, integration with other applications, engineered censorship, and that aims to permeate every minute of its billions of users’ lives. That description could as easily apply to Facebook [15].

China may have already obtained information from “The Social Network” and applied the data directly or harnessed the algorithmically derived insights for its “Social Credit System.” The CCP system can regulate every aspect of a person’s life. If left unchecked, Facebook and other dragnet surveillance capitalists turned propagandists will develop the same capabilities. Totalitarian systems such as these depend on moral order and outer order. By dissolving both and guiding any attempt at restoring either, totalitarian systems control the population. Moral order is someone’s personal restraint, based on their religion, traditions, and personal values. Facebook already has an unprecedented level of influence over the moral order of everyday users. Outer order derives from the laws of government or a collective, and may not always align with a person’s inner values. How many lawmakers, including those interviewing Mark Zuckerberg in mid-April 2018, are dependent on funding from the social media giant or its stand-ins? How many bought into Cambridge Analytica’s abuse of the data of US voters and its influence operations against the country? When the moral order is eroded, power shifts to those who regulate outer order. When lawmakers are dependent on the whims of those who abuse power, as Facebook and Cambridge Analytica did, who controls the outer order, the laws, and the direction of the country? Who actually leads the United States [15]?

 

Sources

[1] Jackson, H. (2018). Facebook a big contributor to the committees in Congress that will question Mark Zuckerberg. [online] USA TODAY. Available at: https://www.usatoday.com/story/news/politics/2018/04/04/facebook-gave-most-contributions-house-committee-question-zuckerberg-also-got-most-contributions-fac/486313002/ [Accessed 6 Apr. 2018].

[2] Champion, M. and Zhei, K. (2018). What Facebook’s Data Scandal Really Means for Regulators. [online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2018-04-02/what-facebook-s-data-scandal-really-means-for-regulators [Accessed 6 Apr. 2018].

[3] Anon, (n.d.). Why Facebook is Banned in China. [online] Available at: https://www.investopedia.com/articles/investing/042915/why-facebook-banned-china.asp.

[4] Seetharaman, D. (2018). Facebook and Xiaomi to Launch Virtual-Reality Headset in China. [online] WSJ. Available at: https://www.wsj.com/articles/facebook-and-xiaomi-to-launch-virtual-reality-headset-in-china-1515455217?mod=mktw [Accessed 6 Apr. 2018].

[5] U.S. (2016). Facebook builds censorship tool to attain China re-entry: NYT. [online] Available at: https://www.reuters.com/article/us-facebook-china/facebook-builds-censorship-tool-to-attain-china-re-entry-nyt-idUSKBN13I03H [Accessed 6 Apr. 2018].

[6] Blau, W. (2018). The newsfeed and Facebook’s China problem – Wolfgang Blau – Medium. [online] Medium. Available at: https://medium.com/@wblau/facebooks-decision-to-downgrade-publishers-in-facebook-s-newsfeed-seems-like-a-knee-jerk-reaction-a9d1c02a676f [Accessed 6 Apr. 2018].

[7] Horwitz, J. (2016). The only way Facebook enters China is as a tool of the government. [online] Quartz. Available at: https://qz.com/644588/the-only-way-facebook-enters-china-is-as-a-tool-of-the-government/ [Accessed 6 Apr. 2018].

[6] https://medium.com/@wblau/facebooks-decision-to-downgrade-publishers-in-facebook-s-newsfeed-seems-like-a-knee-jerk-reaction-a9d1c02a676f

[8] Soo, Z. (2018). Facebook finds a way into China with Xiaomi tie-up on VR headsets. [online] South China Morning Post. Available at: http://www.scmp.com/tech/social-gadgets/article/2127545/facebook-finds-way-china-partnering-xiaomi-introduce-virtual [Accessed 6 Apr. 2018].

[9] Khandelwal, S. (2016). Xiaomi Can Silently Install Any App On Your Android Phone Using A Backdoor. [online] The Hacker News. Available at: https://thehackernews.com/2016/09/xiaomi-android-backdoor.html [Accessed 6 Apr. 2018].

[10] Kumar, M. (2014). Xiaomi Phones Secretly Sending Users’ Sensitive Data to Chinese Servers. [online] The Hacker News. Available at: https://thehackernews.com/2014/08/xiaomi-phones-secretly-sending-users.html [Accessed 6 Apr. 2018].

[11] Wei, W. (2014). Xiaomi Data Breach — “Exposing Xiaomi” Talk Pulled from Hacking Conference. [online] The Hacker News. Available at: https://thehackernews.com/2014/10/xiaomi-data-breach-hacker.html [Accessed 6 Apr. 2018].

[12] Cheng, E. (2017). The timing may be right for Facebook to enter China next year, analyst predicts. [online] CNBC. Available at: https://www.cnbc.com/2017/09/19/facebook-to-enter-china-next-year-analyst-predicts.html [Accessed 6 Apr. 2018].

[13] Alt Perspective (2017). Facebook Is Profiting From China, Thanks To Alibaba. [online] Seeking Alpha. Available at: https://seekingalpha.com/article/4137489-facebook-profiting-china-thanks-alibaba [Accessed 6 Apr. 2018].

[14] Mozur, P. (2017). China Spreads Propaganda to U.S. on Facebook, a Platform It Bans at Home. [online] Nytimes.com. Available at: https://www.nytimes.com/2017/11/08/technology/china-facebook.html [Accessed 6 Apr. 2018].

[15] Philipp, J. (2018). The Chinese Regime’s ‘Social Credit’ Dystopia. [online] Available at: https://www.theepochtimes.com/the-chinese-regimes-social-credit-dystopia_2473100.html.

 

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