Facebook’s ex-CSO, Alex Stamos, defends its decision to inject ads in WhatsApp

Alex Stamos, Facebook’s former chief security officer, who left the company this summer to take up a role in academia, has made a contribution to what’s sometimes couched as a debate about how to monetize (and thus sustain) commercial end-to-end encrypted messaging platforms in order that the privacy benefits they otherwise offer can be as widely spread as possible.

Stamos made the comments via Twitter, where he said he was indirectly responding to the fallout from a Forbes interview with WhatsApp co-founder Brian Acton — in which Acton hit at out at his former employer for being greedy in its approach to generating revenue off of the famously anti-ads messaging platform.

Both WhatsApp founders’ exits from Facebook has been blamed on disagreements over monetization. (Jan Koum left some months after Acton.)

In the interview, Acton said he suggested Facebook management apply a simple business model atop WhatsApp, such as metered messaging for all users after a set number of free messages. But that management pushed back — with Facebook COO Sheryl Sandberg telling him they needed a monetization method that generates greater revenue “scale”.

And while Stamos has avoided making critical remarks about Acton (unlike some current Facebook staffers), he clearly wants to lend his weight to the notion that some kind of trade-off is necessary in order for end-to-end encryption to be commercially viable (and thus for the greater good (of messaging privacy) to prevail); and therefore his tacit support to Facebook and its approach to making money off of a robustly encrypted platform.

Stamos’ own departure from the fb mothership was hardly under such acrimonious terms as Acton, though he has had his own disagreements with the leadership team — as set out in a memo he sent earlier this year that was obtained by BuzzFeed. So his support for Facebook combining e2e and ads perhaps counts for something, though isn’t really surprising given the seat he occupied at the company for several years, and his always fierce defence of WhatsApp encryption.

(Another characteristic concern that also surfaces in Stamos’ Twitter thread is the need to keep the technology legal, in the face of government attempts to backdoor encryption, which he says will require “accepting the inevitable downsides of giving people unfettered communications”.)

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This summer Facebook confirmed that, from next year, ads will be injected into WhatsApp statuses (aka the app’s Stories clone). So it is indeed bringing ads to the famously anti-ads messaging platform.

For several years the company has also been moving towards positioning WhatsApp as a business messaging platform to connect companies with potential customers — and it says it plans to meter those messages, also from next year.

So there are two strands to its revenue generating playbook atop WhatsApp’s e2e encrypted messaging platform. Both with knock-on impacts on privacy, given Facebook targets ads and marketing content by profiling users by harvesting their personal data.

This means that while WhatsApp’s e2e encryption means Facebook literally cannot read WhatsApp users’ messages, it is ‘circumventing’ the technology (for ad-targeting purposes) by linking accounts across different services it owns — using people’s digital identities across its product portfolio (and beyond) as a sort of ‘trojan horse’ to negate the messaging privacy it affords them on WhatsApp.

Facebook is using different technical methods (including the very low-tech method of phone number matching) to link WhatsApp user and Facebook accounts. Once it’s been able to match a Facebook user to a WhatsApp account it can then connect what’s very likely to be a well fleshed out Facebook profile with a WhatsApp account that nonetheless contains messages it can’t read. So it’s both respecting and eroding user privacy.

This approach means Facebook can carry out its ad targeting activities across both messaging platforms (as it will from next year). And do so without having to literally read messages being sent by WhatsApp users.

As trade offs go, it’s a clearly a big one — and one that’s got Facebook into regulatory trouble in Europe.

It is also, at least in Stamos’ view, a trade off that’s worth it for the ‘greater good’ of message content remaining strongly encrypted and therefore unreadable. Even if Facebook now knows pretty much everything about the sender, and can access any unencrypted messages they sent using its other social products.

In his Twitter thread Stamos argues that “if we want that right to be extended to people around the world, that means that E2E encryption needs to be deployed inside of multi-billion user platforms”, which he says means: “We need to find a sustainable business model for professionally-run E2E encrypted communication platforms.”

On the sustainable business model front he argues that two models “currently fit the bill” — either Apple’s iMessage or Facebook-owned WhatsApp. Though he doesn’t go into any detail on why he believes only those two are sustainable.

He does say he’s discounting the Acton-backed alternative, Signal, which now operates via a not-for-profit (the Signal Foundation) — suggesting that rival messaging app is “unlikely to hit 1B users”.

In passing he also throws it out there that Signal is “subsidized, indirectly, by FB ads” — i.e. because Facebook pays a licensing fee for use of the underlying Signal Protocol used to power WhatsApp’s e2e encryption. (So his slightly shade-throwing subtext is that privacy purists are still benefiting from a Facebook sugardaddy.)

Then he gets to the meat of his argument in defence of Facebook-owned (and monetized) WhatsApp — pointing out that Apple’s sustainable business model does not reach every mobile user, given its hardware is priced at a premium. Whereas WhatsApp running on a cheap Android handset ($50 or, perhaps even $30 in future) can.

Other encrypted messaging apps can also of course run on Android but presumably Stamos would argue they’re not professionally run.

“I think it is easy to underestimate how radical WhatsApp’s decision to deploy E2E was,” he writes. “Acton and Koum, with Zuck’s blessing, jumped off a bridge with the goal of building a monetization parachute on the way down. FB has a lot of money, so it was a very tall bridge, but it is foolish to expect that FB shareholders are going to subsidize a free text/voice/video global communications network forever. Eventually, WhatsApp is going to need to generate revenue.

“This could come from directly charging for the service, it could come from advertising, it could come from a WeChat-like services play. The first is very hard across countries, the latter two are complicated by E2E.”

“I can’t speak to the various options that have been floated around, or the arguments between WA and FB, but those of us who care about privacy shouldn’t see WhatsApp monetization as something evil,” he adds. “In fact, we should want WA to demonstrate that E2E and revenue are compatible. That’s the only way E2E will become a sustainable feature of massive, non-niche technology platforms.”

Stamos is certainly right that Apple’s iMessage cannot reach every mobile user, given the premium cost of Apple hardware.

Though he elides the important role that second hand Apple devices play in helping to reduce the barrier to entry to Apple’s pro-privacy technology — a role Apple is actively encouraging via support for older devices (and by its own services business expansion which extends its model so that support for older versions of iOS (and thus secondhand iPhones) is also commercially sustainable).

Robust encryption only being possible via multi-billion user platforms essentially boils down to a usability argument by Stamos — which is to suggest that mainstream app users will simply not seek encryption out unless it’s plated up for them in a way they don’t even notice it’s there.

The follow on conclusion is then that only a well-resourced giant like Facebook has the resources to maintain and serve this different tech up to the masses.

There’s certainly substance in that point. But the wider question is whether or not the privacy trade offs that Facebook’s monetization methods of WhatsApp entail, by linking Facebook and WhatsApp accounts and also, therefore, looping in various less than transparent data-harvest methods it uses to gather intelligence on web users generally, substantially erodes the value of the e2e encryption that is now being bundled with Facebook’s ad targeting people surveillance. And so used as a selling aid for otherwise privacy eroding practices.

Yes WhatsApp users’ messages will remain private, thanks to Facebook funding the necessary e2e encryption. But the price users are having to pay is very likely still their personal privacy.

And at that point the argument really becomes about how much profit a commercial entity should be able to extract off of a product that’s being marketed as securely encrypted and thus ‘pro-privacy’? How much revenue “scale” is reasonable or unreasonable in that scenario?

Other business models are possible, which was Acton’s point. But likely less profitable. And therein lies the rub where Facebook is concerned.

How much money should any company be required to leave on the table, as Acton did when he left Facebook without the rest of his unvested shares, in order to be able to monetize a technology that’s bound up so tightly with notions of privacy?

Acton wanted Facebook to agree to make as much money as it could without users having to pay it with their privacy. But Facebook’s management team said no. That’s why he’s calling them greedy.

Stamos doesn’t engage with that more nuanced point. He just writes: “It is foolish to expect that FB shareholders are going to subsidize a free text/voice/video global communications network forever. Eventually, WhatsApp is going to need to generate revenue” — thereby collapsing the revenue argument into an all or nothing binary without explaining why it has to be that way.


Source: TechCrunch

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