In a February SEC filing, which includes an obligatory meditation on every conceivable risk to future profits, Facebook warned that “unfavorable publicity regarding, for example, our privacy practices … [or] the actions of our developers whose products are integrated with our products” could imperil “the size, engagement, and loyalty of our user base.”
True to form, the $500 billion social networking behemoth’s stock plummeted after news broke Mar. 16 that the data analysis firm Cambridge Analytica, which was hired by President Trump’s campaign in the summer of 2016, acquired data from about 50 million Facebook users, often without their direct knowledge. The data was reportedly used to create psychological portraits of voters for strategic political purposes, though the firm’s efficacy remains unclear. Facebook has blamed the episode on a researcher who collected the information under the guise of academic research (downloading information on both the people who installed its app and their friends), then provided it to Cambridge Analytica.
“The entire company is outraged we were deceived,” read a statement from Facebook this week. “We are committed to vigorously enforcing our policies to protect people’s information and will take whatever steps are required to see that this happens.”
Facebook’s foremost concern is not that many people will deactivate their accounts for more than a week in protest, which remains unlikely despite widespread dyspepsia over the matter. Instead, it is that a significant number of users will check in less often or air fewer details about themselves out of caution. Facebook, which also owns Instagram and WhatsApp, lives or dies by how well it can tailor ads to a persistent, ever-growing audience of people who meet each marketer’s detailed target demographic. Sure, you might be the product, not the customer. But you still pay for Facebook, just not in dollars. You pay in data.
There is no guarantee that this business model can survive. Facebook’s image has already taken a beating for its role in the spread of malicious disinformation from Russia, not to mention helping more run-of-the-mill inaccuracies spread from friend to friend. Still, people will always want to know what their sophomore roommate is up to in Reno or whatever happened their high school sweetheart. Going forward, they just might have to pay for that news with actual money. Absent a more palatable alternative, they will.
The future belongs to the first overtly “privacy positive” social network that, for a reasonable subscription rate, will default to a total lockdown in what any third party, including the platform itself, can see or use. There would still be advertising to keep subscription rates down, just as newspapers and magazines, this one included, still display ads to their subscribers. Users would simply be paying for the privilege of opting in to what they wanted advertisers to know, if anything.
Targeted advertising isn’t going away any time soon. But it stands to reason that there are things we’re perfectly happy to tell a social network in order to get ads that actually appeal to us. While I do not want a marketer targeting my age, relationship status, travel schedule or political affiliation—which Facebook guessed correctly, according to the ad preferences page, even though I’m fairly sure I never filled in that field—I genuinely want them to know that I’m a Phillies fan who lives in Washington, D.C. so that I’m shown ads for products I might actually want. Both of those precious factoids are easily gleaned from my Twitter feed. Or now this article. (To be sure, a less omniscient ad platform would not have nearly the precision that Facebook offers, so it would likely bring in less revenue. Though it occurs to me that there’s some advantage to targeting only the people who actively want to be exposed to your content.)
So how much would this cost users? Facebook estimates that it pulled down $20.21 in revenue per active user worldwide last year, for a total of $40.65 billion. That sum amply covered the $20.45 billion the company paid in costs and expenses. After taxes, Facebook posted $15.92 billion in profits. That per-user revenue was considerably higher in the U.S. and Canada, where a more developed and monetized audience netted $84.41 per user. That’s still less than what you might pay for Netflix or HBO, though perhaps more than many of Facebook’s 2 billion monthly users would be willing to shell out.
But even if subscriptions were prorated by market, and even if a privacy-positive network were to grow to Facebook-sized proportions, it would take less than $84.41 a month in the U.S. and Canada to turn a healthy profit. The trouble with relying on a lot of ads is that you need to store a lot of content. These days, that includes lots of video, with its lucrative “pre-roll” and “mid-roll” ads. To keep up with demand, Facebook has aggressively tried to get users and companies to post their content directly on the social network. When you get into the business of hosting large amounts of original content, however, your bill for storing and indexing rises quickly. Facebook doesn’t disclose its exact obligation for running massive warehouses around the world, but it’s safe to assume it’s a fair portion of its $20 billion in expenses. Without the burden of being a major content platform or pouring money into sophisticated algorithms to serve ads based on rigorous analysis of a person’s profile, we can estimate that $75 a year would cover the operating costs and generate a healthy profit.
Facebook is a black box that rarely leaks compared to, say, the federal government. So we do not know whether it has any sort of plan if it reaches a point where there’s no longer a compromise on data sharing that appeases both users and advertisers. The best we can do is watch for the clearest possible sign of major turmoil in Menlo Park, Calif. We’ll know the end is near when Facebook lifts its prohibition on making a fake account for your dog.
The buzziest tech product coming out of Silicon Valley is not another app or a new virtual reality experience. It’s a burger that contains no meat.
As many Americans attempt to reduce their meat consumption, startups like Impossible Foods and Beyond Meat are targeting restaurants and grocery stores with an approach to the burger that cuts out the cow, but still tastes like meat in an effort to curb the environmental impact of animal production. Funds have poured to the companies out of widespread concern over the 10 billion animalskilled for food in the U.S. each year and cattle’scontribution to greenhouse gas emissions. Although investors are loving it, big beef is starting to fight back, claiming that plant-based burgers should not count as real meat.
The U.S. Cattleman’s Association, (USCA) which represents the cattle industry, filed a petition in February with the U.S. Department of Agriculture asking for specific definitions for terms like “beef” and “meat.” According to the USCA, items labeled with such words should “inform customers that the product is derived naturally from animals as opposed to alternative proteins such as plants and insects or artificially grown in a laboratory.”
But to Ethan Brown, the CEO of Beyond Meat, words like “meat” should have more to do with the food’s chemical composition than an animal origin.
“You don’t need an animal to create meat,” Brown said. “Meat is very understandable — it’s lipids, it’s trace minerals and it’s water. None of those have exclusive residence in the animal, so why use the animal to organize them?”
Real meat or not, the new burgers have attracted a significant following. Founded in 2011, Impossible Foods has raised about $275 million, with investments from prominent firms, including Horizon Ventures, Khosla Ventures and Temasek Holdings. Beyond Meat, launched in 2009, has raised about $72 million in total, with investments from meat producer Tyson Foods, former McDonald’s CEO Don Thompson’s Cleveland Avenue, LLC, and Twitter co-founders Evan Williams and Biz Stone. The actor Leonardo DiCaprio invested in Beyond Meat last year, while Bill Gates has provided funds for both companies.
What sets the burgers from Impossible Food and Beyond Meat apart from other veggie burgers, which have been commercially produced in the U.S. since 1982, is that they provide the mouth-feel of real meat minus any guilt over animal slaughter and the harm it causes to the environment. Both companies use food technology to replicate real meat, producing burgers that smell, sear and bleed as though they were made entirely of beef.
Beyond Meat’s burger, made from yeast extract, coconut oil and peas, appears to bleed due to the addition of beets. Brown said he developed the burger after nailing down how to source the makeup of animal products in plants. The Impossible Burger contains wheat, coconut oil and potatoes in its burger, and relies on a key ingredient called heme for its meaty feel and bloody look.
“That emotional connection to craveability and responsibility at the same time has been a very powerful way for consumers to demand the product,” said David Lee, Impossible Foods COO and CFO.
Impossible Foods
Plant-based and lab-grown meats are unlikely to make a huge dent in beef production right away. Americans are projected to eat more meat than ever in 2018, according to the USDA, which predicts a person on average will eat 222.2 pounds of red meat and poultry this year in a sharp upward trend after meat and poultry demand slumped between 2007 and 2014. Lab-grown meats, in which animal stem cells are used to create meat products, are expected to enter the market within the next three years.
The average customer trying out an Impossible or Beyond burger are meat eaters looking for food that is better for their bodies and for the planet. Beef production makes up 65% of livestock emissions, which total about 7.1 gigatonnes globally, according toUnited Nations Food and Agriculture Organization. Cultivating beef requires four times the land of dairy production, and uses seven times the resources needed to produce pork and poultry, according to theInternational Food Policy Research Institute. The World Health Organization linked red meat with potentially causing cancer and urged caution in consuming it in a 2015 study.
Hope Perri, a vegetarian who has tried the Impossible burger on a few different occasions, said it is one of the most convincing meat alternatives she has ever tried — to the point where even she was questioning herself. Accustomed in her meat-eating days to burgers being cooked all the way through, the pink hue of Impossible’s plant-based burger skewed a little too close to raw meat the first time Perri tried it. The next time she ordered it, she asked for the burger to be cooked for a longer time.
On the whole, Perri, 25, doesn’t miss eating meat. But having more plant-based meat options that approximate the juicy, greasy taste of beef burgers makes it easier for her to go out with friends and enjoy a meal, she said.
“Sometimes you just want what everyone else is having,” she said. “Some meat alternatives taste too healthy, but with the Impossible burger it tasted just like a treat to yourself.”
While Impossible Foods and Beyond Meats hold similar ideologies, the companies diverge in distribution approaches. Beyond Meat, which has 150 employees and is looking to add to its food science and engineering teams, has infiltrated the market by placing its burger patties right in the meat aisles of about 25,000 grocery store locations in the U.S., from Walmart to Whole Foods. By contrast, Impossible Foods, which employs 257 workers, has introduced people to its animal-free meat by way of restaurants and popular chefs.
After landing on the menu at celebrity chef David Chang’s Momofuku Nishi and Traci Des Jardins’ restaurant Jardinière in 2016, and at select Umami Burger locations the next year, Impossible Burgers are now available at more than 600 restaurants in the country and will debut in Asia this year. Des Jardins, who has concerns about how current food production harms the environment, said the Impossible Burger sells better than the beef burger she used to serve at Jardinière.
“Food needs of the growing population are going to make us think about things differently,” she said. “Hunger is a big issue. Environmental impact is a big issue. We need new ways to produce food.”
Facebook is not just a place for you to scroll through Dogspotting posts and hate-read your ex’s status updates. It’s a gold mine for marketers — and that can present problems for people concerned about data security.
Facebook profits off of its 1.4 billion daily users in a big way: According to its most recent filings with the Securities and Exchange Commission, the average revenue per user in 2017 was $20.21 ($6.18 in quarter four alone). Users in the U.S. and Canada were worth even more because of how big the markets are.
“They don’t charge for Facebook, but they are able to sell insights based on how we use the platform and then serve it up for marketers,” says Jennifer M. Grygiel, an assistant professor of communications and social media expert at Syracuse University. “It sounds kind of simple, but the marketers are willing to strategically place advertisements, from selling sneakers to ads for politics.”
The sheer amount of data Facebook collects on its users is impressive. In 2016, the Washington Post identified 98 data points the site uses to target ads, including age, gender, school, square footage of home, relationship status, political leaning, where someone shops, if they like the Olympics and whether they own a motorcycle.
Though Facebook doesn’t directly sell your information, it does “let businesses and organizations connect with the people who are most likely to be interested in their products and services,” as its ad education portal explained. That sort of data is at the heart of the ongoing scandal surrounding Cambridge Analytica, a U.K. company that acquired the personal information of some 50 million Facebook users without their knowledge. Cambridge Analytica is accused of improperly accessing the secretly collected information and then using it to develop voter insight for clients (which may or may not have included Donald Trump’s 2016 presidential campaign).
Facebook has argued that the Cambridge Analytica debacle is not technically a breach because nobody broke in and stole passwords — a small subset of users consented to their data being collected through a quiz program, and the app then accessed their friends’ information. Facebook’s former vice president of ads, Andrew “Boz” Bosworth, posted Monday that it was serious about protecting its community and their data.
“While this was not a data breach, I agree that this was a breach of trust,” he wrote.
But some people are upset anyway and have begun deleting their Facebook accounts in response.
Scott Shackelford, the director of the Ostrom Workshop Program on Cybersecurity and Internet Governance at Indiana University, tells MONEY that certain users are worth more than others to Facebook — people with lots of friends, for example, have a bigger network and therefore provide more opportunities — but if the #DeleteFacebook movement gains enough steam, it could potentially hurt the company’s bottom line.
Shackelford compared it to Snapchat, which saw share prices sink after it unveiled an unpopular update and made an enemy of Rihanna when it approved a domestic violence-related ad.
“It can add up, particularly when more influential people start to give [the service] up,” Shackelford added.
In lieu of deleting their profiles entirely, wary Facebook users can check their privacy settings. But Shackelford warned that it’s difficult to recall your data once it’s out there.
“Ultimately, anything you post online is written in ink, and there’s really no way around that,” he said. “The information you’re putting out there really is incredibly valuable.”
Facebook Inc.’s privacy crisis has turned into a shareholder crisis.
The social media giant has lost over $60 billion in market value over the past two days, following revelations that personal data of millions of users was obtained by a data analytics firm. That’s more than the market capitalization of Tesla Inc. at around $52 billion or three times that of Snapchat owner Snap Inc. at about $19 billion.
Facebook shares tumbled 6.8 percent on Monday, the most in almost four years, and the selloff resumed on Tuesday with news that the U.S. Federal Trade Commission is reportedly investigating the handling of user data, and a report that Chief Security Officer Alex Stamos plans to leave. Shares fell 4.7% to $164.51 at 2:23 p.m. in New York.
The two-day rout is the worst since July 2012, the year of Facebook’s initial public offering at $38 a share.
Facebook is under fire this week over a controversy involving tens of millions of users’ personal information.
The drama began when the $500 billion company admitted Friday that data analysis firm Cambridge Analytica, which has close ties to President Trump’s election campaign and right-leaning megadonors, used data that had been collected from 50 million users without their consent. Facebook has since suspended Cambridge Analytica’s access to its platform.
Still, Facebook is taking a beating from commentators and investors alike. Facebook’s stock was down about 7% Monday afternoon and dropped another 2.5% Tuesday. Meanwhile, lawmakers in the U.S. and the U.K. are demanding CEO Mark Zuckerberg explain his company’s practices.
Here’s what to know about Facebook’s latest crisis.
What is Cambridge Analytica?
Cambridge Analytica is a political analysis firm that claims to build psychological profiles of voters to help its clients win elections. The company is accused of buying millions of Americans’ data from a researcher who told Facebook he was collecting it strictly for academic purposes. Facebook allowed Aleksandr Kogan, a psychology professor at the University of Cambridge who owns a company called Global Science Research, to harvest data from users who downloaded his app. The problem was that Facebook users who agreed to give their information to Kogan’s app also gave up permission to harvest data on all their Facebook friends, as well, according to the Guardian.
The breach occurred when Kogan then sold this data to Cambridge Analytica, which is against Facebook’s rules. Facebook says it has since changed the way it allows researchers to collect data from the platform as a result.
Christopher Wylie, a whistleblower who worked at Cambridge Analytica before quitting in 2014, claimed on NBC’s Today Show Monday morning that the firm was “founded on misappropriated data of at least 50 million Facebook users.”
Wylie added that Cambridge Analytica’s goal was to establish profiling algorithms that would “allow us to explore mental vulnerabilities of people, and then map out ways to inject information into different streams or channels of content online so that people started to see things all over the place that may or may not have been true.”
The data firm initially told British Parliament it did not collect people’s information without their content during a hearing in February, but later admitted in a statement to the New York Times that they did in fact obtain the data, though the company claims to have deleted the information as soon as it found out it violated Facebook’s privacy rules.
Cambridge Analytica issued a number of press releases in the days following the explosive media reports, saying that it “strongly denies the claims” it acted improperly.
“In 2014 we received Facebook data and derivatives of Facebook data from another company, GSR, that we engaged in good faith to legally supply data for research,” the statement reads. “After it subsequently became known that GSR had broken its contract with Cambridge Analytica because it had not adhered to data protection regulation, Cambridge Analytica deleted all the Facebook data and derivatives, in cooperation with Facebook… This Facebook data was not used by Cambridge Analytica as part of the services it provided to the Donald Trump presidential campaign.”
Facebook also issued a statement on its website Monday saying that the claim there was a data breach is “completely false” and Facebook users “gave their consent” when they signed up for certain kinds of apps, like the one Kogan exploited for data collection purposes. The social media juggernaut also maintained that “no systems were infiltrated, and no passwords or sensitive pieces of information were stolen or hacked.”
Who is the Cambridge Analytica whistleblower?
Christopher Wylie, a former employee of Cambridge Analytica, spoke out about the firm’s practices on the Today Show Monday morning after previously giving an interview to the New York Times. Wylie, who quit the company in 2014, said he believes it’s important for Americans to know what companies are doing with their personal information, as well as whether Cambridge Analytica’s practices influenced the democratic process.
“This was a company [Cambridge Analytica] that really took fake news to the next level by powering it with algorithms,” he said in an interview on the Today Show Monday morning.
Wylie also claimed that Cambridge Analytica has been in talks with Russian oil companies and employs a psychologist who works on Russia-funded projects. Any ties between Cambridge and Russia could complicate matters for Facebook, which has spent the past several months grappling with accusations that Moscow used it and other social media networks to meddle in the 2016 U.S. elections.
In a statement, Cambridge Analytica said Wylie left the company to found a rival firm.
“Their source is a former contractor for Cambridge Analytica – not a founder as has been claimed – who left in 2014 and is misrepresenting himself and the company throughout his comments,” the company said.
What is Cambridge Analytica’s connection to Steve Bannon?
Onetime Trump campaign advisor and Former White House Chief Strategist Steve Bannon was previously vice president of Cambridge Analytica’s board, according to the New York Times. Wylie told the Guardian that Bannon was his boss at Cambridge Analytica. Bannon has been involved in propping up right-wing political groups for years, having been the executive chairman and co-founder of Breitbart News, a far right-wing digital publication, until he stepped down from the position in January.
Additionally, Republican megadonor and onetime Breitbart News CEO Robert Mercer, who has funded numerous conservative campaigns at every level of government, invested $15 million in Cambridge Analytica. His daughter, Rebekah Mercer was also a board member of the political data firm. The Mercers originally supported Ted Cruz’ presidential campaign, but became patrons of the Trump campaign after Cruz bowed out of the 2016 presidential race.
The Times reported that through their family foundation the Mercer’s have donated more than $100 million to conservative causes — $10 million of which went to Breitbart News, and another $6 million that went to the Government Accountability Institute, a nonprofit founded in by Bannon.
People around the world are deleting their Facebook accounts this week in the wake of a privacy scandal involving recent U.S. elections, a personality survey and users’ personal data. But if you want to join them, beware: Logging off of the social media site can be a little tricky.
The #DeleteFacebook movement kicked off in earnest after a series of reports broke that a U.K.-based firm called Cambridge Analytica had obtained information from roughly 50 million Facebook users without their knowledge. According to the New York Times, the chain of events started in 2014, when about 270,000 people agreed to take an academic survey and use an app that gained access to their friends’ data. Cambridge Analytica reportedly obtained the resulting information and developed voter insight for its clients, which in 2016 reportedly included the Trump campaign. (The campaign recently told the Associated Press it didn’t use the Cambridge Analytica data, but CBS News reported it did for the primaries.)
There is life after Facebook. I’ve been Facebook free for several years and it is more than ok. I remain informed and connected. #BoycottFacebook#DeleteFacebook
Understand your options. You have a choice to make if you want to get off of Facebook: deactivate or delete. Deactivating is temporary — you can return to the site at any time. Deleting is forever — much (not necessarily all) of your content disappears, and you can’t ever get it back.
Be sure you’re ready. Leaving Facebook isn’t a no-strings-attached situation. Chances are, your account is tied to other apps like Spotify, OpenTable, and Tinder profile. If you want to protect your data but you’re not positive you want to take the radical step of totally deleting Facebook, you can try reviewing your app permissions or using a third-party program to scrub your activity.
Save the important stuff. Before you do anything, Select All recommends you download a copy of all your posts and photos. To do this, go to Facebook, click over to Settings, find General and hit “Download a copy of your Facebook data.” Afterward, Motherboard says you should tell your friends you’re leaving the site. Write down their birthdays and send them your contact info.
Go ahead and do it. Once your memories are safely stored on your hard drive and you’re ready to delete, head to this page. Take a deep breath and click the “Delete My Account” option. Facebook will let you recover your account for two weeks, but it’ll get to work on its 90-day process of scrubbing you from the site.
Be free. And maybe think about deleting Instagram, because Facebook owns that, too.
President Donald Trump may not have realized on Monday that his executive order would step on Russia’s toes. Its official target was Venezuela, specifically the country’s plan to create the world’s first state-backed cryptocurrency, the petro, which went on sale Tuesday.
But behind the scenes, the petro was in fact a collaboration—a half-hidden joint venture between Venezuelan and Russian officials and businessmen, whose aim was to erode the power of U.S. sanctions, sources familiar with the effort told TIME.
Trump’s executive order did not mention the petro’s Russian backers, whose role has not previously been reported. Citing economic sanctions that the U.S. imposed against Venezuela in August, the order simply made clear that anyone who buys or uses the new cryptocurrency would be in breach of those sanctions, as would anyone under U.S. jurisdiction who helps Venezuela develop the petro. “Any conspiracy formed to violate any of the prohibitions set forth in this order is prohibited,” the document states.
That may be why the Russians involved in this operation have been keen to remain in the shadows, in part through a clumsy online campaign to obscure their role in the project. But a TIME investigation has found Moscow’s fingerprints all over the creation of the petro, a scheme that reveals the range of Russia’s efforts to fight back against U.S. sanctions.
The new cryptocurrency, a form of digital cash that is supposedly linked to the value of Venezuela’s oil reserves, was launched on Feb. 20 during a ceremony in the presidential palace in Caracas. Nicolas Maduro, the socialist leader of Venezuela, declared that it would serve as a kind of “kryptonite” against the power of the U.S government, which he sarcastically referred to as “Superman.” Sitting in the front row at that ceremony were two of Maduro’s Russian advisers, Denis Druzhkov and Fyodor Bogorodsky, whom the President thanked for aiding his fight against American “imperialism.”
Both men have ties to major Russian banks and billionaires close to the Kremlin. But they were not the most senior Russians involved. According to an executive at a Russian state bank who deals with cryptocurrencies, senior advisers to the Kremlin have overseen the effort in Venezuela, and President Vladimir Putin signed off on it last year. “People close to Putin, they told him this is how to avoid the sanctions,” says the executive, who spoke to TIME on condition of anonymity. “This is how the whole thing started.”
The Kremlin did not respond to emailed questions about the petro, and the Finance Ministry in Moscow insisted in a statement to TIME that none of Russia’s financial authorities were involved in the petro’s creation. The Venezuelan government did not immediately respond to TIME’s requests for comment.
Miguel Gutierrez—EPA-EFE/ShutterstockA computer used to mine cryptocurrencies is seen during a governmental event in Caracas on Feb. 20, 2018.
Rivaling the dollar?
Ever since 2014, when the U.S. and its allies used sanctions to punish Russia for invading parts of Ukraine, the Russian elites have been desperate to get those sanctions lifted and, in the long term, to weaken the West’s ability to impose them in the future. One of the core aims of these efforts, as Putin outlined in a policy paper on global trade that was published in September, is to “overcome the excessive dominance” of Western currencies, and especially the dollar.
Putin’s advisers have been more open about their ultimate aim: “The reign of the dollar must end,” Andrei Kostin, the head of state-controlled VTB, Russia’s second-largest bank, said in a speech last month in Moscow, calling on Russia to promote other currencies for use in international trade. “This whip that the Americans use in the form of the dollar would then, to a great extent, not have such a serious impact on the global financial system.”
While not as ambitious as the Russian attempt in 2016 to influence the U.S. presidential election, the Kremlin’s move into cryptocurrencies reveals another layer of ingenuity in its struggle against what Putin’s advisers have called the U.S. “hegemony” in global affairs. The use of cryptocurrencies could, at least in theory, hurt the U.S. ability to control the flow of money in and out of sanctioned countries, thus chipping away at one of most powerful means of U.S. influence around the world.
There are currently more than 1,500 cryptocurrencies in existence, with a combined value of more than $320 billion, according to CoinMarketCap.com, which tracks this market. By far the biggest of them is Bitcoin, which accounts for over 40% of their total value. But new cryptocurrencies can be created and sold without involving the banks and regulators that normally police currency markets. That is partly what makes them attractive to people under U.S. sanctions. By flying under the radar of big financial institutions, cryptocurrencies can help these people move their money around securely, discretely and with less fear of having it seized by U.S. authorities.
In the long term, if more people start using this type of digital cash, and more businesses accept it as a form of payment, trade in cryptocurrencies could ultimately grow large enough to rival major currencies like the dollar. That is what many investors in this field are banking on. “It’s an explosive technology,” German Gref, one of the Russian state bankers closest to Putin, recently said of the innovations that make cryptocurrency possible. “It will turn a lot of spheres upside down.”
U.S. regulators are not so sure. Three of the main architects of the Russia sanctions program, who spoke to TIME for this article, said cryptocurrencies will not save major Russian banks or institutions from its restrictions. “The Russians just love to poke holes wherever they can, and they poke a lot of holes, or they try to,” says one of them, Brian O’Toole, who worked at the U.S. Treasury Department between 2009 and 2017. But with cryptocurrencies, he says, “they can only nibble around the edges,” by allowing some sanctioned officials or businessmen to move their wealth abroad.
Still, U.S. authorities have been watching these efforts closely since last summer, when the Kremlin’s interest in cryptocurrencies intensified. In the words of one of Putin’s top economic advisers, Igor Shuvalov, the President “caught the fever” for this technology after discussing it in June with a range of experts and advisers. He has since endorsed its potential in a series of public pronouncements, and Russian officials, lawmakers and entrepreneurs have rushed to make Moscow a global center for the cryptocurrency market.
The Venezuelan experiment
One of their more ambitious ideas has been to create a digital version of the ruble that would mimic key elements of Bitcoin. The Russian Central Bank has, however, resisted this idea, because it would risk destabilizing Russia’s actual currency, says the executive at the Russian state bank. “For Russia, it’s too dangerous,” he says. “If we say that the only reason we do it is to avoid U.S. sanctions, then the United States is definitely going to be displeased about it.”
So instead of putting the ruble at risk, Russia encouraged its ally in Latin America to run the experiment on itself, the banker says. “Venezuela has nothing to lose. For them it’s the only chance.” Indeed, the value of the Venezuelan currency, the bolivar, has been decimated by official mismanagement and the impact of U.S. sanctions, which were imposed last year to punish Maduro for his deepening authoritarianism. The crisis has also made Maduro’s regime deeply dependent on Russia for loans and investments.
“So Russia made its stronghold here in Venezuela,” says Armando Armas, an opposition member of the nation’s parliament, the National Assembly, which has tried in vain to block the creation of the petro. “Now they are using Venezuela as a guinea pig for their experiment,” Armas tells TIME by phone from Caracas.
The job of arranging the details for this experiment has gone to the two Russian businessmen, Druzhkov and Bogorodsky, who met with Maduro on Feb. 20 to discuss the preparations. Toward the end of the hourlong launch ceremony of the petro that day, Bogorodsky stood to give a short speech in Russian, congratulating the “beloved leader” of Venezuela for the “very risky but timely move” he had made.
The Russian connection to this experiment became all the more clear the following day, Feb. 21, when Maduro sent his minister of finance, Simon Zerpa, to inform the Russian government about the results. Zerpa met that day in Moscow with Russian Finance Minister Anton Siluanov and other officials, and he posted photos of the meetings on Twitter. “We deliver to Min. Siluanov updated information about our cryptocurrency,” the Venezuelan minister wrote.
En esta reunión hemos pasado revista a la cooperacion económica y financiera entre ambos países, con énfasis en el nuevo criptoactivo de Venezuela: El Petro. Entregamos al Min. Siluánov información actualizada de nuestra criptomoneda. pic.twitter.com/BYSFZvIdaf
The Russian Finance Ministry was, by comparison, less eager to promote these discussions. There was no mention of them on the ministry’s official website or its social media accounts. (The ministry did, however, take the time to post on Facebook that day about a jewelry fair attended by one of its officials.) In its statement to TIME, the ministry insisted that the Venezuelan cryptocurrency was “not discussed during the meeting or any time later on,” nor did the ministers talk about “any cooperation in this regard.”
It remains to be seen whether Russia drew any lessons from Venezuela’s experiment. But in recent weeks the authorities in Moscow seem to have cooled on the idea of an official cryptoruble. Two days after the creation of the petro, one of Russia’s leading news agencies, Interfax, reported on a letter that Putin had received from Siluaniov, his finance minister. The letter advised the President that, under some conditions, the government should allow the creation of a “private Russian cyptocurrency.” But it should avoid backing such projects with state money or resources, as the financial risks are still too high.
At least some of those risks derive from the reaction of the U.S. government, which has taken a hard line on cryptocurrencies under President Trump. “My No. 1 focus on cryptocurrencies, whether that be digital currencies or bitcoin or other things, is that we want to make sure that they’re not used for illicit activities,” Treasury Secretary Steven Mnuchin told CNBC in January. “So in the U.S., our regulations [state that] if you’re a bitcoin wallet, you’re subject to the same regulations as a bank.”
Under the radar
This position might help explain why Maduro’s Russian advisers have not always been keen to play up their involvement—or their connections to powerful business groups in Moscow.
After they met with Maduro on Feb. 20, state media in Venezuela identified these men only as representatives of a company called Aerotrading, which did not have a website at the time. When it appeared online the following day, the site provided no information about the company, apart from a banner that claimed it was “the biggest blockchain consultancy company,” referring to the technology that makes cryptocurrency possible. The company’s Twitter account, also registered on Feb. 21, contains only three posts. The last one reads: “We are pleased to welcome the #Petro cryptocurrency to the #blockchain ecosystem.”
Only after studying company records and speaking to other cryptocurrency investors was TIME able to identify the Russians whom Maduro had so warmly thanked for helping him create the petro.
Druzhkov, the younger of the two, appears to be relatively new to the world of cryptocurrency. He only founded his start-up in this field last fall, an online trading house called the Zeus Exchange. His partner in that venture, a wealthy Russian industrialist and art collector named Sergei Litvin, also seems to have no previous experience in cryptocurrency. But Litvin does sit on the executive board of a conglomerate that has been under U.S. sanctions since 2014. The conglomerate, Stroytransgaz, is controlled by one of Putin’s oldest friends, the billionaire oil trader Gennady Timchenko, who is also under U.S. sanctions.
Speaking to TIME by phone from Maastricht, in the Netherlands, where he was looking to expand his impressive collection of Renaissance art, Litvin said that Russia, like other countries, is watching the Venezuelan experiment closely. “We’re interested in how it will develop. We want to see the weak spots in such a project.” He insisted, however, that he and Druzhkov were only doing “technical analysis” of the petro, and were not involved in building it. Druzhkov, who posed for photos alongside Maduro during the petro’s official launch, declined numerous requests to speak with TIME about his role.
Cerramos acuerdo con Aerotrading, una de las más grandes empresas de Blockchain. Recuerden esta fecha compatriotas, será recordada como el día en que Venezuela dio un paso #AlFuturoConElPetro. Expectativa mundial por la primera Criptomoneda impulsada por un Estado. ¡Atentos! pic.twitter.com/WKulODa79s
His other Russian partner in this project was more forthcoming. A former executive at several major Russian banks, Bogorodsky moved to Uruguay around 2009 and became an informal ambassador of Russian culture across Latin America. From there he has maintained close business ties with Russia and other former Soviet states, at times partnering with government agencies on tech and infrastructure projects, according to his personal website and local news reports. His involvement with the Venezuelan petro began in December, around the time when Maduro announced his plans for the petro, and when Putin ordered his government to analyze the benefits of a Russian cryptocurrency.
“Russia has been moving in this direction for a while now, trying to draft laws to regulate cryptocurrencies,” Bogorodsky tells TIME by phone from Montevideo, the Uruguayan capital. But this process has become bogged down in bureaucratic details, while Venezuela “wanted to move fast,” he says. “We were ready to help.”
His company, Aerotrading—the one whose barebones website appeared the day after the petro—has served as Venezuela’s “technical partner” on this project, Bogorodsky says. But it has not been involved in the official talks between the Russian and Venezuelan governments, such as the meeting on Feb. 21 between the two countries’ finance ministers: “We have nothing to do with that.”
Venezuela began the official sale of the petro to foreign investors on March 20, and Maduro hopes to raise as much as $6 billion—a massive sum for an economy on the edge of ruin. But it will be hard to verify how much Maduro actually earns, and how that money would be used. Experts have warned that a lot of it could go toward propping up his regime and enriching his allies.
As for the U.S. government’s attempts to ban these investments in Venezuela, Bogorodsky couldn’t care less. “Any citizen of the world can do what he wants,” he said, laughing down the line from Montevideo. “We offer freedom of choice. So I think there will be lots of investors, big and small, from all over the world.”
Facebook Inc. is under investigation by a U.S. privacy watchdog over the use of personal data of 50 million users by a data analytics firm to help elect President Donald Trump.
The U.S. Federal Trade Commission is probing whether Facebook violated terms of a 2011 consent decree following the revelations that user data had been transferred to Cambridge Analytica without their knowledge, according to a person familiar with the matter.
Under the 2011 settlement, Facebook agreed to get user consent for certain changes to privacy settings as part of a settlement of federal charges that it deceived consumers and forced them to share more personal information than they intended. That complaint arose after the company changed some user settings without notifying its customers, according to an FTC statement at the time.
Spokesmen for Facebook and the FTC didn’t immediately respond to requests for comment.
If the FTC finds Facebook violated terms of the consent decree, it has the power to fine the company thousands of dollars a day per violation.
Facebook declined in New York trading, falling 3.2 percent to $167 as of 9:31 a.m. in New York. That follows a drop of 6.8 percent Monday.
The Facebook revelations have also prompted bipartisan, transatlantic concern. The U.S. Senate Commerce Committee announced Monday evening it would like a briefing on “the use and sharing of individual Facebook user data.” The chairman of a UK parliamentary committee announced Tuesday he was requesting that Facebook Chief Executive Officer Mark Zuckerberg, who has remained silent for days, appear before the panel to supplement prior testimony by the company’s executives.
Republican lawmakers, who normally resist regulation of private business, started coming down on the company as early as Sunday, with Senator Jeff Flake of Arizona calling the privacy violations “significant” and Senator Marco Rubio of Florida saying he was “disturbed” by many things about the company.
(LONDON) — Britain’s information commissioner plans to apply for a warrant to access the servers of Cambridge Analytica, which allegedly used data mined from Facebook to help Donald Trump win the 2016 presidential election.
Commissioner Elizabeth Denham said in a statement Monday that she would request the warrant because Cambridge Analytica had been uncooperative with her investigation into whether the company illegally acquired and used Facebook data.
“This is a complex and far-reaching investigation for my office and any criminal or civil enforcement actions arising from it will be pursued vigorously,” she said.
Denham launched her investigation after weekend reports that Cambridge Analytica improperly used information from more than 50 million Facebook accounts. Facebook has suspended the company from the social network while it investigates the claims.
Facebook said Monday that it has put its own audit of the claims on hold at the request of the U.K. information commissioner.
The New York Times and the U.K.’s Guardian newspaper reported that the U.K.-based company obtained Facebook account data without the users’ knowledge and retained it after claiming it had been deleted. Chris Wylie, who once worked for Cambridge Analytica, was quoted as saying the company used the data to build psychological profiles so voters could be targeted with ads and stories.
Cambridge Analytica says the information was acquired from a contractor who was contractually obligated to comply with data-protection laws. None of the data was used in the Trump campaign, the company said.
“I’m not accepting their response so therefore I’ll be applying to the court for a warrant,” Denham told Britain’s Channel 4. “We need to get in there, we need to look at the databases, we need to look at the servers and understand how data was processed or deleted by Cambridge Analytica.”
The scandal has also triggered calls for further investigation from the European Union, as well as federal and state officials in the United States.
The head of the EU parliament said Monday that the bloc will investigate Facebook’s role in the case.
“Allegations of misuse of Facebook user data is an unacceptable violation of our citizens’ privacy rights,” Antonio Tajani tweeted. “The European Parliament will investigate fully, calling digital platforms to account.”
U.S. Sen. Ron Wyden of Oregon and Connecticut Attorney General George Jepsen, both Democrats, have sought written responses from Facebook. Massachusetts Attorney General Maura Healey, also a Democrat, promised an investigation.
U.K. lawmakers have already called on Facebook CEO Mark Zuckerberg to testify before a parliamentary committee.
The death of an Arizona woman who was struck by one of Uber’s self-driving cars appears to be the first ever pedestrian fatality involving an autonomous vehicle.
An Uber spokesperson confirmed to TIME that the incident occurred Sunday night in the Phoenix suburb of Tempe and that no passengers were in the backseat. Uber said there was one vehicle operator in the front seat at the time of the collision. The company says it’s suspending its self-driving operations in Phoenix, Pittsburgh, San Francisco and Toronto as a result.
In a statement, the Tempe Police Department confirmed the vehicle involved was one of Uber’s driverless cars and that it was in autonomous mode at the time of the accident. “The vehicle was traveling northbound just south of Curry Rd. when a female walking outside of the crosswalk crossed the road from west to east when she was struck by the Uber vehicle,” the statement read. “She was transported to a local area hospital where she passed away from her injuries.”
Uber has been testing its self-driving program for years, notably in Pittsburgh, where it rolled out its first driverless fleet in 2016. Autonomous vehicles generated controversy that same year when a passenger operating a Tesla Model S in “autopilot mode” died in a crash in Florida, but Uber’s incident is likely the first time a bystander not driving the car was killed by the technology.
Uber CEO Dara Khosrowshahi addressed the incident in a tweet Monday afternoon. “Some incredibly sad news out of Arizona,” he wrote. “We’re thinking of the victim’s family as we work with local law enforcement to understand what happened.”
Some incredibly sad news out of Arizona. We’re thinking of the victim’s family as we work with local law enforcement to understand what happened. https://t.co/cwTCVJjEuz
scenz kuch esa haen 