Originally published April 13, 2018.
Social media forever changed the manner in which people interact with the world and communicate with one another. It also sparked a colossal shift in the ways that businesses market and advertise themselves. Facebook stands out as the clear leader in this space, with its massive global user base, expansive advertising network, and array of business features.
Facebook took the world by storm and continues to do so. And why is this? For many of us, Facebook offers real value. It allows us to stay connected with the people we care about, know what’s going on in the world, and find and purchase products and services we like. For businesses including startups and professional service providers, it offers an efficient way to market directly to a focused target audience.
But there’s no such thing as a free lunch. There was no way that Facebook could just magnanimously provide its service for free. Like any business, it needs to generate revenue and profit to survive. Once Facebook went public in 2012, that duty extended to its shareholders. The single most important way that Facebook generates revenue is by selling digital ad space to advertisers.
When news about Cambridge Analytica broke several weeks ago, you would have thought that it was the crime of the century. But here is a very important distinction that needs to be made: the Cambridge Analytica situation was essentially an instance of data misuse. Aleksandr Kogan, the researcher who created the now infamous app, harvested the personal data of millions of Facebook users and violated Facebook’s policies. Facebook claims that Kogan lied to consumers, by telling them the data would be collected for research purposes and not commercial use. Cambridge Analytica compounded that violation by failing to remove and destroy that private stored data when told to do so.
Facebook has since eliminated the means by which Cambridge Analytica was able to obtain that data in the first place. It no longer allows third-party access to the data of a user’s friends and family. However, there is always the potential that another bad actor could take advantage of other loopholes in Facebook’s security to access private data and use it for malicious purposes.
Still, this controversy has had the positive effect of highlighting the importance of protecting consumers’ online privacy.
The ongoing debate about online privacy and the use of personal data will continue and should result in better privacy control overall.
Contrary to popular belief, Facebook never actually sells your data. They sell the ability for advertisers to target you based on your personal information, but in a completely anonymized manner. Facebook does partner with major data brokers such as Acxiom and Experian, which do both collect and sell your personal information. All of this data is obtained legally, and often even comes from surveys and forms that you willingly filled out. These companies also use personal data for more altruistic endeavors, such as combating fraud and identity theft. If nothing else, the Cambridge Analytica controversy clearly demonstrates a need for strong limits on how your data can be gathered and how it can be used.
While Facebook does not sell your personal data, it does profit from it. So do countless other companies. And all of these companies, without question, have a duty to protect their users. But truthfully, when was the last time you read all the fine print on a new app you installed? Actually read the terms of your latest mobile update? In our ever-connected world, our own privacy often becomes an afterthought, even for ourselves.
The reality of the situation in our society today is that we have significantly less privacy than we assume. Everything happens electronically. Cameras help protect people by monitoring what’s going on on city streets. iPhones and Android devices monitor everywhere you go.
All this is part of the big data that’s being collected and used for marketing.
Potential regulation or internal policies at large companies that control data like Facebook and Google will determine how that data can be gathered, how it should be stored, and who can have access to that information.
The question is, what would that regulation look like?
Mark Zuckerberg has stated numerous times that Facebook would not be opposed to regulation if it means a safer, more secure environment and a more positive experience for its users. Congress probably won’t prohibit Facebook from selling advertising because that would take away a business opportunity that Facebook has worked hard to generate and that has value to consumers and businesses alike. However, Congress might step attempt some limited data privacy rules.
Facebook could offer a premium service. Users could pay a certain monthly fee to enjoy the complete Facebook experience without any ads. It would be akin to paying for premium streaming services such as Hulu or Spotify, with ads removed.
Your data will be available for marketers to use to target consumers in advertising campaigns. The question is whether the detailed personal information will be hidden from the advertisers and controlled by companies like Facebook, or whether bad actors and hackers will be able to access that data to use it to manipulate political ends or steal from vulnerable people.
The issues at stake are profound and make clear that it is time for all of us, especially those of us building startup businesses, to usher in a new era of data security.
We as individual consumers must take ownership and be fully cognizant of our online security. This idea extends to business owners as well. Businesses large and small must embrace ethical data usage and commit to doing everything in their power to protect customer data, and provide a safe and secure online experience. And, moreover, to keep control of sensitive personal data completely within the hands of its rightful owner: the consumer.