It’s been a tough year for Mark Zuckerberg and Facebook
Facebook’s data wound up in the hands of Cambridge Analytica, who used the information to target voters during the 2016 election. Facebook allowed Microsoft’s Bing search engine to see the names of virtually all Facebook users’ friends without consent and gave Netflix and Spotify the ability to read Facebook users’ private messages. Facebook downplays the data privacy breach, claiming that it never granted access to user data without permission.
You really can’t overestimate the value of user data
Personal data has become the most prized commodity of the digital age, and it’s traded on a vast scale by powerful companies in Silicon Valley and beyond. For those who may not understand what this is all about, it’s hard to overestimate the value of user data. Data helps us understand consumer buying habits, and it’s worth its weight in gold. It helps companies know how to market to whom. Facebook users make it easy by happily providing detailed information about their lives as they fill in fields with their new job titles, education levels, marital status, interests, hobbies, etc. This information can all be exported and shared with other companies.
Sharing consumer data: How this works
Let’s say you just got engaged, so of course you added this to the Relationship field of your Facebook page. The average couple spends $25,000 on their wedding, so there’s a lot of money to be made here. Now think of all the vendors that service the wedding industry—florists, bakeries, hotels, caterers, photographers, dress designers, wedding planners, etc.
The more upscale (You’ve already identified your education level, community and job title, which are affluence indicators), the more interested these vendors are going to be. They want to identify those couples who are most likely to be spending upwards of $25K so they can begin marketing to these potential new wedding clients.
Facebook executives have acknowledged missteps over the past year
Facebook understands they’ve got to regain user trust, and it requires stronger teams, better technology and clearer policies. One spokeswoman says it has found no evidence of abuse by its partners. Some of the largest partners, including Amazon, Microsoft and Yahoo, said they had used the data appropriately, but declined to discuss the sharing deals in detail. Facebook did admit to mismanaging some of its partnerships.
What’s next for Facebook?
Facebook is facing decelerating revenue growth—they’ve begun to saturate their market, at 1.74B users. Data privacy issues have taken a toll, but Facebook sees big opportunities in private messaging. Stories format and video. Facebook is investing in data privacy and messaging. Augmented and virtual reality represent a significant investment.
This last summer, California’s state legislature passed a groundbreaking bill that will give residents unprecedented control over their data. The law, criticized by pro-business groups like the Chambers of Commerce, will become law on January 1, 2020. Tech giants are racing to supersede the law with more industry-friendly legislation. A lot could happen before then.