How Facebook is Losing Its True Value
Facebook has found itself in some serious trouble. The social media giant has gotten itself into a real issue with a company called Cambridge Analytica, which apparently got pretty easy access to the personal information, likes, preferences, and all other social media data from over 50 million Facebook users, and then has turned around and used it to seed dissent and anger leading into the 2016 election of Donald Trump. There is potential they had a had also in things like Brexit vote and elections around the world, using social media data to create dangerous, hurtful campaigns that appeal to people’s fears and underlying ideals, targeting them and setting people on edge.
The issue of course is privacy. The 50 million records is a big deal, the way they were obtained is a big deal, and the way Facebook has dealt with it a big deal. In the words of one commentator in this story from Vanity Fair, Facebook is “F–ked”. Any dreams for Zuckerberg to get into politics is now pretty much on this ice, moves to get back into China full on forgotten, and the trust of their user base damaged significantly.
I think though that it goes a little further. While everyone calls Facebook a social media giant, what they really are is a personal data giant. Facebook’s income is derived from taking your personal data, and selling it to targeted marketers, people who want to reach a certain group of people to try to sell them something. It’s often quite xenophobic and racist in application, with some companies choosing to run ads only for white people in certain areas, promoting products like housing or high end products. Others like Cambridge Analytica and the Russian Social Media Farms have found it a very good way to target market their hateful and divisive messages to certain core groups who will respond well to certain types of memes and media.
Your personal data is Facebook’s real product, it’s what they sell day in and day out. This whole mess brings that entire business model into question.
What’s happened is that Facebook has too much information on most people, and uses it for profit. It’s how they both offer Facebook as a “free” service, and also make 40 billion in top line revenue and retain almost half of that as profit. Facebook is very influential in what people see and read, and had sold that to others who have manipulated your emotions, your fears, and your desires in a manner that has divided the world like at no other time.
Since most of Facebook’s financial income is based on this model, the whole Cambridge situation is perhaps a very big nail in it’s coffin. it is very likely (if not inevitable) that privacy lawsuits, government inquiries, and finally strict regulation will come into play. The Europeans are likely to lead the way, with strong privacy rules in place, it’s quite likely that Facebook and Cambridge both have crossed the line in this situation, and will face sanctions. It will also certainly drive hardcore regulation to limit Facebook’s ability to use your data and sell “use” of that data in the future, even as part of a Facebook based campaign.
Moreover, there will the questions of Facebook tracking you online. Facebook can an does track the websites that you visit, usually based on things like comment sections run by Facebook or “like” buttons hosted by Facebook themselves. My own site here is somewhat guilty on that last point. As a result, if you are logged in, Facebook knows who you are. Now, even if you aren’t actually logged into Facebook (most people forget to log out, it’s not obvious to do it) they still log things like your IP and other browser information, and when you log back into Facebook they can reconcile what you did while logged out and pin it back into your profile.
Don’t believe me? Go to Google and search for a product or service you never would normal search for (say like “adult diapers” or “hand made guitars”). Click through to the top 10 sites that Google returns to you. Then go to Amazon, and search for the same products there. Now return to Facebook, and watch the ads. Give it about 24 hours, and you will start to get creeped out.
Big data is stalking you. Your need for adult diapers and high end guitars is used by Facebook to add you to narrow focus target groups for advertisers. You have been “marked”.
The heat is on. While it’s been a free for all in user access data up until now, this whole Cambridge Analytica (and the Russian bots using similar methods) is almost certainly going to drive a strong public and political backlash. Facebook’s main income is derived from this, and their sky high stock price is based on it. Already, they have lost 8% in value since this started, and combined with reports that Zuckerberg has been selling stock in Facebook at a high rate gives pause to investors as well. There are plenty of calls for people to delete their facebook accounts, delete the app, and stop using the site.
Is Facebook at it’s end game?