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Facebook: the nature of the business… or the nature of the beast

Enrique Dans
Mar 30, 2018 · 5 min read

Facebook says it is to change how it manages its users personal data, starting with a page to allow people to manage their privacy in a supposedly simpler and more accessible way, along with the elimination of a service, Partner Categories (pdf), that allowed user data to be connected with external data services in Germany, Australia, Brazil, France, Japan, the United Kingdom and the United States for campaigns using hyper-segmented criteria.

These services allowed user activity data on Facebook to connect with, for example, sociodemographic or behavioral data obtained from loyalty programs or an infinity of databases that included house ownership, credit history, main household and other purchases, along with habits. This type of data, provided by data brokering companies such as Acxiom, Epsilon, Experian or Oracle Data Cloud, allowed companies to establish criteria that, in the light of the Cambridge Analytica scandal, have been criticized as excessively intrusive or detailed.

Are they? We might ask what has really changed over the years: the exploitation of user data is the foundation of marketing and always has been, even in the pre-internet era. Combining different data sources provides a much more multi-faceted picture of consumers that can provide a better analysis of their possible needs, interests or buying habits. Which is fine until certain limits are exceeded, which sadly the industry has rarely noticed. Since the Cambridge Analytica scandal, we are now even more aware — because in reality, this is something we already knew — that this data can be used to target people, based on a very thin segmentation, with advertisements and advertising campaigns that try to skew their voting intentions.

Facebook now seems to be saying that in light of its most recent scandal, that it understands why many users may be feeling uncomfortable with its advertising practices, and so has decided to end them as part of a campaign, a way to try to improve its image and show greater sensitivity toward privacy. Is Facebook about to change its spots, or just another reflection of the mentality that led it to cancel the launch of its smart speaker? Has Facebook done so as part of a greater commitment to privacy, or has it simply realized that right now might not be the best time to suggest people put a device in their living room that listens to everything they say?

Similarly, and as some pundits have already asked, has Facebook cancelled its Partner Categories because it is concerned about the threat to privacy it might represent, or because this service was neither particularly profitable and may have had to be eliminated anyway to comply with the data protection directive (GDPR) that goes into effect in Europe on May 25?

We know the answer: as I mentioned in my analysis of the Cambridge Analytica scandal, this is what Facebook does; it’s how it makes its money. It has developed a platform for third parties to use for marketing, and that marketing, partly thanks to Facebook’s drive to offer “better” products, will inevitably reach a point where users of the social network feel they are little more than a product to be bought and sold by third parties. That is the impression that more and more people have, and confirms what they already knew for a long time: that the idea of ​​connecting people is a pretext for incredibly segmented advertisements and based on data you never thought would be available to anyone, to attempts to skew your vote in an election based on God knows what criteria and interests.

And now growing numbers of Facebook users say they do not trust the company, and not so much over the Cambridge Analytica scandal but because, simply, what they know about Facebook’s usual activity confirms their worst fears, and is an easy story to believe. If we are told that all the data we handed over to Facebook have been given under some contracts that we, consciously or unconsciously, have signed with the company, this doesn’t help improve that image either. And when we see the even the pages of the very same newspapers that researched and denounced the Cambridge Analytica affair are totally truffled with trackers from Facebook, Google and others, even less.

Facebook’s fellow tech giants haven’t exactly rallied in support: Elon Musk, not Mark Zuckerberg’s best friend, has removed Tesla and Space X’s Facebook pages, which have more than five million followers, after a series of messages on Twitter, saying he had never bought advertising on Facebook or paid for any celebrity endorsement, and that he had never liked Facebook because “it gave him the willies”. Tim Cook, Apple’s CEO, also weighed in, referring to a 2014 letter, that Apple’s clients are not a product, unlike Facebook’s, and calling for privacy regulation on the basis that Facebook should have regulated itself, but now it was too late.

Sure, Apple seems to have a high regard for the privacy and management of its customers’ personal data (which has hindered its ability to attract machine learning talent), but this stance is really due to the nature of its main business, hardware. Apple has tried to develop a segmented advertising sales business with its iAd mobile advertising platform, launched in 2010 and ended in 2016 after many attempts to make it viable, which opens the company to charges of hypocrisy, say some critics.

When it comes down to it, Facebook’s privacy problems are due not so much to this or that scandal or carelessness, but to the very essence of its business. I’m sorry if I appear fatalistic about this, but Facebook proves that practically any business, given the chance to be the dominant player in its sector and to make incalculable profits by indulging in certain practices that many might consider unwise, will seize that chance, whatever those practices are.

It’s not impossible that over time, some kind of balance may be achieved, but this will depend on many factors, among them more scandals and responses to them. In short, we are where we are.


(En español, aquí)

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

Enrique Dans

Written by

Professor of Innovation at IE Business School and blogger at enriquedans.com

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

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