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Facebook: The New King of Data Brokers?

Thoughts on the sale of user information.
Oct | 1 | 2014


Oct | 1 | 2014

fbiconPerhaps you’ve never heard of the world’s largest data brokers—and that’s exactly how they like it. For instance, Acxiom brands itself as “a marketing technology and services company.” That sounds fairly benign, and it’s certainly preferable to the sinister term data broker.

When it comes to data, though, today Acxiom can’t hold a candle to Facebook. There is a reason that the latter’s stock is flying so high. Unlike Apple, a company decidedly not in the data business, Facebook has certainly figured out how to monetize petabytes of unstructured user data. And Wall Street has taken notice.

The next logical, if not ethical, step for Facebook is to sell—or, as Facebook would put it, “open”—some of that data to those hungering for it: advertisers. As reported on Recode, Facebook has “reintroduc[ed] Atlas, the underused platform it bought from Microsoft last year. Facebook says Atlas can help marketers track the effectiveness of their ads around the Web; it also says it will allow them to buy ads on non-Facebook websites and apps, using Facebook targeting data.”

A few years ago, I argued that Zuck should charge users. I for one would pay $1/week for a premium, spam-free experience, and I suspect that millions of other Facebook users feel the same way. That never happened, and it’s not hard to read the tea leaves: Zuck’s believes his company can make more money via indirectly monetizing Facebook users through their data—and he appears to be right.

At least for now.

Facebook clearly possesses something that scores of established companies want: incredibly detailed user demographic and psychographic data. Want to find Millennials in Manhattan who like the HBO show Girls? No problem. Looking for male fans of the English prog rock band Marillion in London? Check. With 1.3 billion users (many of them legitimate and engaged), advertisers are frothing at the mouth. Atlas isn’t exactly a hard sell.

Mixed Feelings

As a capitalist, I can’t argue with what Facebook is doing. After all, no one forces anyone to share anything. Membership in any social network is not compulsory. Tweet and share at your own peril. I can’t fault a company for making money. In fact, publicly traded companies face fiduciary responsibilities to make money for their shareholders. And it’s not as if Zuck hasn’t been charitable.

On the ropes for so long, maybe privacy is finally making a comeback?

On the other hand, I’m still a bit queasy about so overtly being the product. Ditto for LinkedIn. Maybe I got it wrong in my open letter to Zuck. Instead of charging us for Facebook, maybe we users ought to be charging him for permission to use and sell all of our information, even in the aggregate.

It will be very interesting to see how ad-free social network Ello plays out. It’s no competitor to Facebook but its early growth is raising some eyebrows. On the ropes for so long, maybe privacy is finally making a comeback?

Cross-posted on Wired.

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