Facebook And Data Ownership

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When we go out for a drink, we don’t have just the one bar that serves everyone. People migrate to a bar that meets their need. If you go to a biker bar you may or may not  be comfortable – but it is your choice to stay, or find another bar that meets your agenda.

This same logic applies to member communities, such as social media platforms.

With that in mind, let’s take a look at the challenges facing Facebook (FB) and its management of your data today.

Yes, it is your data. You post it and you control your share – but not who can see it. Facebook does not sell your data or distribute it; they protect it from bots and people who try to mine it in mass to sell it to others in the open market. But is that enough?

Facebook has three (3) major challenges.

Challenge one: Who's real, and who's fake?

The first problem is who is real and who is fake. Fake profilers provide a wonderful haven for bad actors, political pulpits, cults, and hate speech to showcase their “message.” They are the magicians who can deceive and draw you in to their lair.

Facebook has to proactively and reactively find them and remove them. They do that today by responding to member complaints, their first line of defense. They are also working on Artificial Intelligence (AI) and facial recognition to pro-actively do this going forward.

But even with AI, what standards are they using to judge what is OK and not OK? Who is judge and jury? How do you control who sees my profile and insure they are not non-believers or offended for what I stand for? How can you protect the people with a different point of view, or too young to judge right from wrong?

The only answer is segmented communities. The segmented community is a Facebook community for families, for businesses, for political activists, for geographical scope, or special interests that enable the member to firewall and limit their exposure. For example: Family Facebook with young children, and/or optionally expand exposure, based on the user's discretion.

The segregation litmus test is: Are you going to let your children and grandchildren go on and be exposed to Facebook?    

Challenge two: When third parties get involved, who's responsible, Facebook or the app developer?

Second, apps add function, features, and the integration of technology to improve the community experience. They are crafted by third party developers and they are approved by Facebook to “Play by the Facebook Rules,” which includes consumer privacy. Most apps pull key information from your Facebook data, as well as request additional information enhancing the app functionality. They ask for your permission to do this. This data is assembled and maintained on app developer computers. However, this assembled collection of consumer opt-in data represent another source for breach of consumer privacy.

They, like Cambridge Analytica, can breach their Facebook Agreement and suffer the consequence. It is Facebook’s responsibility to insure thousands of third party app developers guard and protect user data because Facebook, not the app developer, owns the customer.

Some will argue with opt-in that it changes who really owns the customer. This is back to the Facebook and app developer contract. Today, when a cow escapes the barnyard and wonders on the road and is hit by a car, the farmer is liable. It is the farmer's responsibility to secure their livestock. Facebook shares the same liability with member data.

Challenge three: What role does advertising play?

Third, advertisers pushing messages to targeted members of Facebook. Facebook and other free sites can only exist through targeting their members for advertisers. This is a $40 billion dollar/year business with Facebook. When we considered that at Equifax in the 1990’s, we were way ahead of the bell curve.

Facebook does not sell the data to advertisers, like the old days, but contracts with the advertisers to accept the ad, the advertiser’s audience criteria, and then provides the Facebook platform engine to target specific Facebook users. Targeting means they will display the ad to the members who meet the advertiser criteria or execute an event.

Advertisers are charged based on views, which makes sense. Again, Facebook has the responsibility to screen every ad and every criteria to judge what is appropriate and what is not. Facebook is in full control of the member match and presentation. Again, Facebook are Judge and Jury on appropriateness.

If the ad is political, controversial and reflect all of the values of young, old, senior or politically correct groups, Facebook targeting can, with a high degree of accuracy, target the correct groups.

Or, can they?

They are not selling consumer data – they are targeting – but today, the consumer has no say as to what criteria they want to be targeted.

Facebook CEO Mark Zuckerberg ducked the question that one of his officers addressed earlier in an interview. The issues was that Facebook was considering charging members who wanted to opt-out of being targeted or receiving ads. We do this today on mobile phone apps; free apps have advertising and paid apps do not.

Premium Member services are growing trends and accepted practices in large member communities, such as Microsoft’s LinkedIn. Free only buys you so much. Want more? Expect to pay for it.

Nothing wrong with that business logic, except for the fact that customers are reluctant to start paying for something they get free today. In addition to segmentation, Facebook may have to consider free Facebook and Premium Facebook with more member protection and features.

Final thoughts

Lastly, a little note on Artificial Intelligence (AI). Facebook has recognized the need and has the bucks to nail this big time. AI is a double-edged sword. It can help protect consumers, but it can also give Facebook more targeting leverage on data they don’t own. This is back to who is judge and jury setting the rules governing the AI engines.

It is also difficult to regulate this degree of techno-granularity. From a member data perspective, does AI give me more help or does it represent more exposure? For example, Google is currently under anti-trust scrutiny for weighting their search algorithms in favor of their owned companies and advertisers.

Therefore, it is back to the consumers choosing which bar to frequent based on their lifestyle and preferences. If you're not comfortable at the "Facebook Bar," so to speak, then you may need to migrate to another that fits your needs.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , Technology , Financial Advisor Center

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