You Are Not Facebook's Customer, You Are Their Product

[ Posted Monday, April 9th, 2018 – 16:19 UTC ]

There's an important distinction to make before Mark Zuckerberg sits down in front of Congress to answer questions about what Facebook is, what they do, and what they've been up to recently (that they really shouldn't have been). As more and more political scandals swirl around Facebook, and as Zuckerberg prepares to answer for his company's actions, both the congressmen who will be questioning him and the public at large need to understand something that has long been somewhat of a rule of thumb in Silicon Valley. Because anyone who uses an online service that is free should stop to consider this fact. You sign up for Facebook (or whatever other service or webpage) and you are not asked for any money. What this means is that you are not their customer, in the traditional sense, instead you are merely their product. You and your data are a commodity which the company monetizes and sells to whomever is willing to pony up some money to see it.

This is not an abstract issue -- it is Facebook's (and many other companies') basic business model. They lure you in with the promise of free stuff, and when they get enough takers then they bundle the data they've collected together and sell it to other companies. They don't own you, per se, but they do own your data. All of it. After all, you voluntarily gave it to them for free.

Anyone who has used Google or Facebook or any of a myriad of other free online services has seen tangible evidence of this at some point (it's pretty hard to miss, really). You search the web for some particular subject -- stamp collecting, say. You browse a website or two with stamp collecting products, or maybe you go on eBay and search for stamp auctions. After your boss pokes her head in your door and asks you what the heck you're doing, you put your hobby aside and return to whatever it is that you are supposed to be doing with your computer. But a funny thing has happened -- no matter where you go on the web for the next few days, whenever you see ads, many of them are for stamp collecting products.

Your data has been instantly monetized and sold, and as a direct result targeted advertising has zeroed in on you, in the hopes of convincing you to spend some money. Again -- you are not the customer, you have become the product.

Now, getting ads for stamp albums is fairly benign. After all, you did express an interest in the subject, so perhaps you'll click on a few of these ads and be happy that you have found what you were originally looking for. But it's not just hobbies or other shopping interests that are treated in such a fashion.

Think about all the information a regular Facebook user makes available to the world. This is before third parties try sneaky ways (such as a seemingly-innocent quiz or survey, which was precisely how Cambridge Analytica wormed its way into harvesting data on tens of millions of Americans). Have you ever posted about anything in any way tied to politics? Have you ever shared anything on Facebook which would pigeonhole such data as: where you live, work, or shop, what you regularly read for news and information, what you feel about any hot-button issue of the day, what your financial status is, what brands you enjoy buying, what music you like to listen to, whether you own guns or not, what your health status is, who your relatives are, who your friends are, who your lovers are, or any number of other bits of personal data? Of course you have. What else is Facebook for, after all?

This allows Facebook to build up a demographic profile of you with increasing detail and depth. And all sorts of companies gladly use such data not only to target you with ads for their products, but also to target you with political ads and news items (whether fake or real). It's a treasure trove of data, just waiting for people to pay Mark Zuckerberg for the privilege of mining it. This is how Facebook makes a lot of money by providing a "free" service.

Zuckerberg will doubtlessly face a whole slew of hostile questioning over his company's practices in the next few days. But what can Congress actually do about it? Dark mutterings are heard about "regulating Facebook," but what would that actually mean? After all, we're not talking about some sideline business of the company, this is Facebook's basic business model. So any attempt to change it too drastically is going to be met with howls from Silicon Valley companies who will (rightly) see it as a threat to the way they've been making piles of money for many years now.

There is a spectrum of what Congress could do to rein in Facebook (and similar companies). The most drastic and long-lasting is the least likely to happen: propose and then pass a constitutional amendment guaranteeing the right of privacy (including personal data) to all American citizens. This would be a fundamental shift which would broadly cover many issues, from Silicon Valley companies mining your data to abortion rights, and it would thus be incredibly politically contentious (although, I suspect, the effort would also be wildly popular with the general public).

Barring such a drastic step, Congress could pass some sort of online users' "bill of rights" which would plainly lay down what is acceptable for these companies to do and what is not. This seems the most likely route, although in an election year even this would probably not have the momentum to become law. Sooner or later, though, Congress is going to have to address the issue in some meaningful way, thus ending the "Wild West" atmosphere which Silicon Valley currently operates under. Most everyone would probably agree that there need to be some new rules of the road for social media networks and other online companies with access to mountains of Americans' personal data. But not everyone would agree on exactly how far such new laws should actually go. Silicon Valley would likely push back against the most effective ideas, and they've got some mighty deep pockets.

The simplest answer would be to pass a universal "opt-in" requirement, but this would seriously disrupt the Facebook business model. Companies would be required to only allow selling your personal data if you proactively and explicitly allowed them to do so. Meaning, at some point during the sign-up process or later, you would have to click on some button which indicates that you agree to the company monetizing and selling your personal data. If users were faced with such a stark choice, many would obviously decline. Perhaps enough of them would do so that Facebook's basic business model would collapse, in fact. If they have no data to sell, then they might have to start charging users for their Facebook sites. After all, they've got to pay for all those servers somehow.

This would change the default setting on any online site from the user allowing such data sales to the user not allowing such data sales. Currently, finding the setting to opt out of data sharing can be very hard to find and full of obscure legal language that confuses many. The companies have no vested interest in allowing you to easily opt out, so they make it as hard to do so as they can, to put this another way. However, flipping the model to requiring users to opt in would mean making it a lot more visible and a lot easier to do.

Sadly, most members of Congress aren't all that technologically astute. This means that it's going to be hard to get them to agree to (or even understand) such possible changes to the way these companies operate. And, as noted, the companies are going to spend millions to push back on any such efforts.

This is rather ironic, in a big-picture kind of way. Because Silicon Valley actually prides itself on being as "disruptive" as possible. Companies like Uber and Lyft have disrupted the age-old model of taxis being the only available option for personal point-to-point transportation services. Uber disrupting this market is seen as a good thing, at least in Silicon Valley. This is merely one example -- there are plenty of others where new tech ideas have shaken whole industries to their foundations by rethinking customer choices. But Facebook and other Silicon Valley companies would, in this case, be arguing against the disruption of their own industries by Congress. They have been content to make billions of dollars reaping user data and selling it to anyone willing to pay for it, and they really don't want to see that business model change much, if at all. In this case, Silicon Valley wouldn't be a radical disrupter of staid old marketplaces, they would instead be conservatively trying to protect their own marketplace from radical change. Which is why it'd be ironic.

If any big change is going to happen, the first step is getting the public (and the members of Congress) to understand the reality of the marketplace that Facebook and all the other Silicon Valley companies have created, in very fundamental terms. And that starts with the most basic understanding of the business dynamic every Facebook user is part of. When you buy a product from a company, you are the company's customer. But Facebook is free. You're not buying anything from them. You are not their customer, in fact. You are their product. Facebook sells this product to their real customers -- all the third parties that want to mine your personal data. Understanding this dynamic is key to coming up with any possible legislation to solve the problems that the Facebook business model has created. Mark Zuckerberg can tinker around the edges of this core business model all he wants, but none of what he's so far proposed changes this basic fact in any way. If Congress is going to see a need to do so, they will first have to understand the Facebook business model in the simplest possible terms: the data-mining companies (benign and sinister alike) are Facebook's actual customers -- and not the billions of users who provide their personal data for free to Facebook.

-- Chris Weigant


Follow Chris on Twitter: @ChrisWeigant


8 Comments on “You Are Not Facebook's Customer, You Are Their Product”

  1. [1] 
    Speak2 wrote:

    Wow, never thought about it this way (or deeply). Really poignant thoughts and analysis. Thank you, CW.

    I'm not a Facebook member, but I have gmail, so the same thing applies.

  2. [2] 
    nypoet22 wrote:

    wish i could say i had such clear reasoning ages ago when i quit facebook, but as the years pass that decision is looking better and better...

  3. [3] 
    Don Harris wrote:

    Maybe instead of Facebook users allowing themselves to be the product, they should think of themselves as suppliers of raw material to create the product and start a Facebook page to get Facebook to pay them for the raw material.

    Or maybe someone else will provide an alternative that does pay the users.

    While some legislation may be appropriate, legislation isn't always the answer or all of the answer.

  4. [4] 
    Don Harris wrote:

    I wonder if I would have been able to post the previous comment if this was a Facebook only comment section.

    This article is probably not showing up on anyone's Facebook news list or whatever Facebook people get, either.

  5. [5] 
    ListenWhenYouHear wrote:

    Not to mention that people posting photos and tagging individuals in their photos has made it much easier for us to be tracked by whoever accesses that information. It’s always funny to see when people who post conspiracy theories on how the government is collecting data on us also have photo albums online.

  6. [6] 
    nypoet22 wrote:

    it's an exchange of services for goods. you get their services, they get you.

  7. [7] 
    Balthasar wrote:

    You get the services, they get the goods. Heh.

  8. [8] 
    Balthasar wrote:

    I've successfully avoided social media since "my space" was around. I've been accused of being anti-social because of that.

    I'm not anti-social, I'm only anti-work.
    - "Dear Officer Krupke", West Side Story

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