It is widely understood that for the past few decades, big tech has had relatively free reign over the collection and use of personal data from the individual. However, it is important to appreciate how we have ended up in a situation where companies such as Meta and Google have been allowed to profit from user data and that it is only after several high-profile data breaches, that users and lawmakers began to claw back control. This article will explore how the wool has been pulled over the eyes of millions and how the regulators failed to spot the dangers of the data-driven business model.
When Facebook first emerged on US college campuses in 2004, the concept that products could be free with ads was not alien. For example, products like Hotmail, MySpace and Yahoo Messenger all provided free services to their users, all generating revenue through advertising on their sites. However, while most people understood at this point that ads could equal free products, a silent revolution was taking place in Silicon Valley which involved the collection and use of personal data to be used to create targeted ads.
While Facebook was not the forerunner in developing and deploying targeted ads (companies like Google and Yahoo were doing this as early as the 1990s), Facebook’s great innovation in the advertising sector was using data collected from users’ interests, connections and activities to create highly personalized targeted ads which were far more valuable than the ads based solely on user search queries.
The brilliance of Facebook’s idea was in creating a social media platform that was accessible, easy to use and popular on college campuses, it quickly became so essential to daily life that it rapidly amassed millions of users with very little advertising spend. It then turned those users into lucrative assets, capitalizing on its massive user base and leveraging their data to create targeted advertising.
The key to the model is that Facebook has an unparalleled understanding of its users, and they have a lot of them! Advertisers are willing to pay a premium to access highly specific targeted audiences that are far more likely to convert to sales than traditional advertising.
As a result, Facebook, now operating under the parent company ‘Meta’, has become one of the most powerful advertising platforms (alongside Google) in terms of both performance and usage. Meta made an eye-watering $114 billion in 2022, 98% of which derived solely from advertising.
The issue is that most of Facebook’s users are not aware of the extent to which their personal data is being collected and used to track their behaviours and preferences. While some users may be willing to trade their personal data for free access to Facebook or Instagram, many may feel uncomfortable about this, especially considering the lack of transparency regarding data collection and usage.
For the most part, lawmakers were slow to recognize the potential risks of this advertising model and relied on big tech firms to self-regulate and protect user data. For years, Facebook could reign freely over data protection policies, which inevitably led to several cases of abuse of its position. After numerous data-related controversies (which we will be covering later on in this series), a long-awaited pushback by lawmakers began.
This pushback, which continues to be fought today (please read: ‘Article 5’), is a result of trying to re-establish a suitable equilibrium between user privacy and the new age of the advertising business model. The innovations of the past are now decades old and the idea that big tech firms can continue to self-regulate in this area is not only outdated but a complete regulatory oversight.
In order to appreciate how far the scales have tipped in favour of big tech, we need to understand what data companies like Meta are collecting on half the globe’s population and how they are using it.
Please click here to read what data the big tech firms are gathering on its users: ‘The Power of Meta’s Data’
