Facebook is seen as the largest social media platform in the world. It was founded by Mark Zuckerberg in 2004, and it currently bolsters a monthly active user base of 2.85 billion users (Statista, 2021). It has since become one of the world’s wealthiest companies, and one may dare to ask, how can Facebook make so much money whilst not charging its users any fees. The answer to that partly lies in the data that Facebook has on us, and more specifically, the data we give Facebook about us.
Facebook relies on data monetization to acquire additional revenues. The latter can be defined as the process whereby companies use their data to acquire additional revenues. Facebook has developed a natural feel for data, and data now plays a critical role in Facebook’s revenue strategy. The data that we provide to Facebook is of a certain value to Facebook, but it is of even greater value to third parties, such as advertisers and other brands.
As opposed to what many people believe, Facebook does not simply sell the data that we as users provide to it (Gunnars, 2020) . Information relevant to our names, age, gender, preferences and so on remain within the Facebook database. Yet, this data is not merely stored for information purposes only, it is often used to satisfy the needs and requirements of third parties.
If we take the example of a newly established fictive urban clothing brand called DreeX, the latter is seeking to increase its awareness in the hope of attracting new customers. It thus pays Facebook to promote their Facebook page and to place advertisements on user’s feeds, but not on any random user’s feed, but on a user who is potentially interested by this brand’s feed. How does one establish who that person may be? Well, that’s when Facebook’s data plays its role.
As user’s, anything that we like, comment, share and create on Facebook is stored and remembered in Facebook’s database. Patterns and trends can be assimilated following this information, and if the latter is deemed to match the visions of DreeX, then this user will be more likely to get DreeX advertisements in their feed.
Therefore, it can be safely said that Facebook’s treatment of our data is how the brand makes money off our data. In combination with a plentitude of advertisement requests, Facebook’s data strategy can be seen as if the company was sitting on a gold mine. That is why Facebook is far from being the only social media network to use such a strategy. Facebook’s Messenger and Instagram applications also use a variant of this strategy (Shead, 2019). Other new and arising social networks such as TikTok also monetise user data to procure additional revenue.
Yet, one may wonder about the ethics that lay behind the usage of our data for the benefit of other companies. But that is another question that is an ongoing debate and will probably remain so for the years to come.
References
- Statista. (2021, September 10). Countries with the most Facebook users 2021. https://www.statista.com/statistics/268136/top-15-countries-based-on-number-of-facebook-users/
- Gunnars, K. B. (2020, February 17). How Does Facebook Make Money? 7 Main Revenue Sources. Stock Analysis. https://stockanalysis.com/how-facebook-makes-money/
- Shead, B. S. (2019, December 18). Facebook owns the four most downloaded apps of the decade. BBC News. https://www.bbc.com/news/technology-50838013
A remarkably interesting blog post. After explaining how their strategy works you mention the ethical concern of their strategy. Do you think it is okay for them to make use of our data like that? Upon registering on the platform, let it be Instagram or Facebook, we agree to the terms and conditions. Of course, nobody ever cares about reading those terms and conditions. We just hit the agree button until it gets us what we want, the website. They don’t specifically mention selling your data in the terms and conditions (TaC), which technically they aren’t doing, but the TaC does entail that they gather information about you and make a general profile. So, we cannot hate on Facebook for doing something that they tell us they are going to do simply because we did not bother to read and understand the terms and conditions fully. Another thing is also related to the platforms being free. Everybody nowadays either has or had a Facebook or Instagram account, and their services are completely free. Considering something the general population is quite dependent on to communicate with their friends and family, without those platforms our lives would become quite different. So why not let them make extra revenue that will partially be spent on making our experience on those platforms even better and smoother?
Hi Andries,
Thanks for your article. Very interesting to read how facebook is actually some kind of middlemen between us(our data) and 3rd parties. I myself do not really have a problem with facebook using my data to assure that 3rd parties can provide me advertisements with products I am probably interested in. However, I can understand that some people might feel harassed in their privacy. I do feel that these people get enough options to minimize the data that they share, while at the same time I understand that most people not really realize how much data they are sharing.
It could be interesting to see how facebook is using our data and analyzing it to match our profile with 3rd parties.