Facebook Isn’t Free: It’s Making BILLIONS from You

Facebook is making more money than ever. On May 3, the company announced that between January and March it made $8.03 billion in revenue – a 49% increase from $5.38 billion in the same period a year earlier.

Wait, if users do not pay money to Facebook, where does this goldmine of revenue come from?

The truth is, you are not using Facebook for free. You are paying Facebook. According to CNBC, the average revenue per user in the first quarter is $4.23, which approximates to $16.92 every year.

This amount may not seem like a lot. But when you realize that you are paying with your personal data, your very own identity, it becomes a cause of concern.

Facebook Knows All About You

When you use Facebook, they collect information from every action you take. From the groups that you join, to the friends you interact with, and even the words you post in your status updates. They know your habits, your preferences, and can even determine your current location.

 

A YouTube video from the famous channel, CollegeHumor, describes how Facebook actually collects its data to earn money from you. Let us look at what Adam shared in the video.

 

In the video, Adam dressed up as a matrix agent and brought Mitchell into a virtual space that resembles the Matrix. The space was a representation of the internet and they see users using the internet and all its services for free. But is it really free?

 

Adam brought Mitchell to the “Real World” just as in the Matrix, and begin to explain to him the truth about the internet. He says, “The truth is these services aren’t free at all. You pay for them with your very own identity.”

Adam explained how Facebook captures and uses our data in detail, from risk profile to sexual orientation, and sell the information to advertisers for targeted advertising.

 

This scene showed a woman who was browsing through her Facebook newsfeed and saw an advertisement targeted to gays. She did not reveal her sexual orientation, yet the ad was shown to her and her cover was blown at work.

Adam remarked that this was a real case that happened to a woman in Tampa.

 

Mitchell was concerned, but said, “C’mon, we all know Facebook is showing us ads.”

Adam explained “But we don’t know how deep Facebook’s tentacles really go. They actually record the ads we see, then partner with firms that monitor what we do in the real world.”

The next scene showed a man who responded to a burger ad and bought a burger. The Ad Corp lady collaborated with the Facebook man to flood the user with tons of burger ads.

 

Adam remarked that this is one of the most invasive advertising systems ever devised.

“Facebook can determine who is the most vulnerable to an ad campaign, then up their dosage till they buy even more.” said Adam.

 

Adam shared that Google and Facebook are collecting our data at an unprecedented rate. That is their real business model, they are monetizing us.

He then quoted “When we use these websites, we’re not the customer, we’re the product”

 

Well, all that information that is presented to you may seem to have come straight out of a horror movie. It may be shocking and even unreal. But it is true that Facebook is collecting your data at an unprecedented rate and is monetizing it.

According to Caitlin Dewey, there are at least 98 data points that Facebook collects from you. With all these data, they analyse it and put together a comprehensive profile of your persona.

Targeted Advertising

With this data, they take it and sell it to advertisers. They know the latest food recipe page that you like, or that Arsenal football match you commented on.

When you open Facebook, you see an ad on kitchenware on the sidebar. When you scroll through your newsfeed, you see a ticket sale to the next Arsenal football match. Now what happens when you click the ad on your newsfeed?

“They actually record which ads you see, then partner with firms that monitor what you do in the real world.” technology columnist Farhad Manjoo said.

This means that Facebook not only tracks your demographics and Facebook activities, but also tracks your interaction with advertisements to further target what they show you.

Privacy concerns

The data-tracking does not stop there. In a recent study, a team from Microsoft and Germany’s Max Planck Institute found a loophole which could secretly reveal a gay user’s sexuality to advertisers.

They created six fake profiles: two straight men, two straight women, a gay man and a lesbian. (Besides gender and sexuality, the profiles were indistinguishable.) Then they observed what ads each profile was shown over a week’s time.

The report says that there was a “measurable difference” in the sorts of ads that appeared on the home pages of the accounts.

About half of the ads targeted specifically to the gay male account were for gay nightclubs and other offers specifically referencing gender orientation.

As an example, they cited an ad for a nursing program at a Florida college that appeared for the gay male account, but none of the others.

When Facebook uses a sensitive category like sexuality to target advertising, it can lead to troubling privacy issues. It can even reveal information that users do not want to show to their family and peers.

Facebook’s company line is that it doesn’t share your personal information with advertisers, and the only information it uses to target ads is anonymous. But coming on the heels of revelations that Facebook leaked user information to advertisers through third-party apps, this latest snafu shows how nearly impossible it is for Facebook to both profit from your personal information and to guarantee it will never be shared without your permission.

 

What’s Next?

It is common knowledge that Facebook has your personal data. But it is not certain of the extent to which they track and use this data.

You can continue with using Facebook with its sharing and access permissions or you can adjust your privacy settings. However, it is certain that Facebook collects your data and makes money from it.