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The Social Media Giants Age: How Your Data Makes Them Money?

Our data cost more than oil. That’s our reality, not a joke and not an exaggeration. The data assets are the main resource of income. Income for such giants as Apple, Facebook, Microsoft and Alphabet.

Let us explain: each your step online leaves digital traces — when you search for a meme in a browser, when you listen to music in iTunes, when you like a post on Instagram, etc. These companies get to know us faster and better.

The more you browse, the stronger they become.

The social media giants they know about us, the more products and services they can sell.

What data is collected and how much?

Around 90% of all world websites are ‘equipped’ with counters, widgets and other devices that collect information about user actions. The same is done by social media platforms. Each year, the amount of data collected significantly increases. Here are the statistics on the size of the global datasphere and the prediction of experts — it will grow and will count 175 Zettabytes of data by 2025.

Annual size of the global datasphere
(Image source: An IDC White Paper, November 2018)

If it’s hard for you to imagine such a number, remember that 1 Zettabyte equals 1 trillion gigabytes.

What do these numbers include? First of all, these are cookies, clickstream, profiles from social media, info about your online purchases and so on and so forth. Let’s take the two most underestimated and failed to be acknowledged source of info: cookies and clickstream.

Cookies. You have probably seen those pop-ups notifying you about cookies collecting on almost every website you visit. Cookies are small pieces of data which are stored by browsers for the imitation of non-stop session over HTTP. Otherwise, each time the browser requests to receive new information, the server will consider the user unknown. What cookies do:

  • Storing of logins and passwords from sites during the session. If there were no cookies, the user would have to enter authorization data after each update or request for a new secure page.
  • Remembering user actions. Information is used by online stores and various services, for example, to fill a shopping basket, remember voting options.
  • Eternal cookies are used to identify users. They allow the service to collect information about the actions of visitors to the site, such as time spent visiting, number of pages viewed.
  • Saving an individual profile of a registered user.

Clickstream is probable another notion that is not known for everyone. It’s the recorded sequence of links the user visited. Thus, a service gets information about what website you have visited before and after — the whole robust picture of all your online actions.

As for social media profiles, you can’t even imagine how much seemingly useless information can tell about us! Take a look at what can tell about you the way you leave likes on Facebook. Your ethnicity and gender can be identified at almost 100% accuracy. As well as your orientation, religion and even drug usage.

Predicting personal attributed from facebook likes
(Image source: Corporate Surveillance in Everyday Life, Cracked Labs Institute for Critical Digital Culture)

And what about your phones and apps usage habits? And now, imagine how much information is collected from all the services and apps you use every day! It is known that Facebook uses around 25 thousand personal attributes to categorize its users.

How is the data used by companies?

Internet advertising, targeted SMS, marketing, scoring for banks and insurance companies. This is just a small portion of all the spheres where the mined data can be used.

The genuine magic of data is that it helps to improve the product and attract more users who generate even more data that will attract even more users. Looks like vicious circle.

Data is the fuel of the modern advertising market. Global IT giants are craving to deliver free Internet to third world countries to make money on offline data. However, officially it is called ‘the elimination of the digital divide and the desire to make the world a better place.’

What companies do with all these data massives? They either sell data or monetize it.

Who sell data? Your favorite e-stores, online services that sell you tickets to movies, recruiting portals, etc.

Private social networking

Who monetize data? Search engines, social media, banks, mobile providers, etc.

No global IT giants sell their data. Cellular operators, banks, retailers also do not market information about their users. Everyone is interested in using the same customer base on their side to solve a specific customer problem, rather than selling raw information.

As a result, data providers become those for whom it is a secondary resource, market participants say: online stores, owners of hit counters, geoinformation services, services for setting up “share on social networks” buttons – everyone who collects cookies. Their main customers are independent DMP companies that analyze data and transfer audience segments to customers for advertising, scoring or HR.

Look at the numbers, at the scale of deals connected with data as an object of sale.

Scale of sold data by social media giants
(Image source: the Economist, Data is giving rise to a new economy)

Moreover! Corporations can afford to buy not only databases but companies that own the user base they need. Just recollect some of the largest deals in recent years. Facebook bought Instagram and WhatsApp, Microsoft bought LinkedIn, etc. That’s quite natural that it provokes some concerns from the antitrust authorities’ side. In the process of agreeing on the acquisition of WhatsApp, Facebook promised not to combine the data of the two companies, but some time ago, it started doing it. For this, the European Commission fined the social network for $ 122 million.

Does it harm you?

You may think, ‘So what?’ What does all this mean for me? Reasonable question.

The data-driven approach makes IT products more convenient and content more interesting. People are too accustomed to free online services and are not aware of at whose expense.

If you’re not paying for the product, you are the product.

It is so simple and so accurately reflects the situation. There were stories when the free antivirus provider decided to get some profit selling the search inquiries of its users. Users were furious. However, the company claimed that they changed the Privacy Policy openly in comparison to other companies that do it without notifying users.

But don’t flatter yourself, paid services do exactly the same thing.

Thus, data can be copied and sold many times. This poses a risk of leaks and misuse, which could harm the user.

One of the most notable cases is the Mr. Trump election and Cambridge Analytica. Thus, Facebook was accused that its news feed algorithm (powered by user data) led to the radicalization of users, the spread of fake news, and thus helped Mr. Trump become president.

American judges use programs to predict relapse based on data and AI-algorithms. This helps them to determine the amount of extradition of the accused on bail and the severity of the punishment.

Another curious case: Some time ago, the media accused one of the most popular algorithms of its kind – the COMPAS program from Northpointe – of racism. Here is the picture that came to light then. A black man was considered a menace. However, later it appeared that the white man was arrested several times, while the black one – none.

The case of racism in social net

The worth thing about it is that people do not know what data of theirs is collected and how it will be used later. They subscribe to unread user agreements that are in the interests of the companies and allow the transfer of data to third parties. In the future, their data may be used against them. And it will be legal — that’s the main point.

Funny case: once the British public Wi-Fi provider added to the user agreement the right to send the network user to clean public toilets. Ridiculous? Yes. For two weeks of the experiment, 22 thousand people signed up for such conditions.

The lesson is Read Privacy policy, learn what data you share with the whole world. Or use services that do not collect data from their users.

If you are interested in this topic, read about the Reasons Why Online Privacy Matters.

2 COMMENTS
Loyd
2 months ago

I knew that social media collects a lot of user’s info, but I didn’t know that so much and that they’re making such a big money on it. Do they even have a right for that?? I never read these long terms and conditions of every website and that’s my fault, I guess. As exactly there it’s all written. Well, I’ll try to find a way out of that situation in order to stay more private online.

Matthew Turner
2 months ago

Good afternoon, Loyd! Unfortunately, modern websites collect too much data about their users. And they have the right to do so. The main thing is that all the rules are really too long and almost no one reads them. Although it is wrong. What should you do in this case? You should not choose popular systems, social networks, and search engines. Pay attention to completely anonymous and encrypted tools that do not track or collect any data. You can try to use Utopia. It is a decentralized peer-to-peer ecosystem that is completely anonymous and free to use.

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