It's difficult to identify the spark, that exact moment, when something becomes a defining moment for society. Just to be clear, the new defining moment of our society has everything to do with our data that is stored on the servers at technology companies.
But how did we get here?
Nothing new here, folks.
We've all known that Alphabet (parent company of Google) saves our every search. Web browsers we use track and save our every move across the internet. Same goes for Facebook; it stores your posts, preferences, friends, etc. Netflix and Amazon also track and save our every move on their servers. The vast majority of us have blissfully accepted this as part of these company's terms of service. What's the trade off? These companies get to combine our personal data with algorithms to assist other companies, for gargantuan sums of money, in serving up sales pitches to us for new cars, cheap airfare deals, and everything else in consumerland. Then again, at least the ads we see on these platforms are more targeted to our preferences, which is a heck of a lot better than the mass advertising on TV and radio. OK, so that's the oversimplified version of how the advertising model works in media, both old-line and social.
We've accepted this business model in terms of our own "internal" terms of service; our own threshold for how much of our personal data we'll give out in exchange for the use of these delightful and helpful apps. But the limit to how high this threshold could really go has never been known until now. Or at least it appears that way.
Fool me once, shame on you. Fool me twice, shame on me.
Like any other issue that has exploded to the fore, it wasn't actually any one thing that the social media behemoth did. But there are a few glaring examples that took place such as the manipulative Russian meddling on social media before and after the 2016 Presidential election. People don't like to be made fools of, to be manipulated, but it was understood that social media companies are open platforms in their current form. As Mark Zuckerberg, CEO of Facebook would put it, don't blame the platform; blame the bad users. Facebook's servers weren't breached and the company is moving to both understand and correct that problem (which no doubt isn't enough to satisfy everyone).
Then there's the
problem. Whether or not Facebook was duped, users of the service are not giving it a free pass this time. Why? Because they feel duped for the second time. A word of caution to companies in the business of collecting personal data - the worst offense you could commit is making your user base feel foolish for the second time, albeit by accident or not, which is why this time Facebook's problems are under the spotlight. After all, going back to the well with the same excuse that "it's not the platform, it's those nefarious users" won't work again.
Apple and Tesla throwing shade at Facebook
Tim Cook, CEO of Apple and Elon Musk, CEO of Tesla, both threw some nasty shade at Facebook. Cook said he'd never let something like the Cambridge Analytica issue happen to Apple (even though Apple and Facebook are different businesses). Musk went as far as deleting Tesla's Facebook page (but he didn't delete its Instagram page, even though it's a unit of Facebook). But who we didn't hear dish on Facebook are the CEO's of Alphabet, Amazon, and Netflix. Why? I could only surmise that's because these CEO's are also in the same business of combining personal data collection and artificial intelligence into a package for sale to marketers. In other words, Facebook is the one under the spotlight, but those other three are very likely to feel the heat too.
I won't #deletefacebook anytime soon
For heavy users of social media like me, I don't plan on stopping or even slowing down my usage of these platforms anytime soon. My threshold for maximum sharing of the intimate (and pretty boring) details of my life haven't been reached. My desire to see pics of my friends' kids, accomplishments, and life events is far too great for me to delete Facebook or any other social media apps I am enjoying. So, I'm not judging anyone!
Are investors about to get de-FANG'ed by regulation?
With mid-term elections in a little over 7 months, I think it's an easy call to predict that Facebook et al will be a political football in terms of regulation. FANG - Facebook, Amazon, Netflix & Google (now Alphabet) - may actually benefit from regulation by gaining back some lost trust in the eyes of users and/or investors.
How to download a copy of everything Facebook knows about you
The collapse in technology stocks exactly 18 years ago was caused by overcapacity in semiconductors, underfunded companies, servers, routers, and more. Today, I figured the current tech leaders would also eventually retreat due to overcapacity; via overbuilding in cloud computing capacity and in reaching the upper limits of how many advertisers and users would remain active on the current social media platforms.
With the tech sector making up a disproportionate 25%+ of the S&P 500, and with many tech companies that exist solely to serve the needs of these big four, investors need to be on the lookout for changes to their forecasts. The risk is that these companies, considered reasonably priced or even cheap based on their current growth rates, could become expensive very quickly if their growth rates slow more than Wall Street's base case expectations. And if another Cambridge Analytica happens to any of the FANG's, I'd expect the spotlight on them to get a lot hotter.
In the meantime, if you're going to continue using social media, just remember two things:
- Servers never forget, so be careful what you post.
- If the product is free, then you are the product.
Here are a few articles on this:
How to download a copy of everything Google knows about you