Facebook [NASDAQ:FB] is getting a lot of bad press lately.
In case you missed it, Facebook suffered backlash after reports that Cambridge Analytica got access to data from around 87 million users through a third-party app back in 2014.
But, even with all the backlash, Facebook has done quite well on earnings.
Yesterday, the company reported its financial results for the quarter ended in 31 March 2018…and, they came above expectations.
Year on year total revenue increased by 49%, from US$8 billion to US$11.97 billion. Earnings per share rose from US$1.04 to US$1.69 per share in the same period.
It looks like the Cambridge Analytica scandal hasn’t really affected earnings, or engagement. The daily and monthly active users have increased by 13% year over year.
According to the company’s press release, Facebook’s CEO Mark Zuckerberg said:
‘Despite facing important challenges, our community and business are off to a strong start in 2018. We are taking a broader view of our responsibility and investing to make sure our services are used for good. But we also need to keep building new tools to help people connect, strengthen our communities, and bring the world closer together.’
Shares are up over 9% after releasing the results.
I mean, the story on Cambridge Analytica came out mid-March. Mark Zuckerberg appeared before congress on April to face questioning. Which means that we may not have been seeing the full effects of the scandal in these results just yet.
But, it certainly looks like there isn’t much impact.
Yet, Facebook’s woes are nowhere near over.
Facebook is also facing a class action suit on facial recognition. This month a US federal judge ruled that the class action suit can go ahead in Illinois.
Facebook users alleged that the company used facial recognition technology to identify people on photos without their permission. The company does this to then make suggestions for the user to tag themselves on the photos.
Facebook’s facial recognition technology is scarily accurate. It could even be more accurate than the US Federal Bureau of Investigation, as the Washington Post reports:
‘Companies like Facebook and Google routinely collect facial recognition data from their users, too. (Facebook’s system is on by default; Google’s only works if you opt in to it.) Their technology may be even more accurate than the government’s. Google’s FaceNet algorithm can identify faces with 99.63 percent accuracy. Facebook’s algorithm, DeepFace, gets a 97.25 percent rating. The FBI, on the other hand, has roughly 85 percent accuracy in identifying potential matches—though, admittedly, the photographs it handles may be harder to analyze than those used by the social networks.’
Facebook is ‘free’. Yet it compiles massive amounts of data from its users, which it then uses to sell advertising. That is, it allows advertisers access to their gigantic set of data for a fee.
This is the deal you as a user make when you sign up to the social platform. You are not exchanging money, but you are giving away your data, and concerns for privacy are mounting.
What’s the solution?
While there is the idea that Facebook may offer a paid version, it will most likely never happen.
For one, having a paid Facebook goes against the company’s main message and promise. The message on Facebook’s home page is clear: ‘Create a new account. It’s free and always will be’.
For another, advertisers may not be as interested if Facebook gave some people the option to have a paid account without advertising. It would most likely affect Facebook’s business model and they could lose competitive advantage.
But, what this scandal has made clear is that the market for your data is there, and it is very valuable.
There was something that editor Sam Volkering said during the Paradox of Prosperity summit about this.
Here is what Sam said:
‘The idea of your privacy, your data, being controlled by, believe it or not, you it’s possible and happening now. The ability for believe it or not, you to monetize your data is happening now. They don’t tell you about that stuff. They don’t tell you that you can have a digital identity and you can take it and build it and keep it private and safe here and then carry it somewhere else and then use it over here with no one else interfering or touching it along the way. Your control. Your power. But you don’t hear that on the news. They don’t tell you that it is building new forms of democracy where everyone has a say and everyone has a vote.’
He was talking about cryptocurrencies and how they are changing the world.
So, what if the solution is lying in cryptocurrencies? The technology may be able to transfer the control of our data to us, the users.
Editor, Markets & Money
PS: The crypto revolution is only starting. In his service, Secret Crypto Network, Sam identifies what he thinks will be the crypto ‘winners’, including opportunities that relate to keeping your privacy safe. For more information, click here.