Looking for patterns is human nature. It’s a skill that, in evolutionary terms, has allowed us to progress far beyond any of our mammal counterparts.
Upon meeting someone new, we will immediately make judgments about their character. We absorb their mannerisms, compare them to people we have met before, and neatly box their attributes up with a sticker label.
In many ways, this trait has served us well. It allows us to efficiently discern who is dangerous and who is harmless, form connections based off similarities, and judge if someone is worth our time. Overall, it simplifies the intricate task of human interaction considerably.
But in the digital age, this form of labelling is often used to exploit our vulnerabilities. Using all of the information we willingly upload to the internet, extremely complex character profiles are built and recorded. Our political views, interests and fears are all laid bare — allowing software to create a tailored shopping list of consumers that is then sold to marketing companies.
The scandal which surfaced this week regarding data analysis firm, Cambridge Analytica, is a prime example of this.
In a huge blow to Facebook’s credibility, it was revealed that Cambridge Analytica had utilised the data of 50 million Facebook users to target them with political advertising during the 2016 US presidential campaign. This was data they had gathered without the consent of the vast majority of those people.
Funnily enough, the company had obtained the information through a survey app created by Cambridge psychology academic Aleksandr Kogan a few years ago.
It was one of those seemingly harmless surveys that we’ve all seen our friends share the results of on Facebook. Asking trivial questions like ‘Which Disney Princess would you be?’, ‘What job best fits your personality?’ or even, ‘What kind of cheese are you?’
The sheer popularity of these surveys points to one conclusion: We like to be categorised.
This fact alone doesn’t present any real danger. But the threat to our privacy and security lies in how this information is used by others.
Unfortunately, exploiting information is precisely the area that Cambridge Analytica specialises in. They built psychological profiles of a large portion of the US electorate, sliced them up into demographics, and attempted to influence them based off their preferences and fears.
This new, innovative style of audience targeting has been labelled ‘psychographics’. Through this method, Cambridge measured the values, opinions, lifestyles and personalities of millions of Facebook users — using the data to target impressionable voters with personalised election news that was often misleading or untrue.
As Christopher Wylie, the former Cambridge employee who blew the lid off the story revealed, ‘We exploited Facebook to harvest millions of people’s profiles. And built models to exploit what we knew about them and target their inner demons’.
Considering that 62% of Americans get their news from social media, this style of marketing has very real potential to undermine the democratic process. Clickbait news truly is the technological form of Chinese Whispers.
That said, since the revelations emerged there has been calls for a British parliamentary inquiry, followed by a #DeleteFacebook movement on Twitter. Facebook has also lost more than US$45 billion of its stock market value since last Friday, and the uncertainty caused tech stocks to drop by 2% overall.
In many ways, the backlash against Facebook and its subsequent share price drop is a positive sign. It indicates that even in the technological age, privacy and journalistic integrity is still of high importance to users. Which will hopefully lead to a higher standard of conduct for technology and information companies.
Facebook CEO Mark Zuckerberg has acknowledged this to some degree, stating on Thursday that, ‘We will learn from this experience to secure our platform further and make our community safer for everyone going forward.’
That statement, however, should be taken with a grain of salt. No matter how strict the regulations are, revealing yourself to the internet will always come with substantial risk. As Facebook and other social media platforms are in the business of information, your data is a precious commodity.
The modern adage about the internet is true: if you’re not paying for it, you’re the product.
This week in Markets and Money:
For the first time in a decade, the world’s markets have been growing at a similar rate. This is in part due to US’ tax cuts, and strong investment and trade. But as Selva warned on Monday, we shouldn’t get too comfortable with the idea of continuing world growth. Rate rises could be on the way, and volatility remains high. Now is the time to brace ourselves for change…whether it be good or bad.
To read the full story, click here.
Cape Town’s water crisis worsens by the day. And if the situation doesn’t improve in the coming months, the town could very soon hit ‘Day Zero’. This is the name given to the day the town runs out of water completely. As Selva wrote on Tuesday, the lack of drinking water is a crisis we will all soon face. With our growing population and global shortage of fresh water, we will all be in serious trouble if recycling technology isn’t perfected soon…
To learn more about this story, click here.
This week, we began to realise the extent of Facebook’s shortcomings. News recently surfaced of a massive leak of 50 million user’s data to a consultancy firm called Cambridge Analytica. A blunder that, as Selva revealed on Wednesday, caused Facebook’s share price to drop significantly. This wiped out all of their 2018 gains and caused tech stocks and the NASDAQ to fall almost 2%. However, Selva believes this is a small hiccup compared to the problems household debt will create…
To find out why, click here.
On Thursday, Selva noted that mortgage lending was slowing. And in response, banks are fighting to get a larger share of the market. The big four are slashing rates on mortgages in anticipation of interest rates staying the same. This move will likely keep fuelling the housing market even as household debt skyrockets. It’s now up to the RBA to increase rates to tackle the debt beast…
To read the full story, click here.
Talk of a trade war has sent the markets into a tailspin. The Dow Jones, S&P 500 and stocks are all down. This was further aggravated by the Fed’s decision to raise interest rates, causing the US dollar index to fall also. But as Selva noted on Friday, there is some hope left. Gold rose on the back of the rate hikes and appears to be stable.
To learn why gold could be the investment to make in a risky market, click here.
Until next week,
Editor, Markets & Money