Everyone Wants Your Data, Get Over It!

If you’re like me, you probably don’t carry any cash in your wallet. You pay for everything by credit card. In China it’s the same. Instead of a credit card, the vast majority of Chinese buyers use their smartphones.

But just across the water in Japan, cash is still king.

Cash circulating their economy makes up around 20% of gross domestic product (GDP). Among developed nations that figure is extremely high.

As a comparison, our cash to GDP is only around 4.7%, or more than four times less than Japan’s.

Why do they love cash so much?

Blame it on the ATMs you’ll find everywhere in Japan, the safe cities and the wariness of handing over personal data, according to The Economist.

Sooner or later, however, Japan will go cashless. Banks are pushing them to adopt credit cards and other forms of cashless payments.

Not only will this save the banks billions, it will create massive amounts of data on Japanese spenders. And its data advertisers can’t wait to get their hands on.

Securing data is now on everyone’s minds thanks to Facebook, Inc. Common Stock [NASDAQ:FB]. But most of the discussion is utter drivel. Yes Facebook takes your data and allows advertisers to target ads. They’ve been doing it for years.

But all of a sudden, this agreement between Facebook and users is no good. Not only do users want to use Facebook’s platform for free, some don’t want their data monetised.

When did anyone say you could have your cake and eat it too?

What scandal?

Have you seen the movie V for Vendetta? It depicts a world of total surveillance. Government vans roam the streets listening in on private conversations. No one is safe to speak freely.

Some believe we live in a similar world today. The governments are watching and our personal data is constantly being misused.

Just look at what people are saying about Facebook now. Some view it as a large evil corporation that steals people’s data and gives it to the highest bidder.

Of course these aren’t Facebooks motives. But who doesn’t love to step on the successful?

I’ll let Bloomberg explain the Facebook scandal I’m sure you’ve come across.

About 270,000 people downloaded a personality quiz app and shared information about themselves and their friends with a researcher, who then passed along the information to Cambridge Analytica, in a move that Facebook says was against its rules.

Cambridge Analytica, which worked for Donald Trump’s 2016 presidential campaign, said it licensed data on 30 million people, countering Facebook’s 87 million estimate. Cambridge Analytica said in a tweet that it “immediately deleted the raw data from our file server, and began the process of searching for and removing any of its derivatives in our system” after Facebook contacted them to let them know data had been improperly obtained.

Facebook says it will tell people, in a notice at the top of their news feeds starting April 9, if their information may have been improperly shared with Cambridge Analytica. But it still hasn’t independently confirmed if the firm currently has the data. The revelation, and the subsequent media questions, hint at the grilling Zuckerberg will likely face when he testifies on the matter before Congress next week: How many other Cambridge Analytica-scale leaks of data are out there?

But what’s the story here?

A consultant found a loop hole and took more data than they were meant to. Everyone already knows Facebook uses their data to generate advertising revenues.

Why is it now all of a sudden such a big deal? 

Shareholders come first

Rather than go down that rabbit hole, let’s remind ourselves what Facebook cares about more than anything else…profits.

Like any other company, Facebook’s sole focus is the bottom line. I can assure you they don’t care about the photos you post or comments you leave.

All they care about is more advertising dollars. And really, putting profits first is the moral thing to do. Like all public companies, Facebook has a duty to increase value for their shareholders.

Yet people have got caught up and are now telling others to delete their Facebook account. Should we also stop using credit cards, mobile phones, search engines, and a whole bunch of other extremely useful applications?

They all collect and harvest our data.

Such an idea is of course ridiculous, as is the debacle around this Facebook scandal. Yes, the social network has some issues it needs to fix. But Facebook is still one of the best businesses in the world. They are the holy grail for advertisers who want to target ads for a higher conversion rate (how many people buy because of the ad).

The value in Facebook isn’t really for users. The real value is for advertisers. Even if a few people delete their Facebook accounts, I bet advertisers will continue to pump more dollars onto their incredible platform.

Your friend,

Härje Ronngard,
Editor, Money Morning

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

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