No, Facebook wasn't hacked, but it's still bad
Over the weekend there were a lot of news reports that Facebook had been hacked by Cambridge Analytica. Then the phrase moved from hack to data breach. I was surprised. I know Facebook takes security seriously and the fact that someone was able to steal such a significant amount of data from Facebook was alarming.
I started to look into what happened, and the actuality was still alarming. The data wasn't stolen; it was given away.
In the not so distant past, you used to pay for software. You would go to a store and pick up a box and pay a cashier, and you would now own the software. Everyone understood that and how that worked. I give you money; you give me an item.
Now along comes Google. Google provides a very needed service. You can find out about almost anything through a single place, and it’s easy. Do you want to know about your friend from high school? Put their name into Google. Are you looking for concert tickets? Google it, to find out about your concert tickets, and it costs you nothing.
As a business model for Google that wouldn’t work. They need to make money. So what does Google do? Google accepts payment in exchange for putting your companies product at the top of the search results. It’s a fair trade. You still get what you want, and Google gets a little money. Well, a lot of money and if you doubt that go and visit Google's Mountain View Campus. It’s a beautiful campus. You can even take your picture in front of the Android droid.
So that was the new business model. If Google could make this business model work, other companies will follow.
Here comes Facebook. You don’t search for things on Facebook. What you do is put in all this information about yourself and your friends and update that information almost daily.
Places you go, things you like to do and who you do it with. Look at me I’m at the zoo and look who’s with me.
Your friends then see what you are doing, and they don’t want to be left out, so they do things and post about what they are doing on Facebook as well.
Again, Facebook is a business, and they need to make money. So what are they to do? Easy, they have all this information about you, and they can sell it.
If you are an advertiser and you want to advertise to people that enoy camping? Facebook can focus their advertising directly to people who camp. For companies trying to sell products, it’s just what they need. They don’t have to guess about who watches what TV shows. Now they know who it is they are advertising to.
Facebook can even give you data on if people are clicking on your ads and who they are as a group. That way you can make your advertising even better.
Now that Facebook can sell ads to one person wouldn’t it be even better if they could sell your group of friends as well?
Facebook then makes it very easy for you to share your friend's information along with yours. In your security settings, they make it so that you can let your friend's friends look at more detail in your profile. It’s a small change with big rewards for Facebook.
Here lies the problem. Facebook is out to make money. They are a public company, and they need to keep the shareholders happy so that the stock goes up and the shareholders will make more money.
So they start to do as much as possible with your information as they can. Facebook wants to get every last dollar possible out of your data. Your data is a money tree, and they need to water it. So they make it very easy to get your data.
Then other companies start to figure this out. They create products or software that you like to use, and they integrate that software with Facebook. When you install the product, they now have the same access to your profile and your friends as your friends do. They may even let you know that they will have this access when you install the software, but you click yes on the warning because you want to use the software.
These companies use this information to achieve their goals, and you might not like what they are doing with this information.
In the end, this was not a data breach or a hack. Cambridge Analytica was a company that took advantage of the way Facebook had set up their software. I don’t think Facebook did this with any malice. They did this to make money.
There is a problem though. In Europe, they take privacy seriously. Europe controls what kind of information you are allowed to collect and keep, and it’s about to get even more limited with new rules that have recently passed in Europe. That’s where Cambridge Analytica may run into problems.
In the US we have no such rules. You give your data away, and that’s that. The company that you gave it to can do what they want with it.
Our data is the price we pay for free software.
I know in a few weeks this will blow over. Facebook’s stock will most likely recover in time. People will move on and continue to post on Facebook or Instagram.
Maybe Facebook will make some changes as to how much information they share, but I would be surprised if that happened.
In the end, things will stay mostly the same. You will continue to see ads on Facebook directed towards you and Facebook will continue to make money.
If you want to know how much Facebook is making, I’d suggest you go and have a look at Facebook’s campus while you are visiting Google’s. You can take a photo in front of the big thumb that sits in front of Facebook and post the picture on Facebook.
If you think I'm wrong about what will happen to Facebook let's look what happened to Equifax. That was a hack and a bad one. They had people's Social Security Numbers stolen from them and their share price sunk, and everyone was angry at them. Now we have moved on, and their stock is slowly returning to the amount it was worth before the hack, and it’s only been seven months. Equifax will be fine and so will Facebook.