The latest disclosures with regard to Facebook’s lax custodianship of user data further underpin that large Internet companies with millions of users need to take a leaf out of Google’s book and “go slower with fewer cock-ups”.
Facebook has been caught out yet again as it has admitted that it has shared a significant amount of user data with a number of device makers over the last ten years, including several from China. This data sharing did not come to light before as it was part of device integration to enable a better and more integrated experience on a smartphone.
The two that really went to town on this were Microsoft and BlackBerry, who deeply integrated Facebook into their devices such that friends could be contacted and presence seen from outside of the Facebook app. The idea was to give a more integrated and seamless experience, but the other issues of these two platform prevented this type of user experience from really having a chance at driving engagement. These two collected far more data from Facebook than Android handset makers do, which is why the New York Times used a BlackBerry device from 2013 to make it point.
The real issue is why Facebook has not closed this ability down, as the demonstration was carried out very recently – albeit on a very old device – meaning that the APIs remain open.
Facebook has said that it has viewed device makers as partners and as such has had a rigorous approval process for any experience that device makers created as well as control of what happens to the data. The agreements state that the data has to remain local to the device upon which it is being used, but as the example of ZTE shows, some device makers do not take their contractual obligations very seriously.
Hence, I think it is highly likely that Facebook user data is currently sitting on servers in China, but I doubt whether users have come to any harm as a result. This is because AI in China is still at a fairly early stage, with most of the running being made by Baidu. Consequently, I suspect that any data sitting on Chinese servers will simply remain there, not understood and not used.
This does not excuse Facebook in any way from lapses in its management of user data.
It is also very important to note that Facebook allowed device makers access to this data in order to make the user experience better. Hence, I think that it could be very easy to take limitations on data usage too far.
RFM research has consistently shown that user data is needed to make a service more personalised, more intuitive and more useful. If data usage is cut back too far (as often happens in these sorts of cases), the quality of the services to users may suffer as a result.
Either way, It is clear that the very way that Silicon Valley conducts its product development has a problem. Uber, Tesla and Facebook have now all had serious problems with the “move fast and break things” strategy, and I suspect that a more rigorous approach to product development is likely to ensue.
This will mean that the iteration of new products and updates will become slower, but at the same time these sorts of blow-ups will occur less frequently.
This makes complete sense as the likes of Google, Facebook, Tesla, Twitter and so on, are no longer start-ups but are mature, grown-up companies with all the responsibilities that that entails.
Big changes are likely at Facebook, and I don’t think that any of them are going to be particularly good for revenue growth. A huge increase in human surveillance and slower product development are likely to mean lower revenue growth and higher operating expenses as soon as this year. Both translate into lower profitability, which – combined with the fact that Facebook has a long way to go before its fledgling ecosystem can generate more revenues – points to a lower valuation than where we are today.
Privacy advocate Apple is likely to outperform those that monetize by advertising while this storm rages.
This article was originally published at RadioFreeMobile