Facebook's Plummeting Value Shows Cost Of Unethical Data Collection

In the wake of the Facebook and Cambridge Analytica scandal, several opinion pieces suggested that Facebook users “get what they paid for.” But last week news emerged that Facebook’s stock-market valuation had fallen by almost £120 billion ($156 billion) — and in the European Union it has lost three million users. 

Data scandals come and go, and unfortunately we will probably see more over the course of 2018, and although the column inches used to report these breaches may reduce significantly over time, the recent Facebook fall in value shows that the public still has an appetite for privacy, regardless of what media commentators may say. 

I hope that businesses across technology, marketing and advertising are paying attention to this, because there is a chance we will see more high-profile breaches in the future. According to new data, two-thirds of managers in advertising and marketing consider consumer data collected by their organization to be owned by the company rather than the source of the data — the consumer.



This is not merely ethically ambiguous; in some markets, like the EU where the GDPR has come into force, the law is built so the individual remains the owner of their data. What’s more, 67% of respondents in the United States agreed that businesses share data too freely with external third parties. 

This data indicates we are potentially at the tip of the iceberg, and it is extremely concerning for those who work in the data and insight industries, as well as data protection officers across the land. The Facebook and Cambridge Analytica scandal was big news when it broke, mainly due to its impact on two major democratic processes on both sides of the pond.

But last month a class-action lawsuit against Disney, which allegedly harvested the data of children without consent, was expanded to include complaints against Twitter and comScore, a media measurement and research company. This has largely gone unreported in mainstream media, although it was featured in MediaPost last month. 

What’s vital for businesses to understand is that there is a price to be paid for non-ethical, non-transparent, and illegal data collection. And that price is not only bad PR. You would be naïve to think that legislators across the globe are missing class-action lawsuits, such as the one that Disney is currently fighting.

One of the reasons Facebook lost three million EU users was said to be due to the new GDPR regulations, and if companies continue to betray the trust of consumers around the world, you can expect these regulations to get tighter in the EU and also in the United States. In fact, a GDPR-inspired Right to Privacy Act has just been adopted in California. 

Consumer and customer data is vital to the modern business. In our research, 93% of managers in the United States agreed that collecting data is important to the growth of their business. But in order to continue to have the freedom to use consumer data, all companies need to be more responsible with how they collect and manage it.

The first step in being more responsible and understanding this area, is engage with your local data associations, sign up to codes of conduct and commit to accountability — this will improve trust for consumers and clients, and also provide guidelines for you to follow, as well as ensuring your voice is heard by lawmakers when it comes to further potential legislation. Because If we can’t be trusted with nice things, they will be taken away from us.

2 comments about "Facebook's Plummeting Value Shows Cost Of Unethical Data Collection".
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  1. Joel Rubinson from Rubinson Partners, Inc., August 6, 2018 at 10:06 a.m.

    Finn, your timeline is way off so your basic argument is not correct.  The scandal was in march.  FB stock took a hit but then recovered and reach new highs.  the latest correction was due to a shortfall in user numbers vs. expectations and the stock isn't plummeting, it's coming back.  There was an impact from GDPR but that is not a Cambridge Analytica issue. GDPR is the product of an over-legislation mindset. Finally, there is a mentality that defies the principle of TANSTAAFL...coined by a great science fiction writer and libertarian, Robert Henlein (I believe in the book the Moon is a Harse Mistress).  No, nothing is free...not college tuition in Germany nor the web. Someone has to pay (college, it's taxpayers, the web, it is ad supported.)  Furthermore, display and video ads in digital are over 80% targeted based on profiling data. Kill profiling data and you will change the internet. Imagine a world without the internet or one where it costs thousands per year for access..society doesn't want that...they just don't understand the choices

  2. Neda Eneva from ESOMAR replied, August 7, 2018 at 8:19 a.m.

    Hi Joel, unfortunately Finn is away on holiday at the moment but we wanted to respond to your comment. Thank you for your thoughts, a broad global discussion is important when it comes to conversations about privacy and self-regulation.

    You are certainly correct that in the immediate aftermath of the Cambridge Analytica scandal Facebook stock took a hit, and then recovered. However, last week’s loss of 20% from FB’s market value, which a lot of people would consider a plummet, was down to a number of reasons.  These included FB’s investment in security, wide ranging advertising campaigns to rebuild consumer trust, and user base stagnation in the US. Our interpretation is that the recent data scandals impacted those factors. I would also say that when it comes to data legislation, whether you feel GDPR is over-legislation or not, it is a reality for many businesses based in the US who ply their trade or sell services in the EU. The EU is a bellwether region for legislation of this kind, so we feel it’s important to communicate to businesses around the world the way they collect and manage data can have an impact on their business. I would also like to state that our goal is continued self-regulation of the insights and data industry. 

    While “there ain’t no such thing as a free lunch”, we do believe that there should be a balance between the rights and freedoms of the individual whose data is being collected and used, and those of businesses. We certainly don’t want to kill the (online) advertisement ecosystem, in fact we are looking for more transparency and control so that consumers feel reassured when sharing their data and understand the importance of it.

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