How Facebook Made So Much Money Despite Its Reputation
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Come a little closer to your screen. That’s it. I want to tell you a secret: Facebook is the best money machine on the internet, and it’s not a close call.*
Facebook may be an indefensible company that normalizes invasive tracking of people for dollars. It’s a place where extremists have ricocheted hate around the world. It may be melting our brains. And it’s being sued or prodded by so many governments that I have lost count. You might hate it. I might hate it? But I almost can’t believe how many of us rely on Facebook, and how stupidly successful it is.
The company said on Wednesday that its sales — nearly all of which come from the ads it sells on Facebook, on Instagram and its other apps — reached nearly $86 billion in 2020 and are growing rapidly, as my colleague Mike Isaac detailed here. Each day, 2.6 billion people use at least one of Facebook’s apps, and the user numbers are still rising.
This is a company that’s embroiled in a different scandal each week and that people say they dislike, yet its products are used by billions of people, and businesses spent like crazy on ads during a pandemic to reach them.
And the really wild thing is that Facebook’s products cost the company almost nothing to make. The Instagram selfie of you being vaccinated, the post from Mom about a fund-raiser, and your Facebook parenting group — those are the company’s products, and most of us are making them for free. It means that Facebook is very profitable.
I’ve been writing about corporate finances for a long time. I don’t think I’ve ever seen this combination of popularity, fast-growing sales, fat profits — and complete revulsion. “The gap between Facebook’s public reputation and its financial success has never been greater,” Kurt Wagner of Bloomberg wrote this week.
Historians, tell me if there’s a comparable company that was so reviled and yet so widely used and successful. (If you say the Gilded Age trusts like Standard Oil, I’d argue they make the point for Facebook’s critics who want the company broken up like the trusts of a century ago.)
Near the beginning of the coronavirus outbreak, my colleagues wrote that strong companies like America’s technology superpowers would most likely become even stronger in this crisis. But as corporations’ 2020 financial returns roll in, it’s clear that we underestimated just how much the rich would get richer.
I’m not sure how to feel about this. Yes, I’m grateful that companies like Facebook, Amazon, Google and others are helping us work, go to school, shop, and stay entertained and connected at a time like this. But it’s also hard to ignore the disconnect between their mountains of money and the shaky condition of most major economies in 2020 and the battered finances of many families.
This is not a novel reflection about the gap between the haves and the have-nots in this pandemic. I’m just left again unsure how to answer an essential question: Is what’s good for Big Tech good for all of us?
*(OK, fine. Google search is perhaps the internet’s very best money machine. Feel free to argue with me!)
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Being informed(-ish) isn’t good enough
Thursday is Data Privacy Day. (Cue the balloons!) This fake holiday has become an opportunity for Facebook to remind people to review their privacy settings. It’s also an opportunity for me to remind you that this is a charade.
These nudges from Facebook, as well as the Apple data privacy labels that my colleague Brian X. Chen wrote about this week and a California privacy law I recently wrote about all reveal a fundamental flaw in how our data is treated in the United States.
The mission is to inform us of what data companies are collecting on us and give us (some) measure of choice. But I don’t want being informed to be the final goal.
The focus on making data collection transparent(-ish) is why we have long privacy policies that give a choice between agreeing to anything a company wants to do and not using the service.
It’s why technology executives tout our ability to delete voice recordings from inside our homes — but don’t stop the data from being collected in the first place. It’s why the app Brian uses to open and close his garage door also collects information to target him with internet ads. (YES, REALLY.)
The Washington Post columnist Geoffrey Fowler has written that we should reframe data privacy around a simple question: Why is so much of our information being collected in the first place?
The answer is because companies can. When every company from Facebook to a maker of garage door openers is racing to collect as much data as possible, we can’t really opt out unless you want to cut yourself off from 21st-century life.
So if Facebook reminds you to look at its 40,000 privacy settings, go for it. But I suggest you also remember Geoff’s question: Why is so much information being collected at all?