Last month, Facebook announced in a brief statement that it will be shutting down Partner Categories, a feature that allows marketers to target ads on the company’s universe of platforms by using third-party data provided by data brokers. The move, which comes during a period of intense scrutiny over the social media giant’s privacy and security practices following the Cambridge Analytica revelations, marks a first-of-its-kind pivot among internet companies. This development could have major repercussions for internet companies and the broader digital advertising ecosystem if the firms at the center of this industry follow suit, collectively distancing themselves from data brokers and increasing transparency into their practices with personal data.
Traditionally, marketers on Facebook — and on most major platforms that allow targeted ads — have had three types of data streams they could leverage for targeting. First, they could use data they have collected themselves, like the names and email addresses of the customers who visit their brick-and-mortar or online stores. Second, they could use data gathered by Facebook, which maintains a rich data profile on users based on their use of the platform, web browsing history, and cellular location, among other sources. And third, they could use data provided by third parties — which typically are the companies we know as data brokers. Among these are well-known names in the industry, including Acxiom, Oracle, Epsilon, and Experian.
A critical aspect of this announcement — one that has gotten much less attention — is that the use of such third-party data is a common practice available through most internet companies’ ad-targeting services. While the spotlight has been on Facebook, the broader issue is that most of the industry is not transparent about its practices with data brokers because there are no regulations that directly require such transparency. Until other platform companies that enable targeted advertising using third-party data open up about their relationships with data brokers and commit to further privacy protections, we can expect the internet’s threat to digital privacy to persist.
The broker data that Facebook provided to marketers through Partner Categories threatens user privacy because its sources are unclear and consumers are often in the dark about its use. Advertisers on Facebook have long used that data to target users who were, say, in the market for a new car or who had just had a baby. What makes this data so sensitive is that brokers like Experian collect information that is hard for most firms in the digital advertising ecosystem to otherwise find. Brokers have close relationships with all kinds of other businesses, from large department stores to credit card agencies, which sell data about their customers to the brokers or share it. Customers typically don’t know much about this; they often unwittingly sign away their rights to this data in the act of making purchases.
That Facebook’s shutdown of Partner Categories comes on the heels of the Cambridge Analytica scandal is telling. Clearly, Facebook has realized that it must fundamentally change its data practices to restore its users’ and shareholders’ trust. This latest move helps us paint that picture; Facebook, like most other leading internet companies, has little control over how third-party data is collected, maintained, and used. If that data is used by marketers to reach people on Facebook’s platforms, and another privacy breach like the Cambridge Analytica incident happens because of it, Facebook is left holding the bag. It can be argued that Facebook should have known better — but, then, so should every platform firm that shares broker data with advertisers. It’s sensible risk management for Facebook to shut down data conduits that are particularly damaging to individual privacy, and it would be wise for other internet companies to learn from Facebook’s move.
This development is an immensely positive step forward for digital privacy, consumer protection, and the fight against disinformation. Facebook’s announcement signals a significant public policy change for the company: Moving forward, it will hold both itself and its data partners more accountable. Other platforms that share data from brokers are surely studying Facebook’s decision and considering how they, too, can distance themselves from brokers and increase their data transparency — if only out of enlightened self-interest.
from HBR.org https://ift.tt/2GMSEtT
