In the weeks following the eruption of Facebook’s Cambridge Analytica scandal, the world’s biggest social network has been experiencing what is arguably its biggest PR crisis ever. But the lasting legacy of the scandal is not headlines linking Cambridge Analytica with the Trump campaign or Russia’s alleged meddling in the 2016 presidential election; rather, it is the politicization of privacy that will surely intensify as the public becomes more aware of how firms monetize their personal data, writes Wharton Dean Geoffrey Garrett in this opinion piece.
It is now six weeks since the Cambridge Analytica scandal rocked Facebook. Here’s a short history. Facebook shares plunged 18% in 10 days, dragging down the NASDAQ index 10% as well. Then Mark Zuckerberg’s mea culpa in Congress played to decent reviews. Now Facebook and the NASDAQ have stabilized in the markets, and the trade war with China now seems a bigger threat to end the bull market.
So, was the Facebook wobble a “blip” or a “sea change”?
Blip — in the sense that the chances seem vanishingly small of a 2001-style dotcom bubble bursting — because today, tech companies, and their products, are so much more real (read: not only revenue, but also profit generating) and there is no sign of a flattening of the innovation S-curve in Silicon Valley.
Potential sea change — in the sense that Facebook’s Cambridge Analytica problem was only the most visible example of a much broader and deeper phenomenon.
The core business model of many tech firms is monetizing the data they collect from users — not only for themselves but also for selling on to others.
Not everyone is a privacy hawk, and millennials less so than earlier generations. And of course, we all click the mind-numbing agreements asking us to “agree” to and “accept” how tech firms tell us they may use with the data we give them voluntarily.
But there is a powerful political dynamic right below…