| Published date | 11 June 2018 |
| Pages | 369-370 |
| DOI | https://doi.org/10.1108/DPRG-03-2018-0012 |
| Date | 11 June 2018 |
| Author | Peter Curwen |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
Rearview
Facebook
Peter Curwen
Economics 101: Lecture 1: In a free
market, a willing buyer negotiates with
a willing seller, and all being well they
agree upon a mutually acceptable
price. If not, they walk away.
In the current world, there are five
behemoths that attract immense
interest, namely, Amazon, Apple,
eBay, Facebook, and Google.
However, none of them behave
precisely according to the dictates of
the above. In the first place, only three
of them essentially engage in the
selling of products and services to end
users. Furthermore, Amazon and eBay
are marketplaces where other parties
offer their products for sale, mostly at
fixed prices, although eBay sellers may
also provide a “best offer” facility and
the possibility of auctions which closely
approximate the workings of a free
market. Apple simply offers its
products at its chosen retail prices,
ofteninitsownshops,althoughthere
is a vibrant secondhand market for
those customers willing to forgo, at
least temporarily, being at the cutting
edge of technology.
The really unusual cases are
Facebook and Google. The great
majority of all people who have an
internet connection use these
websites, yet they mostly appear to
be oblivious to the nature of the
activities in which they engage.
Clearly, these people arenot buyers
because access to these servicesis
provided for free. Furthermore,if, say,
a photo is sent via Facebook, theyare
not sellers either because no charge
is being levied upon the recipient.
But if Economics 101 teaches us
anything, it is that if something is
being transacted that has a value,
and hence an associated cost, it must
be paid for by someone if the provider
is not to go bankrupt. But if the person
sending a photo by Facebook, or
conducting an internet search via
Google, is not paying, then who is the
customer?
The answer, as so often in the modern
world, is advertisers. Butif so, what
exactly are they buying? The answer
is data –data relating to those who
use the service. Every time websites
are accessed, cookies are planted,
and data are stored, and as the data
on an individual accumulate, it
becomes possible for an algorithm to
sum up that individual’s behavior and
interests and to send that person a
directed advertisement. And because
so much is known about the
individual, advertisementsneed only
be sent to those whose prior behavior
indicates a much improvedlikelihood
of a response. That knowledge is
worth money.
If asked, most young(ish) people will
probably take the view that they have
willingly signed away their privacyin
return for free goods and services,
although, in reality, almostnone of
them will have bothered to read the
long list of terms and conditions that
they have agreed. These effectively
allow Facebook, for example, to use
anything posted for whatever purpose
it sees fit, even after you close your
account –which is extremely hard to
do in practice. But in the majorityof
Peter Curwen is Professor at
Newcastle Business School,
Northumbria University,
Newcastle upon Tyne, UK.
DOI 10.1108/DPRG-03-2018-0012 VOL. 20 NO. 4 2018, pp. 369-370, ©Emerald Publishing Limited, ISSN 2398-5038 jDIGITAL POLICY, REGULATION AND GOVERNANCE jPAGE 369
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