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The Price of Facebook

-- By JessicaGuzik - 12 Mar 2012

Introduction

The dangers of Facebook’s ability to track our personal data continues to become more apparent, yet most users continue to use this and similar on-line services despite their implications regarding the loss of our privacy. For me, this raises a major question that I want to explore: why do consumers of Facebook so readily relinquish their personal information in exchange for this, and similar, social networking services? I hypothesize that my generation is so accustomed to the conveniences and benefits that we believe we are getting from these types of services, that we overvalue the harm that would result from our choosing to disconnect from these services. This dissuades us from unplugging even in the face of violations of our privacy. I therefore want to explore other potential arguments to persuade a non-privacy-conscious generation that the use of these services is not in our interests as consumers. In this paper, I focus on the opportunity cost of relinquishing our personal information to a third party for free. I argue that we are giving third parties valuable information, and we should therefore at least question whether access to their social networking services is adequate compensation for the handing over of this information.

The Challenges

Generation Y’s Misconception of Privacy

I hypothesize that my generation in particular has a hard time grasping the concept of privacy, because most of us are not familiar with a time in our adult lives when social media did not play a role in our social interactions. We are less hesitant to relinquish information via the internet because we have a lessened awareness of the fact that we are “sharing” this information with anyone besides our acquaintances. We have been deprived of the opportunity to experience a life in which our personal activity was restricted to the physical realms in which we experienced it. Privacy has a different meaning to us than it does to the generation that precedes us.

More Problems: the Difficulty of Unplugging

This problem is exacerbated by the fact that we find it difficult to imagine living our day-to-day lives without sharing our information with third parties and having access to the information of others as a result. As Mark Zuckerberg was quick to recognize, there was a type of social craving that couldn’t be satiated in the absence of a service like Facebook. Our desire to share our own information while simultaneously being able to access the information of others is a powerful one, and our use of Facebook to satiate this borders on addiction. Even for those who want to unplug, these third parties do not make it easy. The process of removing oneself from Facebook went from being very simple back when the website was first created, to being complicated enough to confuse a significant number of Facebook users. Whether we desire it our not, getting our virtual selves out of this realm of cyberspace is not a straightforward matter.

The Economic Value of Our Internet Presence

If our understanding of privacy is incomplete or if we overvalue the cost of dissociating ourselves from the social media sphere of cyberspace, then the loss of privacy argument seems moot to us. For a generation accustomed to instant gratification and convenience at the click of the mouse, the dangers of relinquishing our privacy are difficult arguments to sell to us. For the purpose of persuasion, it may be valuable to explore a different approach for evaluating the price we pay to use Facebook. This begins with undoing the false notion that Facebook is “free.” Facebook is only free in the most obvious sense of the word, and this is because the company chooses not to charge users money to access the service. Without users’ activity on the site, there is no way to generate revenue other than to charge users to create an account. It is our personal information that lies at the base of the website’s profitability. And in exchange, we get free use of the service. We are essentially purchasing access to this service using our personal data as currency. Given the multiplier effect that occurs when these services gather enough data to fill in the information gaps that exist, the economic value of our on-line activity is significant, and goes beyond the face value of the information that we choose to hand over. This aggregation effect seems to dampen the effects diminishing marginal returns that one might ordinarily expect. This makes sense given that information is not subject to diminishing marginal returns in the same way that other commodities are. With Facebook’s valuation approaching $100 billion, it is difficult to imagine that the economic value of our activity and information is insignificant. If we could avoid the middle-man and sell our own information straight to third parties, how much money might it command on the open market? Because we’re allowing websites like Facebook to step in and conduct the transaction for us, we should question whether we are giving Facebook an excessive commission. Is free access to a social networking service adequate compensation for forgoing participation in a market that allows consumers to extract economic value through strategic disclosure (or non-disclosure) of their information? This raises the possibility that tools like the freedom box could be used to protect more than our privacy – perhaps the ability to control who receives our personal information and how they receive it may allow us to protect the economic value of our personal information. I recognize that such an approach may run counter to the goal of protecting our privacy in many ways, and may introduce an entirely new set of social and political ills. But as I continually observe the difficulty of getting Generation Y concerned about the privacy issues that we face, I seek out a solution that may appeal to a population that has a hard time appreciating the importance and meaning of privacy.

http://www.forbes.com/sites/chunkamui/2011/08/08/facebooks-privacy-issues-are-even-deeper-than-we-knew/2/ http://www2.scnow.com/news/2012/mar/04/column-will-endless-connectivity-drive-us-unplug-ar-3338403/ http://articles.cnn.com/2009-04-23/health/ep.facebook.addict_1_facebook-page-facebook-world-social-networking?_s=PM:HEALTH http://glennstok.hubpages.com/hub/Obsolete-Facebook-Profile-Charade http://dealbook.nytimes.com/2012/02/01/tracking-facebooks-valuation/

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