Consumer Demographics

Case 3

4-13)   Facebook collects consumer demographics such as age, status, location and any information that provides details of one’s life to create a consumer profile. This information is very valuable and useful for a marketing and advertising companies. On the other hand, this information is collected without the consent of the users. This is the ethical dilemma in this case.

Even though users can switch privacy settings, users will be held back from basic security features from Facebook. “If you turn the setting off, you have a privacy problem with identity theft. If you turn it on, you have a privacy problem with Facebook’s data collection. Consumers are in a no-win situation” (Allen, 2018, Para. 22). Facebook is unethically selling and using consumer data for personal profits. When Facebook introduces new features, it is evidently made to update consumer profiles. Even though Facebook has security, it does not provide enough and sufficient security because of the massive information they give out.

4-14)   Facebook is not a subscription based social networking site. Due to this, their business model is strictly related to ad revenue which is also their main source of revenue. The correlations between privacy and their business model is simple. The more privacy they provide, the less revenue they earn. This is because having offered more privacy restricts marketing companies to access certain aspects of the consumer profile. With less privacy, Facebook can sell more of the user’s info and generate more revenue.

4-15) One weakness behind Facebook’s privacy issue is that Facebook makes it very difficult for the users to understand what they have control of. There is a lack of communication between the user and Facebook. If a user wants to change privacy settings or access the settings, Facebook makes it very confusing and difficult to change. Another weakness is the unequal privacy options in different countries, this opens new markets for marketers and increases revenue for Facebook. Facebook did not realize that providing user info to third party companies would be an issue for the user. So, this assumption is a management weakness that puts users into risk.

In terms of the organization, it makes simple tasks difficult to accomplish. Something as simple as deleting your account, requires outside assistance. There are many technology weaknesses faced by Facebook. The Beacon advertising service originally allowed users to opt-out. However, even after users opted out, Facebook continued sending out information. Also, most services and features are launched without user permission. Facebook makes it seem like they are doing the user a favour, but it is simply another way to sell information.

4-16) Personally, I think Facebook will be able to have a successful business model without invading privacy. Facebook still has 2.32 billion active monthly users today (Statista, 2018), even after the controversy they faced. In order for Facebook to be successful without invading privacy, they must make a clear distinction of what information they are using. This will avoid the legal troubles and make their advertising model legit. In terms of revenue, I think there will be a decline but, Facebook will eventually find different alternatives to make money.

References

Facebook users worldwide 2018. (n.d.).

John, A. S. (2018, June 27). CR Researchers Find Facebook Privacy Settings Maximize Data Collection. Retrieved from https://www.consumerreports.org/privacy/cr-researchers-find-facebook-privacy-settings-maximize-data-collection/ 

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