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Inside Facebook's brilliant plan to hog your data

Mike Elgan | May 5, 2014
Facebook's Anonymous Login is designed to create scarcity in the user data market, which increases the value of that data, and forces more small companies to get that data through Facebook's ad network, rather than from the users directly.

There's more.

In an interview, Zuckerberg characterized the process of moving from what he calls "anonymity" with an app to divulging personal data to the app as a "nice upgrade path" that maintains a "seamless experience without having to set up a new identity within the app."

As he said on stage at his company's F8 developers conference: "You can always sign in with your own identity once you're more comfortable with the app." And then he explained that if you do offer your personal information, you can have what is essentially a line-item veto over what information is shared. For example, Zuckerberg said, "if someone wants to share their email address with an app but not their birthday, they can make that choice with a couple taps."

So even if users choose to divulge information to an app — perhaps because they're given an incentive to do so — they'll have the option of withholding any personal data they choose. (It's important to note that, as with many new features Facebook has announced in the past, Facebook Anonymous Login won't be fully operational for many months.)

Facebook presented Anonymous Login as a benefit to users because they can share less data. It does benefit users for that reason. The company also says Anonymous Login is a benefit for app developers because they get around user hesitation to try their apps. And it may prove to benefit developers as well for that reason.

But it's clear who really benefits from Anonymous Login: Facebook, of course.

Why Anonymous Login is brilliant

The future success or failure of Facebook depends entirely upon the company's ability to make increasing amounts of money on advertising.

In the past five years, advertising-centric companies like Facebook made most of their money by selling ads that would be seen inside desktop PC Web browsers.

Two trends are changing all that. Users are spending far more time with mobile devices like smartphones. And when they use smartphones, they're spending nearly all of their time using apps, not mobile Web browsers.

So if Facebook is to keep growing its advertising revenue, it must sell ads inside mobile apps.

Within the world of advertising, there's another long-term shift — from broad-based, general advertising to specific, personalized and targeted ads.

You can't personalize ads unless you know all about the individual you're targeting. That's where user data comes in. It's also why everybody wants that data. The future of advertising monetization is based on possession of, control of or access to user data.

In a world in which every single mobile app gathers as much data as it can from every user, the value of that data goes down. That's the genius behind Facebook Anonymous Login: It creates an incentive for users to not share data, and an incentive for app developers to not request it.


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