Future Tense

Facebook Earns $132.80 From Your Data per Year

But it’s valuable in other ways, too.

Zeroes and ones floating up through the Facebook logo to become dollar signs.
Photo illustration by Slate. Photo by Facebook.

In 2013, software company Six4Three launched an iPhone app, Pikinis, that let creeps more easily find swimsuit photos posted by their Facebook friends. Two years later, Facebook cut off Six4Three’s access to Facebook users’ friends’ data, ruining the hunt for bikini pics. Shortly thereafter, Six4Three sued Facebook, alleging anti-competitive behavior, and on Nov. 6, NBC News published thousands of pages of leaked documents from that lawsuit. The newly released files indicate that between 2013 and 2015, moves that Facebook touted as protecting consumer privacy—like stopping Six4Three and other companies from accessing the names, photos, and likes of their users’ Facebook friends—were really about safeguarding the economic value of consumers’ data.

If you’ve watched Mean Girls, you perhaps remember the reason why Gretchen Wieners’ hair is so big: “It’s full of secrets.” In 2010, when Mark Zuckerberg announced the launch of a Graph API to open up Facebook users’ data to third-party developers, he declared that the company was “building a web where the default was social.” For example, if a music app could pull the favorite musical artists of the Facebook friends of its own customers, it could use that information to drive better song recommendations. But within a few years, Zuckerberg realized what Gretchen Wieners could have easily explained: Social information is much more valuable when you use it to reward friends and punish enemies, rather than handing it out willy-nilly to anyone who comes asking.

According to the leaked documents, Facebook executives worried that new social networks and messaging apps could get started using Facebook’s data as a jumping-off point. For instance, MessageMe, a company that in early 2013 was the second most popular social network in the U.S., had used Facebook graph data to support its “Find Friends” feature. Facebook’s disappointing IPO in 2012 had turned up the pressure on the company, and Facebook’s vice president of product management, Sam Lessin, lobbied Zuckerberg to lock down customer data from competitors, saying the company needed to stop “selling off our assets in a way that transfers wealth from ourselves to others.”

Douglas Purdy, a director of product at Facebook, suggested that the company divide up apps into “three buckets: existing competitors, possible future competitors, [or] developers that we have alignment with on business models.” According to the dictates of a policy internally called “PS12N,” competitors would lose their access to the Facebook graph data; noncompetitors could keep their access to user data if they signed a “private extended API agreement with Facebook.” The emails reveal that Facebook discussed making these private agreements conditional on the third party sending over its own valuable user data to Facebook, or on the company making big advertising purchases with Facebook. As Facebook debated the principles it should use to organize strategy, executives landed, primarily, on “reciprocity”: If you want Facebook’s data, send Facebook some useful data back. Mark Zuckerberg himself explained, “Sometimes the best way to enable people to share something is to have a developer build a special-purpose app or network for that type of content and to make that app social by having Facebook plug into it. … [T]hat may be good for the world, but it’s not good for us unless people also share back to Facebook and that content increases the value of our network.”

The documents also illustrate the company’s deliberations about how to announce the changes to the public. Executives ultimately landed on what an employee called the “Switcheroo Plan”: Facebook bundled in the decision to cut off third-party access to user data with other unrelated privacy updates, and explained it all under the new slogan “people first.” The fact that user data would still be available to some third parties, as long as the companies gave Facebook enough money and didn’t pose a competitive threat, was conveniently elided. Amazon, Sony, Tinder, and Microsoft are among the third parties that kept their user data access, exchanging property to make it worth Facebook’s time. Other products, like Voxer and Twitter’s Vine (RIP) lost access.

This all points to something crucial: Our data is valuable to Facebook, above and beyond what the company has previously disclosed. Facebook’s average revenue per user in the United States and Canada totaled $132.80 in the past four quarters—seven times more than the $18.70 average revenue per U.S. and Canadian user in 2013, the year after Facebook’s IPO, and the start of the period of data lockdown that the released documents describes. Notably, Facebook is earning triple the revenue from its U.S. users as from its users in Europe (where average revenue per user is a mere $41.91 annually). Part of that is attributable to the fact that American consumers spend more in general—per capita consumption in the United States is about 80 percent higher than in Europe. But Facebook having to comply with much stronger consumer privacy rules in Europe and European regulators taking a much stronger tack on anti-competitive practices in the tech industry probably play a role as well.

The newly leaked Facebook documents reveal that the business model behind data isn’t always as straightforward as “use this product, and in exchange, you’ll have to look at a few advertisements.” In fact, a legitimate advertising business may give Facebook cover for what appears to be a more controversial business in selling or bartering data, one that the company has repeatedly denied engaging in, both before and after portions of these documents were leaked in November. Yet these documents show that Facebook’s director of developer platforms and programs, Konstantinos Papamiltiadis, instructed third-party apps that they would “need to spend on NEKO [mobile advertisement] at least $250K a year to maintain access to the data.” Facebook data is clearly valuable not only because it helps Facebook target advertisements, but also because other companies want it, for purposes those companies don’t disclose, and would be happy to buy some ads in exchange for continued data access. For example, the filings reveal the Royal Bank of Canada was disturbed it might lose Facebook social data. After Facebook employees confirmed “the existence of a contract for a large advertising expenditure,” they gave RBC whitelisted access to a restricted API.

It’s easy (if clearly ill-advised) to write off advertising, even targeted advertising, as harmless—after all, we all perceive ourselves as immune to the effects of internet banners. It’s much harder to defend the general principle that, for example, third parties should be able to buy detailed lists of every address at which we’ve ever lived, our current contact information, the most recent purchases we’ve made, our voting behavior, and our personality traits. As Kalev Leetaru, senior fellow at Auburn University’s Center for Cyber and Homeland Security, writes, “any interaction you have with any company in your daily life might result in your data being resold behind the scenes without your informed consent.”

The data economy is growing. PwC expects the market for personal data will rise to $400 billion by 2025. Although Facebook mines and repurposes this data for its economic value, as Garrett Hazelwood pointed out in Slate, our data is “not just some inert commodity,” and we lack agency over how it is sold, resold, and used.

Facebook has not contested the authenticity of the leaked documents, although in an April 2019 statement, Paul Grewal, a vice president at Facebook, said, “The set of documents, by design, tells only one side of the story and omits important context.” Six4Three founder Ted Kramer has stated he did not leak the documents, although in a July court filing, Facebook’s lawyers alleged the leak was orchestrated by Six4Three and its lawyers, calling it one of the “most damaging violations of a protective order in history.” That’s one clear clue that Facebook understands it was better off keeping this particular set of secrets hidden. We protect that which we hold dear, and the lengths Facebook went to as part of PS12N to start hiding our data from its competitors reveals how much our data is truly worth.

Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.