Inside Facebook's brilliant plan to hog your data

Facebook's 'Anonymous Login' is about neither anonymity nor logging in. It's about creating scarcity in the market for user data.

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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.

Meanwhile, you can be sure that Facebook's own apps -- including the Facebook app, Instagram, WhatsApp, Moves, Messenger, Facebook Camera, Paper and others -- will be collecting every scrap of user data possible.

In a world in which many mobile app developers embraced Facebook Anonymous Login, the amount of user data "in the wild" would go way down. And the value of the data in the hands of Facebook would go up.

If mobile app developers want to sell contextual ads, they'll have to come to the companies that have all the data, as well as the ad network to serve up highly personalized ads. And that will be Facebook (and a small number of competitors, especially Google).

Facebook Anonymous Login, in combination with other announced offerings, does provide some benefit to both consumers and app developers. But above all, it's designed to create scarcity in the user data market. And when user data is scarce, two things will happen: The data itself will grow more valuable, and more small companies will be forced to get that data through Facebook's ad network, rather than from the users directly.

It's a truly brilliant move on Facebook's part.

This article, "Inside Facebook's Brilliant Plan to Hog Your Data," was originally published on Computerworld.com.

Mike Elgan writes about technology and tech culture. You can contact Mike and learn more about him at http://Google.me/+MikeElgan. You can also see more articles by Mike Elgan on Computerworld.com.

Copyright © 2014 IDG Communications, Inc.

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