In a move that seems specifically designed to forestall European enforcement efforts, Facebook has announced they will integrate their messaging platforms worldwide, including Messenger and WhatsApp. This follows a move by the German Cartel Office ordering Facebook to stop combining user data across their social media platforms without consent. The integration of the messaging platforms would mean that all users across all platforms would effectively be in one database – exactly what the GCO is trying to prevent. Coincidence? I don’t think so.
Resistance to Regulation
Facebook’s resistance to regulation and to user privacy laws is now legendary, but these current actions directed to making legal enforcement on privacy impossible are remarkable and important to we ordinary publishers and advertisers.
“We can’t combine user data from Messenger and WhatsApp? Ha! Just watch us integrate the products and then let’s see you try to order us to unscramble the omelette!”
Why does this matter to affiliates?
Why does this screw-you approach to privacy regulation matter to affiliates and merchants? It’s because it’s an opportunity to weaken the stranglehold that the Google/Facebook duopoly has on the profit margins of so many online businesses. We have a dog in this fight.
Here’s the thing with Facebook and Google: most of their user data comes from their proprietary tracking tags that are installed on the vast majority of commercial websites today. Those tags enable the functionality of everything from ad serving to conversion optimization to automatic user login, and many of those functions are provided for free by Google and Facebook. As an example, Google will happily provide DFP for Small Business free of charge to any website that wants it. Free is great, but at what cost?
There’s an old saying that if you’re not paying for a service then the product is you. Well guess what? If you’re using DFP to serve your ads then your website data is the product. Ditto a Facebook Like button, or any of the other “free” functions on offer from the duopoly. These utility products and their associated tags get to collect user data on every visitor on every page and every ad clicked across an estimated 80% of all websites and almost 100% of commercial sites.
Google and Facebook Marketing Power
The resulting massive aggregation of data is what allows Google and Facebook to make so much money. The big insight though is that the data originally belongs to the website publishers. That’s you. And me.
That’s our first party data that is being sucked up. And you’re wondering why it can be so hard to make a decent margin online? Why do Google Ads and Facebook’s ad platform take so much of the advertising pie? It’s because they’re using our data to sell ads on our websites. Why is Facebook’s advertising pricing a black box? Why are Google’s auctions so good at extracting profit from the market? Why is there so much online advertising fraud?
Ultimately, all these negative effects on the market are a result of market power by these two massive incumbents. Essentially in their relevant segments they now enjoy the benefits of being effective monopolies, and as a result many people are now calling for them to be broken up. Perhaps that is too extreme, though I haven’t heard a good argument why it should be. In the meantime, privacy regulation – via GDPR or by some US equivalent in the future – is a first step, and much to be supported.
In the end, if we want to see online marketing thrive in the way it should, and affiliate marketing expand exponentially, then we need to see Facebook and Google’s market power reduced. We should all hope that increased enforcement of user privacy succeeds in Europe and is adopted by the USA in a way that is not hamstrung by the lobbying efforts that are already under way.
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