This Is Facebook's Mobile Future -- And Yours

Facebook acquired a small data compression company, which points to harvesting even more information about you.

Jun 17, 2014 at 8:30PM

In HBO's Silicon Valley, a start-up fights to create a business around data compression. The show sits right on the edge of reality and parody with outrageous personalities, barely pronounceable start-up names, and millions of venture capital dollars thrown around. What viewers may not know is that a real company has already created a data compression service, which Facebook (NASDAQ:FB) acquired last October for $120 million.

The company, Onavo, offers data compression to mobile users to help them conserve data usage and stay under their cellular plan's limits. By compressing images and other data and serving it through Onavo's private network, Onavo users can make the most of their data caps.


The path of the Internet to your phone using Onavo. Source: Onavo's website.

Because all of a user's mobile traffic routes through Onavo's servers, Onavo has an intimate knowledge of a user's behavior, app selection, and web history. This goldmine of information is more than Facebook could gain through its traditional services. And this is the future of the advertising-based web industry.

The history of 'privacy'
With the old Internet, websites were only able to track your behavior when you visited them. A website like Google (NASDAQ:GOOG) (NASDAQ:GOOGL) could only know what you searched for and subsequently clicked on. Then, little files stored on your computer called cookies made it possible for a website to track you across other websites. As other sites implemented Google Analytics to track their own traffic, and allowed for users to login with Facebook or make comments with their Facebook account, Google and Facebook could compile even more user data.

Taking control of the rest
Now, Google is building out its own fiber network to bring the Internet directly to consumers. Currently in Central Kansas City, Missouri, Kansas City, Kansas, Provo, Utah, and Austin, Texas, with plans for nine other cities, Google Fiber charges $70 per month for speeds up to 1 gigabit, and a free tier at traditional broadband speeds for only the cost of a $300 installation. The privacy policy for Google Fiber has apparently changed since 2011 when Google Fiber's terms of service used to state that it "does not store the content of your online communications or the content of data transfers." The current privacy policy for Google Fiber now does not associate your browsing data with your Google account (except by consent or law), but Google can harness the anonymous data to build advertising profiles.

While Facebook isn't building a fiber network for consumers, the acquisition of Onavo represents another way to capture all of a user's web traffic, especially as we consume more content through mobile devices. The value to a user is real, as those in developing countries buy more smartphones and those in developed countries hit data caps. And for many users, giving up such data isn't a big deal.

In search of new revenue
In the past, Facebook and Google have monetized the most obvious aspects of their business. A person searches for shoes, so display shoe ads. A person 'likes' a shoe brand, so display shoe ads. Now, with advertising data too dense for a human to sift through, algorithms will learn which consumers to target for a certain brand or product based on the whole of their browsing data -- not just the slice of web activity that these companies used to have.

A person viewed a tweet with a picture of a shoe on their phone? Display a shoe ad on each app and website they use. Through controlling the beginning of the Internet pipe, mobile or otherwise, these companies will become scarily efficient with advertising.

Think of the advertising possibilities in wearables
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Dan Newman has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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