Facebook (NASDAQ:FB) has recently been hit by an angry backlash over an "emotion study" that it quietly conducted on 689,003 users.
Back in 2012, Facebook secretly tweaked users' News Feeds to show a higher number of positive or negative status updates to gauge their reactions. The results of the study, recently published in the Proceedings of the National Academy of Sciences, showed that the tweak slightly encouraged users to post their own positive or negative status updates.
While those results weren't surprising, they sparked a fierce debate about the ethics of the study. On one hand, Facebook users agreed to allow the company to conduct experiments with their data when they initially signed up for the service. On the other hand, privacy advocates felt that users should have been informed and allowed to opt out of the experiment.
Facebook has defended the study, stating that it already informed users when they signed up. Meanwhile, the media has gone on a sensationalist offensive against Facebook. Time claims the social media giant "totally screwed" its users, The Atlantic calls the study "new-level creepy," and Slate labels it as "unethical." But in my opinion, the study was no big deal for three major reasons.
1. Big brother has always been watching you
Fifteen percent of the top 10,000 websites are conducting A/B tests similar to Facebook's social experiment at any given time, according to MIT Technology Review. That means all of your searches, tweets, status updates, emails, and photos could be being analyzed by various companies at this very moment.
That's the nature of web-based companies -- they gather user data to generate market research reports that help them strategize targeted ads and product launches. For people who view the Facebook study as unethical, consider this -- Google (NASDAQ:GOOG) (NASDAQ:GOOGL) mines Gmail accounts, search histories, and location for search data to craft highly profitable targeted advertisements.
It's also surprising that users are alarmed by Facebook's A/B experiment considering the company's other services. Facebook's Graph Search allows advertisers to locate individual users based on social connections, location, and interests. Facebook's Nearby Friends is an opt-in, real-time tracker that lets users find each other on a map. Facebook also owns the rights to all the photos and videos that are uploaded to the site, and reserves the right to use them in any ads for free.
Back in a 2010 TechCrunch interview, Facebook CEO Mark Zuckerberg stated that people had simply "gotten comfortable" with sharing more information on the Internet.
2. Facebook is not your friend, it's a business
Here's a simple fact -- Facebook, Twitter (NYSE:TWTR), and Google can never survive as subscription-based services. Internet users have come to consider social networking sites, like email, to be rights instead of privileges. That's why premium email services, like Yahoo!'s Ad Free Mail ($50 per year), have never taken off.
But Internet users should be aware that they are paying Facebook, Twitter, and Google with something much more valuable -- their personal data. The social networking habits of Facebook's 1.28 billion monthly active users helps the company launch targeted ads, which in turn generates advertising dollars. Last quarter, Facebook's advertising revenue soared 82% year-over-year to $2.27 billion, accounting for 91% of the company's top line -- indicating that each user is worth roughly $7.08 per year. That's pretty good compared to pre-IPO suggestions that Facebook charge $1 per month for an ad-free experience -- which would have undoubtedly throttled its user growth and ad revenues.
Facebook has altered its News Feed in the past with in-feed ads and paid "boosted posts" that rise to the top of friends' feeds. The "emotion experiment" wasn't all that different, but users felt manipulated due to the intentional omissions of certain "positive" or "negative" posts. But in reality, Facebook omits and boosts News Feed stories all the time by lettings users see more frequent stories from contacts with whom the user more frequently interacts with.
3. Facebook isn't a virtual prison
Privacy advocates who complain about Facebook are like vegetarians weeping about factory farming while chowing down on a steak.
The reality is that Facebook provides a convenient service to keep users connected to friends and family. Users don't have to pay Facebook, but Facebook reserves the right to share their data with advertisers -- a fair trade that is clearly stipulated in the terms of agreement. Most importantly, no one forces users to stay on Facebook like a virtual prison -- they can delete their accounts at any time.
Facebook isn't really the best social network out there. Its messaging service is clumsy, game notifications are annoying, and its ads can be intrusive. Google+ arguably offers a more pleasant experience than Facebook, but it has fewer users and mines user data just as much as Facebook does. However, Facebook remains synonymous with "social networking" across the world for a simple reason -- it's the site with the most users and largest global footprint.
The Foolish takeaway
In conclusion, Facebook's study certainly struck a nerve with users, but it's unfair to single out Facebook when other Internet companies are constantly conducting similar A/B studies.
Facebook has undoubtedly made our lives easier through instant social connections and location-based services. Its "emotion study" was certainly odd and unnecessary, but let's stop overreacting -- it was a slight, temporary tweak that only affected 0.05% of all Facebook users worldwide.
Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.
Leo Sun owns shares of Facebook and Google (C shares). The Motley Fool recommends Facebook, Google (A shares), Google (C shares), and Twitter. 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.