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Facebook Finally Kills Its Controversial Spying App

By Evan Niu, CFA – Updated Apr 11, 2019 at 4:15PM

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The social networking giant got plenty of value out of the Onavo acquisition.

Facebook's (META 0.54%) Onavo has always been controversial. The app, which masquerades as a VPN that offers users greater privacy, has been a thinly veiled way for Facebook to spy on users and monitor their activities, which the social networking giant would then use to shape monumental decisions such as product road maps or major acquisitions. For example, Facebook knew Snap's user growth was already rapidly decelerating, even before the Snapchat parent ever filed its IPO documents.

More recently, Facebook landed in hot water after using distributing an app called "Facebook Research," which was built using Onavo code, through Apple's Enterprise Certificate program to bypass the App Store. Apple had removed Onavo from the App Store last year for violating its data collection policies, but it remained available on Google Play. Until now.

Broken padlock on a circuit board

Image source: Getty Images.

Facebook got plenty of value out of the Onavo acquisition

TechCrunch reports that Facebook has finally decided to shutter Onavo, removing the VPN spying app from Google Play. Considering ongoing scrutiny of Facebook's data practices and growing awareness of what Onavo really does, it makes sense for the company to kill the controversial app. It had acquired Onavo back in 2013 for an estimated $200 million, and it's safe to say that Facebook got quite a bit of bang for its buck in the years since.

Much of Facebook's efforts to replicate popular features in other social media apps -- most notably the Stories format from Snapchat -- were driven by insights gleaned from Onavo. Stories has become one of the most popular sharing formats across social media platforms (even Microsoft's LinkedIn has added Stories), and Facebook is just now beginning to monetize Stories.

"People are creating more Stories and sending more messages, which means these are emerging areas of opportunity for marketers," COO Sheryl Sandberg said on the last earnings call. "Today, we're also announcing that 2 million advertisers are using Stories to reach customers across our family of apps."

Check out all our earnings call transcripts.

Stepping out of the shadows

Instead, Facebook is transitioning its market research toward paid programs while trying to be more up-front about what it's up to. "Market research helps companies build better products for people," Facebook told TechCrunch. "We are shifting our focus to reward-based market research which means we're going to end the Onavo program."

Plenty of companies conduct market research through numerous methods, but Facebook's surreptitious approach was incredibly shady. The "Research" app paid users for unfettered access to their mobile devices, including tremendously sensitive information like location data and private messages, while Facebook obfuscated its role by paying other testing companies to be the front of the app. It would have been far less controversial if the social networking giant was simply more transparent about its market research activities, and killing Onavo appears to be recognition of that fact.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former Director of Market Development and Spokeswoman for Facebook and sister to CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Evan Niu, CFA, owns shares of AAPL and Facebook. The Motley Fool owns shares of and recommends AAPL and Facebook. The Motley Fool owns shares of MSFT and has the following options: long January 2020 $150 calls on AAPL and short January 2020 $155 calls on AAPL. The Motley Fool has a disclosure policy.

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