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Here's How Much Your Privacy on Facebook Is Worth

By Evan Niu, CFA - Feb 26, 2020 at 9:42AM

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A recent study estimates how much Facebook would have to pay users for permission to share data.

Facebook (META -0.76%) is in the midst of a massive pivot toward privacy following years of controversy and data scandals. It's been less than a year since CEO Mark Zuckerberg laid out his "privacy-focused vision" in a lengthy manifesto that pins Facebook's future on encryption, ephemeral posts, and interoperability across the company's messaging platforms.

Over the years, Zuck has regularly dismissed the notion of introducing a subscription model that eschews ads altogether in favor of a monthly fee. "All of the research that we have -- it may still end up being the right thing to offer that as a choice down the line -- but all the data that I've seen suggests that the vast, vast, vast majority of people want a free service," Zuckerberg said a year ago.

Mark Zuckerberg standing in front of a display reading "The future is private."

Mark Zuckerberg. Image source: Facebook.

Speaking of research, a recent study has just attempted to pin monetary values on certain aspects of online privacy.

Putting a price on privacy

This month, the Tech Policy Institute (TPI) released the results of a study across six different countries -- the U.S., Argentina, Germany, Mexico, Brazil, and Colombia. The study looked at different forms of data sharing and asked respondents how much Facebook would have to pay them to consent to disclosing information to third parties. The results are less about how much users might be willing to pay Facebook to remove ads, but rather seek to estimate a monetary value associated with privacy.

As might be expected, respondents placed the highest average value on financial data such as a bank account balance ($8.44 per month), biometric information like fingerprint data ($7.56 per month), and private texts ($6.05 per month). Sharing location information was worth just $1.82 per month.

German consumers tended to assign higher values for privacy compared to users in the U.S. or Latin America, according to the study. That's partially related to a strong preference for financial privacy. There was a particularly stark contrast in how much consumers valued their personal contact information.

Country

Amount Facebook Would Need to Pay for Permission to Share Contact Information

Germany

$8 per month

U.S.

$3.50 per month

Mexico

$2.30 per month

Colombia

$0.52 per month

Data source: TPI.

On average, women also appeared to value privacy more than men, as did older users. There was no apparent correlation between income and privacy valuation.

"Differences in how much people value privacy of different data types across countries suggests that people in some places may prefer weaker rules while people in other places might prefer stronger rules," TPI's Scott Wallsten, one of the study's authors, told Reuters.

It's also worth noting the stark differences in Facebook's monetization across geographies. Facebook's average revenue per user (ARPU) in North America is over 15 times higher than its "Rest of world" segment.

Region

ARPU (Q4'19)

U.S. and Canada

$41.41

Europe

$13.21

Asia-Pacific

$3.57

Rest of world

$2.48

Data source: Facebook.

If Facebook were to charge a subscription fee to remove ads, these figures represent how much Facebook would require throughout a quarter in order to offset ad revenue. For example, Facebook would need to charge a monthly subscription fee of around $13.80 in the U.S. and Canada to break even from removing ads, on average.

The tech giant could ostensibly pay U.S. users $3.50 per month for permission to share their contact data with third-party advertisers and then sell that information wholesale. Facebook currently does not sell personal information to advertisers directly, but instead targets users on advertisers' behalf. Data leaks and breaches are a different story.

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