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A back of the envelope estimate based on the Pareto principle

Posted on by bherrlinger

Facebook Knows It Can’t Offer More Privacy

canada goose outlet canada goose outlet houston parka How much is your privacy on Facebook canada goose outlet website legit worth? canada goose outlet parka

canada goose jacket outlet This question has seen renewed attention following the revelation that political analysis firm Cambridge Analytica, hired by the Trump election campaign, gained access to canada goose outlet store quebec the private information of more than 50 million users. One of the possible responses that’s generated some discussion is the creation of a paid tier that’s free of ads and data sharing. Such an option would likely be socially beneficial Canada Goose Outlet and canada goose outlet belgium have considerable public appeal. But my guess is that it would be pretty expensive, too. canada goose canada goose factory outlet vancouver jacket outlet

canada goose outlet sale Let’s start with some rough calculations. Facebook’s annual ad revenue was about $40 billion (roughly Rs. 2.65 lakh crores) in 2017, with 2.13 billion monthly active users. That means the average user is worth roughly $20 (roughly Rs. 1,330) in ads to Facebook a year. That’s probably already a lot more than many users would pay for privacy on the social network. canada goose outlet trillium parka black canada goose outlet sale

canada goose outlet new canada goose sale uk york city But the price also depends on who would choose to pay for greater privacy. And it’s likely that many of the users who would opt for more protection could be worth more than $20 each to the company. canada goose outlet new york city

canada goose outlet shop canada goose outlet in canada Why’s that? First, the value canada goose outlet orlando of keeping your data private increases with the amount of data you provide on the platform; by the same token, the more data you give Facebook, the better it can advertise to canada goose outlet store near me you. Similarly, you might find privacy especially valuable if there’s something unusual or unique about you that makes you especially easy to target. canada goose outlet shop

goose outlet canada The canada goose outlet florida people canada goose outlet black friday sale who can afford a paid tier are on average wealthier; that too makes them more valuable to advertisers. And canada goose outlet official some of them already have browser ad blockers, so it’s hard to reach them via other channels. goose canada goose outlet in vancouver outlet canada goose outlet new york city canada

canada goose outlet uk sale To make up for those sorts of canada goose kensington parka uk customers canada goose outlet shop opting out of data sharing, Facebook would have to charge a lot more than the average of $20 just to break even. A back of the envelope estimate based on the Pareto principle 80 percent of the ad revenue coming from 20 percent of users suggests that if mostly high value users purchase privacy, then Facebook would need to canada goose jacket outlet toronto charge closer to $80 (roughly Rs. 5,300) a year. canada goose outlet uk sale

canada goose outlet store uk That’s much more than even high estimates of the value most people attach to having access to Facebook. And it’s still a substantial underestimate of the likely price. According to Facebook’s annual report, the company’s 239 million North American users are responsible for about four fifths of ad revenue; applying the Pareto principle to them would suggest annual privacy prices in the range canada goose outlet new york of $500 (roughly Rs. 33,200) a person. canada goose outlet store uk

canada goose outlet online If price alone were the question, Facebook might indeed want to charge huge amounts for enhanced privacy. The users who buy out won’t all be the most valuable users, and canada goose outlet online store review it would be pretty lucrative if canada goose outlet store montreal the company could sustainably charge some customers much more for privacy canada goose outlet in uk than the annual ad revenue they generate. But that’s unlikely to work out in the long run. canada goose outlet online

canada goose outlet jackets Putting a high price on privacy would make it clear just canada goose jacket uk how much Facebook’s user data is worth. We’d probably see increased calls to share that canada goose outlet uk fake value by giving canada goose outlet phone number users a portion of revenues. The consumer led drive for increased privacy would likely accelerate, too, prompting a growing number of users to leave the platform (assuming they can’t afford or are unwilling to pay for greater privacy). canada goose outlet jackets

canada goose outlet uk A user exodus plus enhanced scrutiny of data practices would quickly eat away at the profits from offering the paid canada goose coats uk tier, making the whole thing a losing proposition. canada goose canada goose outlet black friday outlet uk

canada https://www.canadagoosejacketca.ca goose outlet nyc Facebook canada goose outlet in toronto must have run the numbers on this already, using much better information than we have here. The idea of a paid tier isn’t new; if Facebook hasn’t offered such an option, the company probably thinks it would be canada goose parka outlet uk a money loser. So if we want Facebook users to have control over how their data is shared, we may need outside pressure. The company isn’t likely to provide the option on its own. canada goose outlet nyc

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