The revenue comes from the power to influence, not selling data.
Advertising is not just placing adds, it is about the advertisements being effective in influencing and persuading people. The more effective Google, Facebook, Amazon, etc can be at influencing your opinion, the more essential it is for companies to allocate a budget to spend on these platforms.
These are the richest companies in the history of humanity, and that money does not come from selling data.
Yes, anonymised, aggregate data is a revenue source, but it is not a significant one, within the heading ‘payments and fees’ in the graph.
The biggest source of revenue of Facebook, Google and other media enterprises, is from advertising, not from the sale of data.
One of the main metrics that affects stock price, and is an indicator of potential earnings, is ‘user engagement’, or the total time people spend on web sites. This is the equivalent of ‘ratings’ for a television show. The more watched the program, the more it can earn.
While Facebook’s spokespeople did not reply to our inquiries, we will offer one clarification in their defense: They do not “sell off” data, technically. They sell a service to advertisers. Looking to peddle your hemp-rope macramé vests? Facebook will happily take your money and use algorithms to serve your ads to a carefully curated subset of its users. Those with no taste perhaps. Or no arms.popular mechanics: How Much Money Facebook Gets From Selling Your Data
No matter how you look at it, the answer is the same. The other metric that affects the stock price is revenue, and the revenue is from advertising. Advertising sounds innocent enough, and at one extreme advertising is simply providing information to consumers, but at the other extreme, it can be propaganda: to influence or persuade an audience to further an agenda.
The ultimate profit arises when a large audience can only be effectively reached through one channel, such as people getting all their news from Facebook, or buying all their products from the catalog that is Amazon or doing all their research through Google.
In these scenarios, if a company wants to promote a product, it has no choice. Either promote a product though the relevant channel, or consumer wills will not be informed, persuaded or influenced to buy the product. Paying these companies their fee to influence consumers, becomes an essential cost of business, and thus becomes a part of the cost of the product.
At the extreme, the product with highest allocation of its price being allocated to influencing consumers via platforms, becomes the most successful product, even though that means allocating the smallest percentage to providing the product itself.
The platforms can effectively ‘tax’ everything that consumers purchase, and their ability to influence can enable them to play a role in who governs, and the rules of society. It is a step beyond the 4th estate, and those running the platforms have even influenced the definition of the 5th estate to suggest the new power is held by the people on the platforms, and for the definition to ignore the greater power of the platforms themselves.