How does Facebook make billions of dollars in profit, year after year?
Facebook does not sell users’ data per se (the “raw material” of its industry), but rather a series of transformed products which only it can fabricate: prediction services.
Thanks to its gigantic private store of personal data and its machine intelligence fed by the daily behaviour of billions of users, Facebook can show advertisements with unprecedented degrees of personalization.
But this massive collection of personal data makes it possible to deduct indiviudal characteristics with astounding accuracy: after analyzing the “Likes” from 58,000 volunteers, researchers have been able to correctly predict sensitive attributes in most cases, such as “sexual orientation, ethnicity, religious and political views, personality traits, intelligence, happiness, use of addictive substances, parental separation, age, and gender”—all with publicly accessible data.
Facebook’s business model relies on the transformation of personal data into high-performance prediction services. This logic, initially focused on ad targeting, has led the platform into developing extremely sophisticated surveillance technologies in order to better predict our behaviour, ultimately leading to more revenue.