Facebook (FB) is wearing a figurative scarlet letter. Users of the social media platform willingly share some of their personal information, but now those users are upset because they are learning the extent to which their information has been collected and monetized.
Wednesday, Facebook said it was addressing the situation by making it easier to find its privacy settings. In doing this, Facebook is playing the role of the "good guy." However, the issue isn't access to your information by others. The issue is the massive amount of data that Facebook itself collects and sells.
While, Facebook is being publicly portrayed as a bad apple in the digital world, what about the rest of the bunch? Other companies are collecting your data, just like Facebook. What if they are just as culpable as Facebook, or worse, but we don't realize it yet?
For example, an information technology consultant named Dylan Curran recently obtained information that Alphabet/Google (GOOGL) had collected about him, and detailed his findings. He learned that Google:
- Constantly tracks his location. In fact, it created a complete map of everywhere he had been, including time and date, since the moment he started using Google on his phone.
- Recorded all online activity, including a complete search history, and a complete YouTube viewing history, across all of Curran's devices.
- Keeps a massive file on each user. Curran's file was 5.5 gigabytes, or the equivalent of 3 million Word documents. Included in his master file were items that Curran had previously deleted.
What about Twitter (TWTR) ? Wall Street offers differing opinions. J.P. Morgan tells us Twitter is being unfairly punished for Facebook's sins. Analysts at the investment bank say the selloff is overdone, and maintain a $36 target price on the stock.
On the other hand, Citron Research, which made an accurate bullish call on shares of Twitter just a few months ago, has turned bearish on the stock. Citron's Andrew Left says he flipped from long to short based on data privacy concerns. According to Left, Twitter is more vulnerable to privacy issues than any other stock.
Companies like Facebook, Alphabet, and Twitter tell us that they collect this information in order to effectively target us with ads. For example, if I start watching YouTube videos with titles like, "How to Change a Diaper", they'll assume that I'm a new parent and target me accordingly. I'll begin to see ads for diapers or toys.
That explains a certain degree of information gathering, but what future purchase could possibly justify this massive collection of data?
Here's why I'm avoiding Facebook, Twitter, and Alphabet right now: most people are unaware of the level of data collection in which these companies are currently engaged.
They're about to find out. Officials from all three companies have been invited to appear before the Senate Judiciary Committee on April 10, for a hearing on the future of data privacy.
That's just for starters. The Federal Trade Commission announced earlier this week that it was looking at Facebook's practices. It wouldn't surprise me if that investigation was expanded to include other companies as well.
I'm avoiding Facebook, Google, and Twitter because this story isn't going to go away. It affects nearly everyone. Many users will see this as an invasion of privacy, regardless of what is written in the terms of service agreements. I can't see an upside to the avalanche of negative publicity and eye-opening revelations that are about to occur.
Ed Ponsi is a regular contributor to Real Money Pro. Click here to learn about this dynamic market information service for active traders and to receive daily columns from Ponsi, Paul Price, Bret Jensen and others.