Inside Facebook's brilliant plan to hog your data

Facebook's 'Anonymous Login' is about neither anonymity nor logging in. It's about creating scarcity in the market for user data.

Personal data is the new currency.

Companies want to get information about people -- their location, age, relationships, interests, preferences and much more -- because when they have that information they can offer more powerful, more monetizable apps and services and can make money with high-priced personalized ads.

But people want to prevent companies from getting their personal information for fear of being exploited, surveilled, abused and sold out.

It's in the context of this tension that Facebook CEO Mark Zuckerberg this week announced a new offering called Anonymous Login. It's one of the most ingenious ideas Facebook has ever had.

Here's how it's supposed to work: If you provide your personal data to Facebook, you can then install and use apps that support Anonymous Login without giving your personal data to the app maker, at least initially.

In other words, a mobile app that supports Facebook Anonymous Login would allow logged-in Facebook users to interact with the app as if they had supplied their personal information, even if they hadn't actually done so.

Facebook says the feature provides "anonymity." But that's not accurate, because you do have to tell Facebook who you are. And it's not "pseudonymity," either, because you're not using a surrogate identity.

Facebook is walking a very fine line between the need to attract users (with a promise that they won't have to share their data) and the need to attract app developers (with promises of a greater number of users who will hand over some personal data eventually).

When he announced Facebook Anonymous Login, Zuckerberg seemed to imply that people wouldn't use apps indefinitely without ever divulging their personal details. He implied that once you've decided to trust or use an app, you'll be expected to agree to have personal information collected by the app maker. "Even if you don't want an app to know who you are yet," Zuckerberg said -- note the word yet -- "you still want a streamlined process for signing in." It's a way to "try apps without fear," he said -- note the word try.

But I wonder.

Facebook promises app developers a process for converting "anonymous" users into data-divulging users. But I haven't seen any mechanism or contract or agreement or policy in any of this that might trigger the need for people to hand over personal information to app makers after some specific period of time.

My guess is that it will be up to the app makers to come up with incentives that will entice users to cough up their data. The implication that people would eventually hand over their data is probably just Facebook's attempt spin the service in a way that's friendliest to app developers as it tries to win them over to its platform.

There's more.

In an interview, Zuckerberg characterized the process of moving from what he calls "anonymity" with an app to divulging personal data to the app as a "nice upgrade path" that maintains a "seamless experience without having to set up a new identity within the app."

As he said on stage at his company's F8 developers conference: "You can always sign in with your own identity once you're more comfortable with the app." And then he explained that if you do offer your personal information, you can have what is essentially a line-item veto over what information is shared. For example, Zuckerberg said, "if someone wants to share their email address with an app but not their birthday, they can make that choice with a couple taps."

So even if users choose to divulge information to an app -- perhaps because they're given an incentive to do so -- they'll have the option of withholding any personal data they choose. (It's important to note that, as with many new features Facebook has announced in the past, Facebook Anonymous Login won't be fully operational for many months.)

Facebook presented Anonymous Login as a benefit to users because they can share less data. It does benefit users for that reason. The company also says Anonymous Login is a benefit for app developers because they get around user hesitation to try their apps. And it may prove to benefit developers as well for that reason.

But it's clear who really benefits from Anonymous Login: Facebook, of course.

Why Anonymous Login is brilliant

The future success or failure of Facebook depends entirely upon the company's ability to make increasing amounts of money on advertising.

In the past five years, advertising-centric companies like Facebook made most of their money by selling ads that would be seen inside desktop PC Web browsers.

Two trends are changing all that. Users are spending far more time with mobile devices like smartphones. And when they use smartphones, they're spending nearly all of their time using apps, not mobile Web browsers.

So if Facebook is to keep growing its advertising revenue, it must sell ads inside mobile apps.

Within the world of advertising, there's another long-term shift -- from broad-based, general advertising to specific, personalized and targeted ads.

You can't personalize ads unless you know all about the individual you're targeting. That's where user data comes in. It's also why everybody wants that data. The future of advertising monetization is based on possession of, control of or access to user data.

In a world in which every single mobile app gathers as much data as it can from every user, the value of that data goes down. That's the genius behind Facebook Anonymous Login: It creates an incentive for users to not share data, and an incentive for app developers to not request it.

Meanwhile, you can be sure that Facebook's own apps -- including the Facebook app, Instagram, WhatsApp, Moves, Messenger, Facebook Camera, Paper and others -- will be collecting every scrap of user data possible.

In a world in which many mobile app developers embraced Facebook Anonymous Login, the amount of user data "in the wild" would go way down. And the value of the data in the hands of Facebook would go up.

If mobile app developers want to sell contextual ads, they'll have to come to the companies that have all the data, as well as the ad network to serve up highly personalized ads. And that will be Facebook (and a small number of competitors, especially Google).

Facebook Anonymous Login, in combination with other announced offerings, does provide some benefit to both consumers and app developers. But above all, it's designed to create scarcity in the user data market. And when user data is scarce, two things will happen: The data itself will grow more valuable, and more small companies will be forced to get that data through Facebook's ad network, rather than from the users directly.

It's a truly brilliant move on Facebook's part.

This article, " Inside Facebook's Brilliant Plan to Hog Your Data," was originally published on Computerworld.com.

Mike Elgan writes about technology and tech culture. You can contact Mike and learn more about him at http://Google.me/+MikeElgan. You can also see more articles by Mike Elgan on Computerworld.com.

Read more about social media in Computerworld's Social Media Topic Center.

This story, "Inside Facebook's brilliant plan to hog your data" was originally published by Computerworld.

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