FAANGS Out: What big tech wants with your data
By Lorence Olivo
November 16, 2020
Tech companies love to collect data on their users. Our personal data is a hot commodity for companies that want to optimize their services, sell something, or keep you as a returning user. With advertising being a 600 billion dollar industry, it comes as no surprise that there are many companies with a motive in utilizing personal data to try and get a profit out of you, the consumer. Out of all of these different companies, it is those that belong to FAANG, or the “big five” of tech companies, that have been the most successful in capitalizing on data harvesting from their users and using that information to further their own ends. But what exactly is FAANG, and how does the monopolistic hold it has on our society really affect our day to day lives?
What is FAANG?FAANG is an acronym that financiers use in reference to stocks of Facebook, Amazon, Apple, Netflix, and Google (the core company of Alphabet). What makes tech companies so important for the marketing industry is the wealth of data they record about users and their habits. Marketing companies are constantly searching for the newest insights into how consumers behave, and the data that tech companies harvest from their users can include information such as age, ethnicity, education level, income, marital status, number of children, political leaning, hobbies, and other interests. All of this data is invaluable for the market research industry, as both companies with ad-based revenue like Facebook and Google, along with service/product based tech companies like Amazon, Netflix, and Apple use this information to increase their profits. For ad-based revenue companies, user data is used to better target ads. For service or product-based tech companies, the collection of data is more focused on how their users utilize their products/services, which allows these companies to improve how they should go about selling their product/service. When it comes to FAANG, these “big five” of tech companies stand out because of the day-to-day dependence that people have on the services provided. For the past 20 or so years, these companies have been able to effectively fulfill particular niches in what consumers were searching for, becoming an almost indispensable part of everyday life. As Adam Singolda, for the Independent, explains it, “if a firm wanted a consumer to read (F) something, buy (A) something, install (A) something, watch (N) something, or search (G) for something, there were not many options.”
What consumer data do the FAANGs sink into?
There are numerous companies and organizations that try to tap into people’s user data, but what is it about the FAANGs companies that give them such a seemingly monopolistic power over their respective industries? It is thanks to a system known as the “two-sided market network”. A two-sided network is a system where the customer and service provider are able to come together in a convenient way. Consumers are able to easily interact with and acquire goods and services through these tech platforms that make up FAANG, giving value to the platform itself. For example, Netflix provides users with an easy and accessible means to watch a large catalog of movies, wherever and whenever. As more and more consumers come to the platform, the platform itself only becomes more invaluable as it is able to improve its service and attract even more consumers. With the FAANG companies growing to be as large as they are, this marketing system explains how the reliance users have on these platforms only helps to serve the platform’s own interests of gathering data to turn around and try to recruit/retain its consumers, truly a never-ending cycle. In the list below, we’ll run through a brief synopsis on what specific uses each platform does with collected consumer data.
While many social media companies have risen over the years, Facebook still stands above the rest with a user-base of more than 2.5 billion people. Through the use of “Topic Data,” Facebook is able to analyze and sell to marketing companies data concerning what users are saying on the platform in regards to events, brands, subjects, or other activities in what Facebook claims to be an anonymized fashion. That’s not all, however. The company has made major headways in recent years and thanks to the development of new facial recognition and image processing capabilities, Facebook now has the means to track its users through not only their activity on the platform but also across the entire internet thanks to the imaging data that users freely give over when they upload to the site. With over 136,000 photos being uploaded every 60 seconds, there is a trove of imaging data that Facebook can use to track people. While the social media company has come under a great deal of scrutiny over the past few years, especially regarding the Cambridge Analytica data leak among other scandals, the amount of information it harvests from its users is an invaluable trove of information for business products and how they can be made more relevant to users. (With the cost of our privacy being thrown out the window, it would seem.)
Amazon’s main focus has been e-commerce, but it has not contented itself with selling products across the United States to over 300 million active customers. The company has spent a great deal of time and effort into developing personalized recommendation systems, price change alerts, and even one-click ordering. All of this is thanks to big data and is part of Amazon’s intent to keep us on their platform. But that’s not all. Utilizing algorithms and cloud computing to collect data analytics on purchase trends, the introduction of the in-home assistant, Alexa, has been part of a much larger endeavor of nearly 17.4 billion dollars annually to provide “windows into our purchase behavior and opportunities to steer that behavior in a direction that benefits Amazon.” Aside from providing users a new, convenient service, Alexa also serves Amazon another means to gather consumer data, with the intrusive devices being accused of spying on people countless times already. The simple voice commands that people use for their Alexa systems are often uploaded to Amazon’s servers, which the company brushes away as something only used to improve their speech recognition software.
AppleA different kind of intrusive, but all the more unsettling, is that of how Apple utilizes the functions of its devices, like smartwatches, to passively and constantly collect data on its users and their health information. The company claims that the monitoring of Apple product usage is just a way for the company to discover how to optimize their products to be as useful as possible. This excuse might be a rather hard sell for some users as even iPhone apps have been discovered to track users and relay this information to third parties, including current location and other personally identifiable information. This seemingly duplicitous nature extends even further into the Apple App Store with many third-party pieces of software gathering email and mapping data, to prioritize ads that are relevant to your activity and location. Reports even indicated that Apple sold off large volumes of data to Google for 12 billion dollars back in 2019.
Netflix recommends content to its users based on a complex algorithm that mines through the shows and movies that they watch and enjoy, recommending similar content based on those interests. This allows shows to reach the right audience, increasing viewership. Aside from recommendations, Netflix has also used big data to customize marketing promotions based on target preferences. The series House of Cards had over ten different versions of a trailer made in order to promote the show based on a user’s gender, among other stats. From around 21 million users in 2011 to more than 190 million in 2020, the company has seen exponential growth. But it would seem that Netflix hopes to gather even more users through utilizing this viewership-preference algorithm to create new, in-house content to draw in even more users. There are many more on-demand video services nowadays, all of them competing for viewers. With so many new competitors, this big data edge is a means for Netflix to ensure that it is able to retain its viewers with exclusive content that matches their interests.