Facebook's New Graph Search: Boon or Privacy Concern?
Last month, Facebook sent out invitations to tech reporters hinting it would be making a big announcement on January 15th. That alone was enough to spark a number of theories on what was about to come out from the Palo Alto giant: a much-speculated Facebook phone? Another Instagram-like acquisition?
Rather, Facebook announced ‘Graph Search’ enabling its members to search through Friends’ posts to search on interests, locations and recommendations. Facebook has an enormous database of member-created content from which to search, and that puts it in a unique position relative to Google or Microsoft Bing that search on public websites. Like Google and Bing Facebook will have a database of what people are searching for. However, uniquely, Facebook will have what Google and Bing don’t: Facebook will have search answers from Friends, or “trusted sources.”
Many observers see the launch of Graph Search as a crucial move for Facebook in its quest to become the one-stop destination on the Internet. Google was unable to crack Facebook’s grip on large scale Social Media with Google+; a successful venture by Facebook into the search space could deal a blow to Google.
Smart investors can see the potential opportunity for Facebook to deliver highly-valuable ads via Graph Search, because they can be attached to Friends’ posts. Ads can be delivered with accuracy and credibility – effectively cloaked as recommendations. Clearly, what’s attractive to advertisers is Facebook’s tremendous reach. By providing advertisers with access to “1 billion people, 240 billion photos and 1 trillion connections,” Facebook allows marketers to direct ads about their products and services to the right people at the right time, like when someone asks about it. And the subsequent equation is simple to understand: the higher the precision of the personal information, the higher the value of the ad.
Yet as Facebook responds to investors’ needs for profitability, users are becoming concerned about privacy. Shortly after Facebook acquired Instagram, Facebook announced changes to its terms of service and privacy policies, including the right to use members’ photos to create personalized ads in the same way that Facebook displays Friends in sponsored stories. There was an immediate backlash to this change in policy, and many users quit. It is unclear if many of those who dropped Instragram in reaction ever came back.
Sites like Sgrouples.com, an emerging social media alternative that does all the familiar Facebook things, adds a storage function, and allows users to control their personal information and share more privately, represent a possible next generation in the evolution of social media. Names like Burst, Path and Sgrouples may not be familiar, but one may disrupt Facebook’s social networking where Facebook isn’t paying attention: social networking with privacy.
Could this happen? There’s mounting evidence that consumers do, in fact, care about privacy. An Edelman study found that 90% of consumers are concerned about the data security and privacy of their online information, and roughly 70% reported that privacy and security was a concern they had towards their social media accounts. In the same study, respondents stated that they were, on average, 67% likely to switch their social media provider or stop using such services entirely if their information were accessed without permission.
(Note: Even Path, who came out as one of the first private social networks, recently had an unfortunate issue with privacy. Path was just fined for collection of personal data without knowledge of its users.)
If advertisers are looking to hedge their bets, they could turn to private social networks and their more intimate, personalized platforms. “The industry is addicted to a spy-and-scrape personal information ad model. Not only is it incredibly invasive, it’s also not particularly effective,” says Mark Weinstein, CEO of Sgrouples. “We believe that by creating a real relationship with our users we can better identify their deep needs and desires, and present effective solutions to those problems when appropriate.”
Right now, Facebook Graph Search is in beta, so to try it, one must get on a waiting list to see how it actually works. (I am on the waiting list). Obviously, how this will impact Facebook depends on the user experience, and the one potential pothole in the plan could be privacy. Given the Instagram reaction, it appears that users will switch away if they feel taken advantage of and if they have a viable alternative. Granted, Facebook is incumbent with over 1 Billion users and that is sticking power. On the other hand, Facebook has to show its members that it puts their needs first, over Wall Street pressure to show profitability. For investors, it is worth watching how users react to Graph Search. If members embrace it, it will be a boon for Facebook. If members feel exploited, start watching the ramps of alternative private networks such as Sgrouples or Burst, to name a few, to see if Facebook gets “My-Spaced”.