is the internet.

And that is causing some major problems when it comes to user data, and security.

You can trace a lot of these problems to a phenomenon called “the network effect”.

I think the first time I ever read about this, they were talking about fax machines, right.

The first fax machine is invented, it's totally useless.

But the more people who have it,

the more useful it becomes, because you can communicate with other people.

Facebook is network effects on steroids, right?

It's an event calendar, a contact book, a photo album, it's texting, video calling,

money transferring SOCIAL NETWORK that makes millions of dollars a day.

“A million dollars isn't cool, you know what's cool?”

Two billion people!

And at that size the network effects push Facebook beyond useful, to pretty much being

integral to daily life.

It's not just that you personally would miss stuff if you went off Facebook, but it would

almost be rude, right?

It could be an inconvenience to your peers, for you to not be on Facebook, because then

they couldn't invite you to things that way.

So you create a problem for yourself, and you create a problem for other people by opting

out of it.

This FOMO is how Facebook turns the network effect into profit.

Even though no one pays to use the core service.

But advertisers, marketers, and other folks WILL pay.

For user data.

And because users feel that the free core service is so beneficial, they agree to pay,

in a sense, by providing that data.

Yeah.

Read those Terms of Service.

What happened with Cambridge Analytica illustrates how our personal boundaries for using that

data in the real world are being tested.

The consulting firm, hired by the Trump campaign for the 2016 election, exploited access to

the data of millions Facebook users.

Now, Facebook allows academic researchers more access to user data than commercial companies

and app developers.

So a researcher built this personality quiz app under those guidelines. People used it

and in doing so, allowed it to harvest data from their Facebook profiles. But no

one really read the Terms of Service, because it also gave the app access to some data on the friends

of the people who took the quiz.

These are friends, who did not directly consent to the terms of the app.

Only 270 thousand people took the quiz, but by Facebook's latest estimate,

the app was able to harvest

the data of at least 87 million users.

Here's the kicker: this was all above board… the data collection didn't violate any rules.

But what wasn't allowed was handing over that data, collected for “research purposes”,

to Cambridge Analytica.

And when it came out that Cambridge used all this data to develop techniques to target

voters during the 2016 election, people were not happy.

And users wanted to know why Facebook was allowed to do this.

When you have executives saying, "It's our

responsibility to do x."

A good question to ask is, in what sense is it your responsibility?

Is it your legal responsibility?

Or are you just saying you'll feel bad?

The situation with Facebook is unique,

in that there are no legal responsibilities. At all.

Which is different from financial institutions, medical records, other kinds of things like that.

Even though angering its users might seem bad for business, Facebook isn't doing anything

unexpected here in regards to your data.

Because the aunts and high school friends and work acquaintances on Facebook aren't

just the users of the platform.

They're also the product.

And Facebook sells that product — all of that data — to advertisers who want information

about potential customers.

Which is how Facebook makes millions daily without charging you to use it.

When you look at it this way, Facebook is very, very good at what it does… even if

the people spending the most time on it don't actually like it that much.

And that's why I think it's important to see that as far as we can tell from the research that's available,

Facebook is not really good for its customers, it makes people feel lonely and depressed.

Matt's referring to this study, by the University of Copenhagen.

It compared how participants

self reported various emotions before and after quitting facebook for a week.

It's a good reminder that,

while Facebook does exist to connect you with friends,

and help you find events,

that's secondary to the platform's business goal of mining your data.

Put another way: Facebook only cares that you're using Facebook, not whether you like

to use Facebook.

Which is why the main selling point is that everyone is on Facebook.

Because at roughly two billion users… those network effects likely aren't going anywhere.

And whether you like them or not, you probably aren't going anywhere either.