The past few weeks have been turbulent for Facebook. The social media platform has been forced to admit that the personal data of up to 87 million of its users had been the object of an unauthorised sale by a former psychology professor in the context of an opinion survey to the data analyst company Cambridge Analytica. The latter is suspected of having used the data acquired in this way for activities including the election campaign of U.S. President, Donald Trump, among other things. In 2017, Google, which is a subsidiary of Alphabet Inc, was the subject of criticism when the video portal, YouTube, placed ads of well-known companies next to extremist and racist videos.
In recent years, the two online behemoths have enjoyed huge success with the collection and analysis of personal data – considered the “gold of the 21st century“ – for the purposes of online advertising aimed at specific target groups. In the period between 2012 and 2017, Facebook sales recorded average growth in excess of 40% per year, with the figure for Alphabet amounting to 15%. A number of the services operated by these companies are used at times by more than a billion people. This strong growth has surely been promoted by the lack of adequate regulation. The latest scandals may serve to increase the global pressure coming from consumer protection organisations and politics. Apologising (as Facebook CEO, Mark Zuckerberg, recently did) and announcements of improved data protection measures are no longer sufficient, in our view. In this context, for example, the EU General Data Protection Regulation, which, among other measures, standardises data protection legislation throughout the EU and provides for more stringent penalties in the case of infringements, will come into effect on 25 May 2018.
Even in the face of growing concern, the market for online advertising is nevertheless set to increase at above average rates in comparison with classic media such as TV or print. In the short term, tighter regulations may have a detrimental effect for Alphabet and Facebook, but in the medium and longer term, these companies will have the opportunity to regain the trust of users and advertisers by improving their data protection and increasing their transparency.