An old poker-playing maxim goes something like this: in every game, there’s a patsy (that pays for the other players). If within five minutes you can’t tell who the patsy is, you’re the patsy. It’s like that with all kinds of different enterprises: if you don’t know what the business is selling, they’re probably selling you.
With TV, radio, and newspapers we’ve known that all along. Ad revenues have a big part of their business strategy. That free newspaper that you pick up at the local convenience store isn’t free. They’re monitoring how many people pick it up, and using their circulation data to sell advertising.
It’s like that with Facebook, but a little creepier. “Liking” something is a public action. If I go to my Facebook page and tell people that I like the author Walter Isaacson, then I may get an email notice the next time he comes to the Northeast on a book tour. That’s not necessarily a problem. But if it turns out that people who like Isaacson’s biographies tend to be late on their mortgage payments, I may start getting offers for secured credit cards and financial counseling services. That just goes into the spam box: annoying, but not evil.
But I might be more concerned if a future employer or institutional client decides that Isaacson-likers just aren’t for them. And banks could start including likes and dislikes in their credit-scoring models. All this data is for sale. And there’s no law protecting various likers from discrimination. Privacy statutes in the US are relatively lax. In Europe they’re more strict—that’s why Facebook has issues with the EU. But over here it’s “liker-beware.”
Which puts a new twist on another old saying: be careful what you like—because you’re going to get it.
Douglas R. Tengdin, CFA
Chief Investment Officer
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