Social media giant Facebook has confirmed it is to abandon a number of partnerships with data brokerage firms that help advertisers target specific users for their campaigns.
The news comes as the company continues to contend with the data privacy crisis that has sent the company’s shares crashing and people pledging to close their Facebook accounts.
Last week, it emerged that marketing firm Cambridge Analytica harvested the personal data of 50 million Facebook users, without the consent of all but 270,000 of them.
It had used data harvested from an app that gave it sweeping rights to scoop up the Facebook profiles, not only of the 270,000 who took part in the app, a quiz, but also the profiles of any of their friends.
This was done before Facebook cut back its somewhat broad permissions in 2015. Cambridge Analytica then claimed to be able to build psychological profiles of those Facebook users and claimed that it could help politicians to target them individually with tailored messages.
Now, many consumers, lawmakers, investors and privacy campaigners around the world have put the company – and its founder and CEO Mark Zuckerberg – under pressure to explain themselves.
They have also called on Facebook to improve its data protections. On Wednesday, the company finally responded with a more simplified and accessible list of privacy settings.
Advertisements are Facebook’s main source of revenue and, for many years, it has offered large marketing firms access to tools to help them create highly targeted campaigns.
It was used by the likes of marketing technology company Acxiom and credit-reference agency Experian across a range of areas, including consumer goods, services, fashion and motoring.
Facebook product marketing director Graham Mudd called this “common industry practice”, but explained that the firm will be “winding down” the service over the next few months. He said it “will help improve people’s privacy”.
Despite this, advertising firms will still be able track the performance of their campaigns by using third-party applications, but they won’t be able to do it via Facebook.
In recent years, Facebook has formed data brokerage deals with firms such as Experian, Oracle Data Cloud, WPP, Acxiom and TransUnion.
Yesterday’s announcement, though, sent shares in many of these companies tumbling. Acxiom’s valuation plunged by 10 per cent shortly after the news first broke.
While the firm does not expect this announcement to be detrimental in the short-term, it admitted that it may end up losing $25 million in the next financial year.
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