Des Moines game developer Brad Dwyer is keeping an eye on Facebook.
Small business owners have been watching since news leaked in March that Cambridge Analytica, a third-party provider, was able to purchase Facebook user data from a rule-abiding personality profile application. The user data was then sold to President Donald Trump’s campaign team in the 2016 election cycle.
As a result, Facebook is under a mountain of pressure to reform its privacy policies.CEO Mark Zuckerberg testified before Congress in April, and multiple class action lawsuits were filed in U.S. courts against the company. Meanwhile, Cambridge Analytica ended company operations after blaming nonstop media coverage for chasing business away.
Businesses that rely on the social media giant, like Dwyer’s and a Greater Des Moines insurtech firm Denim, are waiting to see what happens next and how it affects their operations.
BALANCING ACT
When Dwyer founded his mobile games company Hatchlings out of a college dormitory 10 years ago, building on to Facebook’s developer API (application programming interface) was a no-brainer.
To operate, Hatchlings games need a user’s name, email address and social graph, which is the list of friends also playing Hatchlings games. Logging in with a Facebook account also makes it simple for users to play the same game across multiple devices.
“That’s what makes Facebook valuable. You don’t have to upload a user’s contact list or get them to give you all their friends’ contact information to connect people within the app,” Dwyer said. “Facebook has spent years building out your social graph of who your friends are. The ability to frictionlessly create a social application without having to rebuild Facebook itself is what’s really powerful about their platform.”
“It’s a lot easier to stand on the shoulders of giants and use their infrastructure.”
Facebook’s recent revelations cleared up slow changes Dwyer began noticing a few years ago, when Facebook was allegedly first made aware of a “breach of trust” by Cambridge Analytica – the collection of data from nonconsenting users for the purpose of a political campaign.
“One of the frustrating things with Cambridge Analytica, since they abused the Facebook data – it’s frustrating to be a developer on the platform that hasn’t abused the data,” Dwyer said. “We feel like everyone’s getting punished. … I sympathize with it and I understand that Facebook needs to make changes, but I’m concerned that they will act with such broad brushstrokes that we might end up being collateral damage.”
These days, the Hatchlings team is exploring what mobile games look like separately from Facebook.
“We came out with a game called Hatchlings Match a couple years ago, and that was one thing that had the option of continuing as a guest – instead of using Facebook as an identifier … We had the option where you could sign in as a guest. All that data wouldn’t be stored in the cloud, it would be stored just in your device,” Dwyer said. “We did see a lot of users opt into that choice and not want to log in to Facebook at all.”
There are tradeoffs to what companies can do with limited data, Dwyer said – tradeoffs that companies like Hatchlings will explore as Dwyer and his team explore augmented reality, or AR, capabilities, which they debuted in the app Magic Sudoku.
Existing augmented reality apps, like Niantic’s popular game Pokemon Go, superimposes a computer-generated image over a device’s camera view of the real world. Magic Sudoku introduces machine learning to the mix: hover the smartphone app over any print Sudoku puzzle, and the app will use the camera view to instantly solve the puzzle.
Magic Sudoku’s task is bare bones and more of a demonstration of what augmented reality can become, Dwyer said. Although the data collection to solve a puzzle is basic, future augmented reality apps may learn to recognize faces or livestream an individual’s surroundings through AR-enabled glasses.
“It changes the kind of data we deal with,” Dwyer said.
“The privacy of solving Sudoku puzzles is not mission critical, but as we start to think about other things we could do with augmented reality and computer vision, I think it’s going to become a lot more of an important distinction, and there’s definitely a balance to be struck between how good of a result you can get, how fast of a result you can get, versus privacy.”
A DIFFERENT MODEL
Business-to-business companies that rely on Facebook are also paying attention.
Ad technology platform Denim started placing hyperlocal Facebook advertisements for insurance agents and brokers in the fall of 2016. Ads localized for insurance and financial service companies perform up to 250 percent better than a brand’s national campaign rollout, Denim CEO Greg Bailey said.
Targeting local users would seem to require more personal data – but that’s not true, Bailey and Tim Laehn, director of marketing, said.
“Denim never has access to any consumer’s personally identifiable information,” Bailey said. “We make product decisions so that we can maintain that stance. … At the end of the day we take that into the market to insurance companies and financial services companies, and we share with them that we are this ‘safe harbor.’ We’re building Denim as this safe, guarded place where they can rely on us to have additional protections put into place.”
“We announced that we collected a billion data points most recently, but those are all data on consumer engagement with ads our customers have placed,” Laehn said. “It’s data on how often they click on the ad – what the cost per click was.”
The amount of dollars spent on digital advertising is expected to surpass dollars spent on television advertising in 2018 – $107.3 billion digitally compared to $69.8 billion on television, according to eMarket’s advertising forecast.
When Zuckerberg testified in front of Congress, employees at Denim turned on the office TV for two hours, listening and speculating over the impact Denim and its customers may feel. At the end of it, employees posted what they called the Denim Design Philosophy on the Denim Labs blog. Denim also updated the Audiences platform for Denim clients, which requires platform users to actively certify their company’s right to use the data every 90 days, among other changes.
“Our customers wanted to know what our position was, they wanted to know what we were doing about it, but at the end of the day they wanted to know, ‘How can we get on with doing business, because we can’t allow this thing to disrupt business,’” Bailey said. “(We were) trying to keep a level head and be a voice of reason through a tumultuous time, a noisy time in the market.”
By the end of April, Facebook had announced nine API changes to developers spanning analytics, events, Instagram and the Messenger platform – but none of those changes affected Denim, Bailey said.
“I think it all harkens back to some of the decisions we made along the path. … I’m thankful that we’ve done things the way we’ve done things,” Bailey said.
CHANGING EXPECTATIONS
Meanwhile, after five years of negotiations, the European Union reformed a 1995 data protection law – the General Data Protection Regulation, or GDPR – to bring existing regulation up to speed in the social media age.
That puts pressure on U.S. companies to decide how to engage with European customers.
“Today we’re not in Europe, we don’t have customers in Europe at the moment. We do have active conversations going on with insurance or financial services conversations going on in different parts of the world,” Bailey said. “Our approach will be, let’s let that settle in … and see what impact it’s going to have on some of our competitors, some of the other players that are in this space over there.”
“There will be a time where we enter these other markets around the world. I don’t anticipate 2018’s going to be our play to Europe, given this new regulation that they have,” he added.
At Hatchlings, Dwyer is confident that his games’ users separate Facebook headlines from the Hatchlings products.
“I do feel like we have a relationship (with) our users, and they trust us separately from Facebook,” Dwyer said. “They interact with us as the developers and as people. … Trust is built on relationships, and if they have relationships with those separate entities, then they can have trust as well.”