When Facebook held its initial public offering six years ago, it marked a major turning point in the history of the Internet.

But it was also the beginning of Facebook’s uphill battle to make money. On Facebook’s first earnings call following its IPO in May 2012, Mark Zuckerberg said, “I want to dispel this myth that Facebook can’t make money on mobile.”

Forbes reported at the time that Facebook was already driving $3 million per day in revenue from Sponsored Stories, which accounted for 14% of the company’s ad revenue. This wasn’t a surprise, though, because every digital marketer, advertiser and publisher already knew that Facebook was (and still is) the holy grail of consumer data.

But first, let’s backtrack.

At Facebook’s F8 conference in 2007, Zuckerberg officially announced the launch of the Facebook Platform which would “let any developer worldwide build full applications on top of the social graph, inside the Facebook framework.” And according to San Francisco Chronicle, Facebook’s social graph API was a catalyst to a new gold rush in Silicon Valley led by social gaming companies like Zynga, Slide and RockYou.

Zynga and Facebook were once the best of friends. CNBC found in Facebook’s S-1 filing with the Securities and Exchange Commission that an estimated 19 percent of its 2011 revenue (and 15 percent of its Q1 revenue in 2012) was tied directly to Zynga.

In a Mashable article published that same year, the Federal Trade Commission “accused Facebook in an eight-count complaint of not living up to its own promises of sharing users’ personal information with third parties without their knowledge or consent, changing privacy practices without informing users, and claiming to have a program to verify the security of apps when it didn’t.”

The result? Facebook is supposed to submit to a privacy audit every two years for the next 20 years to the FTC.

But that didn’t stop Facebook from continuing to boast about the power of its platform for social games. Julien Codorniou, the head of EMEA Game Partnerships at Facebook in 2012, published a blog post on Techcrunch on Facebook’s role in the growing social gaming ecosystem that was powered by the Social Graph API:

Many top developers are also finding that if you’re big on Facebook, you can be big on mobile. Wooga’s Bubble Island and Diamond Dash, Jellyvision Games’ You Don’t Know Jack, Nordeus’ Top Eleven, King.com’s Candy Crush Saga, and Playtika’s Slotomania all became popular apps on iPhone and/or Android after getting big on Facebook first. This is an ideal time to build a social mobile game. Currently more than 45 percent of the top 400 grossing iOS apps are built with Facebook.

Ironically, the meteoric rise of social gaming using the Graph API was what ultimately led to Facebook shutting down the Friends data API in 2014, which “lets you volunteer your friends’ status updates, check-ins, location, interests and more to third-party apps” — the reason why you keep getting spammed with requests to join games so your friends can earn more lives.

Creepy? Yes, but not new. This is how Facebook makes money.

Read more about Facebook’s history with data and privacy issues dating back more than a decade here.

Welcome to Thefacebook.

Facebook circa 2004

Last year, Facebook announced that it has 2.1 billion monthly active users worldwide. That’s a whole lot of people and personal information concentrated in one platform.

There is a widely-used expression about Silicon Valley business models that has recently resurfaced as a way to explain Facebook’s attitude towards privacy and user data: “If it’s free, then the real product is the user”. This expression is thrown around in a way that reverses the blame on the people angry over the misuse of their personal data harvested by social media companies. But we believe there is a happy medium where users have the ability to exchange their data for free services on their own terms.

To understand the root of the issue, it helps to take a pause and understand why our data is so valuable that massive tech companies are willing to pour millions of dollars into building free products that entice us to give them that insight into our lives and personalities.

(Google Trends: “big+data”)

Two of the biggest catalysts in the growth of big data have been Facebook and Apple:

In the third quarter of 2012, the number of active Facebook users surpassed one billion.

Before the turn of that new year, Apple became the №1 smartphone in the world.

Around the same time, Google searches for big data began to take off and the Three Comma Data Club came into existence.

The three comma data club refers to the three billion-dollar industries that came to be as the internet flourished worldwide and the average person began spending more time online: Digital marketing, advertising, and media buying. These grew quickly as they were integrated into the business models of tech companies that offer their products for free.

As companies expanded their platform and competed for advertisers’ dollars, the need to increase marketing and ad ROI increased, leading to a larger focus on data collection and “big data” products using machine learning and data science to target users more effectively.

When confronted about the way they profit about their users, social media companies that collect data have hidden behind the excuse that getting rid of their advertiser and marketer services would force them to charge for access to their platforms — a cost which would be prohibitively high for a large number of their users worldwide.

Should data privacy and monetization be a zero-sum game?

(Image source: HBO Silicon Valley)

One of the most obvious solutions to the problem: being transparent and sharing the wealth with users.

If companies were forced to structure their terms and conditions agreements as they are now in a way that actually ensured users read through and understood everything they were agreeing to, they would surely find it to be a huge drop-off in their user acquisition funnel.

The T&Cs would not only be a barrier because of how difficult they are to read through, but because of the unfair stipulations they hide — granting access to their platform in exchange for total control over the data they collect.

If they were open to discussing simple terms and conditions, wherein users could understand how much of their data needs to be sold in order to pay for their access to the platform and the different ways it could be sold, we could create a business model that requires consent to sell data, with the understanding that a minimum amount must be sold in order to cover the cost of access.

This is the Siglo vision.

When brands collect data, they are not just gathering insights into how their platform is used; they are gathering intimate and unique information about the user — from shopping preferences and physical location, to social habits and psychological profiles. This is information that inherently belongs to that individual. Nobody should be forced to sign that over completely in order to use a search engine, shopping site, or social media platform.

Instead, users should be made fully aware of what data is being collected, to whom it can be sold, and the amount for which it can be sold. Users should also be empowered to have a conversation with the data aggregator about how they want their information shared and its value.

Solving today’s problems: users can choose what data to sell in order to keep their access to their favorite social media platforms.

In the future, this could grow to into a complex network upon which to build a form of universal basic income sourcing value from people’s use of the internet.

The Siglo protocol is built on the Ethereum blockchain and is designed to facilitate free access to mobile connectivity for prepaid subscribers in emerging markets.

Similar to how one day people will be able to reap the rewards of their data being collected and sold online, apps on the Siglo protocol connect airtime sponsors with smartphone subscribers and create a decentralized mobile network power education by the transfer of value between users, airtime providers, and advertisers. Users will have the freedom to share their opinions and information consensually on a case-by-case basis, deciding who gets to access it and at what cost, creating a fair marketplace for consumer data and laying the foundation for a new business model for free online platforms.

Building this on a decentralized platform is important, as ensuring data is only transferred and resold consensually will be a key element for this free connectivity model to work. Having all data transactions recorded on a transparent, immutable ledger will allow the internet to remain a low-regulation environment while ensuring a higher level of protection and benefit for users.

by Zev Bimstein, Growth and Strategy for Siglo