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Summary:

Facebook just broke ties with two companies that helped it collect information about app revenues because they breached Facebook’s rules on using customer data.

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photo: Gigaom Illustration

Facebook has cut ties with two mobile ad companies after a privacy audit revealed that they breached policies on retaining data and informing customers about app activities.

According to AdExchanger, which reported the story, Facebook relied on the companies, HasOffers and Kontagent, to help measure app installations and app-based revenue.

The violations were reportedly discovered in the course of a routine audit that measures whether Facebook’s partners are complying with contractual terms, including rules on data and privacy. There is no indication they leaked or failed to secure data.

“After working with a third-party auditor to review the practices of all our mobile measurement partners, we discovered that some weren’t adhering to the terms they agreed to,” Facebook said in a statement to AdExchanger. “As a result, we’ve removed a couple of our partners from the program. We take our contracts seriously, and will continue to act swiftly anytime we find out they are being violated.”

The violations themselves reportedly include holding on to data longer than Facebook contracts permit, and failing to require advertisers they work with to notify users about changes to data collection.

The action is obviously a blow to the two companies, but also shows how seriously Facebook is taking its mobile ad business, which delivered booming results last month and sent Facebook’s stock price soaring.

Facebook’s action against the two companies may be a larger signal to customers and regulators that it is being scrupulous about data issues. And, as AdExchanger noted, the social network is likely wary about any of its partners using access to the platform as a way to start a sideline in data analytics.

  1. I think Facebook should take their business model seriously.

    Veritasium points out their business model problem here: https://www.youtube.com/watch?v=l9ZqXlHl65g

    And he shows that Facebook has no incentive (or even a viable solution, mind you) to stop fraud with their advertising system here: https://www.youtube.com/watch?v=oVfHeWTKjag

    After scientifically proving his point with real examples, Veritasium goes on to say this:

    “So wherever you’re targeting, advertising your page on Facebook is a waste of money. I wish Facebook would remove all the fake likes [obtained by using Facebook paid advertising] from my page and from all the others. But that would mean admitting that they have generated significant ad revenue from [1] clicks that weren’t genuine, which then suppressed the posts that had low engagement, [and 2] forcing those pages to pay again, to reach inauthentic fans.”

    Facebook has a big problem indeed. The Facebook generation is getting older and dying. In fact, I uninstalled my Facebook apps from my mobiles a few months ago. Nothing in my filtered news feed was from people I care about. Plus, having to reset my permissions, as well as allowing Facebook to have access to my mobile contacts from a guy who 1) stole the idea from Winklevoss and 2) said that his users were dumb f#cks … why trust this guy? Facebook is indeed a fraud.

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