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Facebook Is Making Big Changes to Its Relationship With Data Brokers

March 29, 2018, 10:45 AM UTC

Facebook is placing new limits on the data it shares with data brokers—companies like Acxiom and Oracle Data Cloud, which compile dossiers on consumers so as to make it easier for advertisers to target them with appropriate pitches.

Relatively few people are aware of how these shadowy companies profile them, by combining data derived from browser tracking, public records, previous purchases and, of course, social media usage. The social network said Wednesday that it will no longer allow these third-party data providers to offer their customers the ability to target their ads at Facebook users.

This effectively means that businesses advertising on Facebook will lose the ability to use data from Acxiom, Experian and other such services to narrow the group of people who might see their ads. Advertisers will be left with the data they themselves can bring to the table—from their lists of customer emails, for example—and the data that Facebook has collected on its users.

Acxiom, one of the largest data brokers out there, said late Wednesday that Facebook’s elimination of the Partner Categories service would hit its fiscal 2019 revenues and profitability by “as much as $25 million.”

Separately, The Wall Street Journal reported late Wednesday that Facebook would also stop providing anonymized user data to these data brokers. This would have the effect of making it more difficult for third parties to measure how effective their ads are on Facebook, although the report suggested Facebook is “trying to find more secure ways” of achieving the same thing.

These are significant moves that come in the context of a raging scandal over Facebook’s privacy and data protection practices, thanks to the outrage over the use of Facebook data by political consultancy Cambridge Analytica.

Facebook also announced Wednesday that it would be making its privacy controls easier to use—people will be able to delete their data from the platform and even move it to rival providers if they wish.

The company explained these changes by noting how the “last week showed how much more work we need to do to enforce our policies and help people understand how Facebook works and the choices they have over their data.”

However, Facebook had to make these changes anyway, because of the looming introduction of the European Union’s new General Data Protection Regulation (GDPR). Due to come into effect on May 25, this is a major reform of EU privacy law that will affect every company that does business in the bloc and handles significant amounts of personal data.

As for whether the changes to Facebook’s data-sharing practices will help it comply with the GDPR, the devil will be in the detail, though the changes should reduce Facebook’s liability if those third-party data brokers got their data in a way that doesn’t comply with the law.

“I welcome Facebook’s announcement that it will be shutting down its partner category service, using third party data to inform targeted advertising,” said Elizabeth Denham, the British information commissioner. “I have been examining this service in the context of my wider investigation into the use of personal data for political purposes and had raised it with Facebook as a significant area of concern.”

European regulators will have Facebook in their sights when launching their first crackdowns under the new law, due to the company’s dominance and track record of breaking EU rules. However, Facebook makes its money from advertising, so serious changes could severely hit its bottom line.

This article was updated to include Elizabeth Denham’s statement.