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Is it time for big tech to rethink the “free” business model?

Howard Yu on advertising and data harvesting in light of Facebook’s recent woes
7 min.
April 2018

Professor Howard Yu was recently interviewed by Inc. Southeast Asia on Facebook and customer data. Extracts below: 

There’s been a lot of noise surrounding the Facebook controversy. What must founders and entrepreneurs in Southeast Asia know about the Cambridge Analytica scandal? 

Howard Yu:  In a nutshell, Facebook has encouraged third party developers to provide services via application programming interfaces (APIs). APIs are rules and guidelines that facilitate information exchange between two pieces of software. Third parties are thus able to tap into Facebook’s massive user base. This creates vulnerability inside of the platform. A researcher named Aleksandr Kogan built a personality quiz and because of the design of Facebook at the time, he was able to access tens of millions of user data by signing up 300,000 people. He then shared the copious database to Cambridge Analytica. 

The biggest learning for founders and entrepreneurs is the limit of an open platform. Historically, an open platform has been the golden playbook for growth among startups built on the premise that a product’s best feature will never be invented in-house. Creative apps must be conceived by outsiders instead. Steve Jobs understood this too. No matter how perceptive the CEO was to the end-consumer’s needs, he could not have predicted that some of the most prominent features of his iPhone would be used for hailing a cab (Uber) and taking automatically erased pictures (Snapchat). No single company, even Apple, could have come up with both of these killer apps internally.  

What founders and entrepreneurs must learn now is the risk of the unbridled openness. Facebook Platform, with the goal of turning its ecosystem into an innovation hotbed, has enabled people to log into apps and share who their friends were and some information about them. But by embracing openness to the extreme, Facebook also fails to review apps that are using the social network improperly. 

This understanding is especially critical for Southeast Asia, not only because the sheer size of Facebook’s base in the region, but also in certain countries, including the Philippines, Facebook is synonymous to the Internet, as it is the only portal for certain population to get connected online. 

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