When Edward Snowden released fresh information about extended NSA surveillance, the reaction was swift, bipartisan, and one of indignation. Rarely in DC can you find something that both the left and right can agree with—except this program. But, as conventional wisdom often does, the revelations missed a key part of the story. Instead of wondering why the NSA conducted surveillance, the pertinent question should be: "Why did the U.S. government go to private industry?" What are Google Inc (NASDAQ:GOOG), Facebook Inc (NASDAQ:FB), and Verizon Communications Inc. (NYSE:VZ) doing better than our most clandestine agency? And is there really such a thing as privacy on the internet?
Marketing loves big data Many think of marketing as simply the sale of products to customers. This is true, but incomplete. Marketing is the exchange of information up to and including the sale of products. Companies relay brand information, value propositions, and price. Customers provide information in numerous ways other than just buying a product—enter big data.
Big data is the business of compiling data to detect trends—in the case of marketing, this means buying habits. From something as innocuous as a rewards card at your local grocer to your browsing history, you are constantly providing information to big data. Although the most tangible example of big data's total capabilities is International Business Machines Corp. (NYSE:IBM)'s Jeopardy-winning Watson, Google has an impressive big data operation in its own right.
I always feel like somebody's watching me... Big data starts with, well, data—and Google has that in abundance. Every Google search is based upon meta data to deliver the best results and Google analyzes each search to tweak this formula. With Google commanding around two-thirds of this market with consistently more than 10 billion searches monthly, that's a lot of data. It's a no-brainer why the NSA wanted information and records from Google's users.
In addition, Google has run afoul of privacy advocates recently with two revelations: First, Google admitted in a court filing that anyone sending email to one of its 425 million Gmail users has "no reasonable expectation" their communications are confidential. Secondly, Google recently announced that it intends to make Google+ users' names and photos visible to friends for the marketing of businesses and services in its "shared endorsements" campaign. And there's no doubt that Google's growing -- the last quarter was a smashing success, pushing the company over $1,000 per share. However, Google+ isn't even the biggest social network.
You know what's cooler than a million users? A billion users Facebook is sitting near all-time highs, mostly as a result of increased monetization of mobile and changing sentiment on the company's growth prospects. How was Facebook able to monetize mobile more effectively? You can bet the story has to do with Facebook Exchange, or FBX.