Internet Privacy Is Dead: 3 Companies Know More Than the NSA

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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 on—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 (NASDAQ: GOOG), Facebook (NASDAQ: FB), and Verizon 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 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.

FBX was launched in June 2012 to allow advertisers to buy Facebook ads based on users' prior browsing history. Whether this is on a mobile format or not, having a virtual marketing list of over a billion people with the ability to provide relevant ads is a strong reason for Facebook's growth. It is pretty easy to understand how Facebook's immense size, social media format, and data collection was of interest to the NSA when it collected email addresses from the company.

Can you hear me now...
If you are thinking that people must not talk anymore, rest assured—the NSA has that covered too. Recent revelations of the NSA asking for access to the entirety of Verizon's network—all 120 million—were also uncovered. While the argument boils about the scope of the data, and how much these companies are paid to give up this information, there's no doubt that Verizon is the largest mobile network by subscribers.

Verizon could certainly use the cash to service its mounting debt—its recent bid to buy Vodafone's portion of Verizon Wireless may be financed by up to $50 billion in debt, the largest debt offering in corporate history.

Scared now?
While both sides of the NSA surveillance argument have their merits, that's beyond the scope of this post. However, it is interesting that the United States government chose to go to private industry for data collection.

As for me, I choose to remain optimistic and realize information, like science, is just information—it is the application of the information that determines its value to society. For those who choose to disagree with me and have to fear something, I'd worry less about an entity that can't seem to agree to pay its existing bills and focus on these three goliaths.

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The article Internet Privacy Is Dead: 3 Companies Know More Than the NSA originally appeared on Fool.com.

Jamal Carnette owns shares of Facebook. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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