Facebook Fallout

In 2014, approximately 300,000 individuals were compensated to take part in psychological surveys meant to provide revealing data about the possible course of the 2016 presidential election. However, tens of millions did not see a dime. Why? Well, they had no idea. Aleksandr Kogan, the head researcher, took information not only from the people paid to download his application and complete the surveys, but their friends and family too.

Word began to spread in March of 2018 that the English data-mining firm that hired Kogan, Cambridge Analytica, had gotten ahold of 87 million Facebook user profiles without any consent.

Did Facebook know anything about this? Here is where things get a little fuzzy. Yes, Facebook knew. The social media giant allows outside developers to construct and run their applications through the platform. So, when Kogan presented his “This Is Your Digital Life” application, Facebook gave the go ahead. In doing so, Kogan was granted permission to collect data on friends of paid participants if their Facebook privacy settings made it accessible.

So, why the drama? It sounds like Kogan had all the permission he needed, right? Kogan believes so, especially since his terms authorized commercial use. Facebook on the other hand, claims Kogan lied by handing the information he gathered over to Cambridge Analytica. In 2015, after recognizing the gravity of the situation, Facebook quietly demanded all the data received through Kogan’s application be destroyed. It’s now 2018 and the New York Times for one thinks Cambridge Analytica is still playing finders keepers. In response, the data firm has been adamant that any and all information from Kogan has been deleted. Meanwhile, Facebook isn’t even sure what they have.

Facebook users are not happy. Investors are not happy. Congress is not happy. And Mark Zuckerberg, Facebook’s founder and CEO has not been exactly handling the scandal with much grace. People have gone so far as to deem him robotic or socially inept, mocking his halfhearted interviews and awkward congressional testimonies.

In any business, reputation matters. When you’re in the business of ensuring personal data is kept private, it may matter even more. Facebook has broken the trust of its users, supporters, even the government, and has got the numbers to show for it. Initially after the Times broke the story earlier this year, Facebook’s stock fell 18 percent in the immediate ten days following. Fast forward to the present, well about two weeks ago, on July 26, Facebook’s stock took an even bigger dive. The company lost 120 billion dollars in one hour, making it the biggest single day market-cap loss in the history of the US stock market.

Now, what’s the most important thing to have in a relationship? I’m going to go with trust, and I think millions would agree.

Don’t Leave Home Without It

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The slogan “don’t leave home without it” from American Express in 1975 seems to have a new meaning today. We don’t leave home without our mobile phone. It appears that technology is en route to making the little plastic cards we swipe and insert daily, almost entirely obsolete. Apple Pay and Google Pay have created secure, frictionless payment experiences that make it okay to forget your wallet at home.

These systems allow for contactless transactions with just your finger. Your cards are tokenized and virtually stored, making for quick, convenient purchases through mobile, in-store, or online.

Google Pay began as Google Wallet back in 2011 which later developed into Android Pay in 2015. At the beginning of January this year, Google Pay was released, unifying those two previous platforms. Apple Pay, aside from improved, additional features, has remained consistent since its release in 2014. The number of Android users is almost double that of iOS (Apple’s operating software) users, reported as 1 billion to 470 million, according to Lily Newman of slate.com.

Google Pay works with Android operating systems, while Apple Pay works solely with Apple products. In a survey conducted by PYMNTS.com, individuals were asked about how frequently they use Google (Android as of 2017) Pay and to compare it to swiping a physical card. All of these following statistics are taken from December of 2017.

Almost half of the users asked, 49.1%, use it “every chance” they get, 39.7% “whenever they remember”, 10.8% “rarely consider using mobile pay”, and 0.5% “stopped trying to use mobile pay”. When compared with swiping an actual card, the “ease of use” of Android Pay had 49.5% say it was “much better”, 47.2% “about the same, and 3.3% “much worse”. “Speed at checkout” with Android Pay was marked by 53.3% as “much better”, 43.0% as “about the same”, and 3.7% as “much worse”. Convenience showed the highest ratings with 57.5% stating Android Pay was “much better” than a physical card, 39.7% as “about the same”, and 2.8% for “much worse”. “Security” was almost even with 50.5% believing digital was “much better”, 48.1% “about the same”, and 1.4% “much worse”.

The exact questions were asked of Apple Pay users at the end of 2017 as well. A small 17% of users claimed they use Apple Pay “every change they get”, 44.2% “when they remember”, 35.4% “rarely consider using Apple Pay, and 3.4% simply have “stopped trying”. In terms of “ease of use”, 32.5% answered Apple Pay was “much better”, 5.3% for “about the same”, and 62.1% said it was “much worse”. Regarding “speed at checkout”, 37.2% replied Apple Pay was “much better”, 4.9% “about the same”, and 57.9% for “much worse”. “Convenience” of Apple Pay was marked with 41.6% stating it was “much better”, 5.2% saying it was about the same, and 53.2% “much worse”. As a matter of “security”, 33.3% believed Apple Pay was “much better”, 4.7% “about the same”, and 62.0% thought “much worse”.

Android Pay, now Google Pay, when compared to the Apple Pay reports, showed stronger results from its users, with them displaying significantly more confidence in their digital wallet. Both digital wallets however, have in common the legitimate comfort in security. Despite the uncertainty of users, which can be shown from the numbers previously discussed, the setup of these platforms actually allows for safer transactions. Merchants are never able to collect your card information, instead it is “tokenized”. This tokenization means your information is shown with an arbitrary code rather than revealing sensitive data. So, how prominent have these digital wallets actually become? With over 700 million iPhone users and approximately 1 billion Android users, markets worldwide are more widely accepting these forms of payment, most notably in the Asia-Pacific sector. A closer look from Jackie Dove at Tom’s Guide, also reveals these innovative systems have surpassed 5 million accepting locations.

Statistic: Number of smartphone users worldwide from 2014 to 2020 (in billions) | Statista
Find more statistics at Statista

Statistic: Availability of Apple Pay, Samsung Pay and Android Pay in global regional markets as of 1st quarter 2017 | Statista
Find more statistics at Statista

So, as bizarre as it may seem leaving your physical wallet, multiple cards, cash, and coins all at home, some people are making the change. The surveys from PYMNTS.com clearly indicate some apprehension from users, but this could potentially be a transition period where breaking old habits can just mean some natural discomfort. As merchants and consumers become more familiar with these new systems, the processes are bound to work more smoothly, right? Well, with Apple Pay, some think it has already reached its peak. Karen Webster of PYMNTS.com reports, “the inconvenient Apple Pay truth is that not enough consumers see the value in it, so 19 out of every 20 people who could use it don’t even bother anymore.” How do you feel about digital versus tangible? We all know practice makes perfect; and don’t we all want what’s safest and most secure when it comes to our money and personal information?

Cleaning the Aisles.

Retail powerhouses, Alibaba and Amazon, grew from similar roots. Both e-commerce giants were started by individuals obsessed with technology disruption. Now, they dominate the world’s largest economies, China and the United States, building ecosystems of services around the mutual mindset that the customer is the center of their universe.

In comparison, in terms of revenue reports, as of August of last year, Amazon is the clear breadwinner, outweighing Alibaba 177.9 billion (USD) to 23.82 billion (USD). Per share, Amazon made $314.52 versus Alibaba’s $10.52. More in depth metrics however, such as operating margins and quarterly earnings progress, reveal Alibaba had substantially more impressive numbers. Alibaba held a 32.68% operating margin compared to Amazon’s 2.31%. In terms of quarterly earnings, Alibaba had a staggering 94.50% growth to Amazon’s -77.00%. This can be attributed to more than just the lower trading costs. Amazon’s price-earnings ratio is 326 while Alibaba is at 37.11.

Alibaba is already operating in a much larger market, double that of the United States, with China being the largest. For approximately 20 hours a week, there are 560 million internet users within the country. Out of that number, Alibaba has 350 million active customers responsible for skyrocketing sales across not one, but two of their retail sites.

These two companies, when dissected, are operating with two different business models. Amazon began as a B2C business, business to consumer whereas Alibaba started off as a B2B, business to business. Now, Amazon is operating a marketplace involving more third-party transactions. Alibaba has expanded from B2B to both business to consumer and consumer to consumer, which has widely broadened their playing field.

Despite the different business models, both are impacting the world’s retail environment dramatically. Alibaba is using modern technology with pop-up stores including their online payment system, electronic price tags, facial recognition, and even the ability to virtually try on items. Jack Ma, co -founder of the Alibaba group, has made it apparent that the company is taking on a “retail as entertainment” approach, by curating an experience rather than just simply business.

On the other side of the game, Amazon, most recently, is changing the way Americans buy groceries. With the recent acquisition of Whole Foods and an immediate stock jump of 27%, it is safe to say, people are on board. Jeff Bezos, Amazon’s CEO, has expressed his goal to cut prices while maintaining a commitment to high quality products. In-store benefits and transformed POS systems are “just the beginning” according to the head honcho. What does he mean exactly? Well, maybe the recent unveiling of the Amazon Go store with its Just Walk Out technology can give us a clue. Yes, Amazon has created a store where customers can literally just walk out, no lines, no cashiers. Oh, the possibilities.

These ecosystems created by these two companies give the brick and mortar stores no choice, but to embrace technology and rise to their level. Most, however, are playing catchup with incremental innovation. Both companies are blurring the walls of these brick and mortar stores with online commerce.

Disruption is here and happening, next we will bring you the retailer whose aisles are being cleaned out by Amazon or Alibaba.