Twitter cuts off third-party data amid privacy mistakes

Brief:

Twitter will stop using third-party data sources in its ad-buying system, according to The Wall Street Journal. Marketers will be required to buy third-party data on their own beginning in early 2020.
Twitter also on Tuesday apologized for using people's personal information for advertising purposes without their consent, despite offering settings to limit data sharing. The social network said it fixed the issues on Aug. 5, per a blog post. Twitter said it may have shared certain data with measurement firms and advertisers without permission, and is looking into how many people were affected.
The first incident of unapproved data sharing occurred after users viewed an ad for a mobile application — which Twitter didn't name — and interacted with the app since May 2018. The second incident happened when Twitter showed people ads based on "inferences" the company made about the devices they use, even if they didn't give the company permission to do so.

Insight:

Twitter's move to remove third-party data from its ad platform coming on the same day that it apologized for using user data without consent is a one-two punch for the social media company. While Twitter's third-party data decision follows a similar move by Facebook last March that was in response privacy concerns, a Twitter exec told The Wall Street Journal that its decision was based on simplifying ad purchasing for marketers, many of whom the exec claimed aren't using Twitter's third-party data. Still, the move could make it more difficult for marketers to target their advertising on the platform, although they will still be able to purchase third-party data on their own.

It's not clear whether Twitter’s admission will produce the same kind of outrage that the Cambridge Analytica scandal directed toward Facebook. Twitter's apology for violating the privacy settings of users lacks meaningful information about its data-sharing practices. Twitter's reference to an unnamed "mobile application" isn't clear, leaving customers to guess which app among millions violated their privacy and the statement about the "inferences" Twitter gleaned from users is vague. Anyone who has questions about Twitter's mistake is asked to fill out a web form.

Twitter emphasizes that its default settings urge openness and public distribution of user-generated content. The company also doesn't share user names, Twitter handles, email address or phone numbers of users with ad partners, according to its privacy policy. However, it does share the mobile device identifier of users to track their internet activity for ad targeting.

The news comes amid growing scrutiny by regulators of social media platforms' practices around data-sharing and privacy — scrutiny that is likely to lead to tighter legislation. Ireland's Data Protection Commission currently is investigating Facebook, Twitter, Apple and LinkedIn for possible violations of the European Union's General Data Protection Regulation (GDPR), which came into effect in May last year. The rule covers the period that Twitter mentions in its apology around these latest revelations. As the law requires companies to disclose data breaches, and mandates fines for non-compliance, it's possible Twitter will be subject to financial penalties in the EU region.

Facebook's mishandling of consumer data was costly for the social network, not only in terms of damaging its reputation, but also financially. The company last month agreed to pay a record-setting $5 billion fine and make changes to its consumer privacy practices as part of a settlement with the Federal Trade Commission. The agency had accused Facebook of violating a 2012 order to revamp its privacy practices.

Twitter's apology and third-party data change comes as the company highlights its more personalized and relevant advertising. Its focus on making advertising more engaging to users, including through machine learning and fresh video offerings, appeared to pay off in Q2. Ad revenue grew 21% year-over-year to $727 million, with total ad engagements jumping 20%. Any fallout from Twitter's admission of using people's personal information for advertising remains to be seen, including possible limits on how marketers reach target audiences on its platform.