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How Facebook Makes A Lot Of Money Off Your Data

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How Facebook Makes A Lot Of Money Off Your Data
Last year, Facebook made on average $84.41 for each North American user and $27.26 for each European user.
SHOW TRANSCRIPT

During testimony before Congress Tuesday, a lawmaker asked Facebook CEO Mark Zuckerberg, "How do you sustain a business model in which users don't pay for your service?"

Zuckerberg replied: "Senator, we run ads."

In fact, at least 98 percent of Facebook's revenue in 2017 came from ads. And Facebook makes a lot of money — it made more than $40 billion that year.

And ad revenue isn't uncommon in the internet biz. Google, YouTube and other platforms cash in on targeted ads. Those take user data and help companies target specific groups that are most likely to buy their products and services.

Zuckerberg also told senators Facebook will always be free, at least in some form.

He said: "There will always be a version of Facebook that is free. It is our mission to try and help connect everyone around the world and to bring the world closer together. In order to do that, we believe that we need to offer a service that everyone can afford."

So Facebook harvesting user data is just a part of its model. The company's COO suggested — hypothetically — if users wanted 100 percent privacy, they would have to pay for it.

But suggestions that Facebook move to a subscription-based model like Netflix and charge a few dollars a month could cost the company significantly.

With its current model, Facebook made on average about $84 from each North American user and about $27 from each European user last year.