How Does The Owner Of Facebook Make Money

Facebook CEO Mark Zuckerberg testified before Congress for over five hours on Wednesday, where he answered questions from senators on a broad range of subjects.
During an exchange with Senator John Cornyn, Zuckerberg laid out a simple explanation for how Facebook makes money with user data.
Zuckerberg's explanation is a concise walkthrough of how your data is turned into profit.

You're forgiven if you didn't watch all five-plus hours of Facebook CEO Mark Zuckerberg answering questions during a joint Senate Judiciary and Commerce Committees hearing on Tuesday.

Even if you were watching, it's entirely likely that you missed a crucial, brief segment around the two-hour mark, where Senator John Cornyn asked Zuckerberg about how Facebook handles ex-user data.

Though somewhat unrelated to what Senator Cornyn asked, Zuckerberg's answer was a fascinating, concise look into how Facebook turns its vast quantity of user data into profit.

"There's a very common misperception about Facebook — that we sell data to advertisers," Zuckerberg said on Tuesday. "And we do not sell data to advertisers. We don't sell data to anyone."

Facebook CEO Mark Zuckerberg is surrounded by members of the media as he arrives to testify before a Senate Judiciary and Commerce Committees joint hearing regarding the company's use and protection of user data, on Capitol Hill in Washington, U.S.

Indeed, Facebook makes it money through advertising. Facebook doesn't provide data to advertisers — it does the work for them.

Here's Zuckerberg explaining it to Senator Cornyn on Tuesday's Senate hearing:

"What we allow is for advertisers to tell us who they want to reach, and then we do the placement. So, if an advertiser comes to us and says, 'All right, I am a ski shop and I want to sell skis to women,' then we might have some sense, because people shared skiing-related content, or said they were interested in that, they shared whether they're a woman, and then we can show the ads to the right people without that data ever changing hands and going to the advertiser."

In the wake of the Cambridge Analytica scandal, which revealed that at least 87 million Facebook users had their data used without consent by a political firm to influence elections (including the 2016 US Presidential election), general users, celebrities, tech executives and politicians have begun openly questioning Facebook's handling of user data.

Facebook now admits fault for allowing third-parties to access user data inappropriately, which is what led to companies like Cambridge Analytica possessing user data in the first place. The company has since shut down loopholes in its social media service that allowed third-parties to "scrape" data from its users.

All that said, Facebook still directly relies on user data to make money — it's just not in quite the way you may have thought.