5 Reasons Why LinkedIn Won't Follow Facebook Privacy Failures (...and 1 Reason It Will)

While LinkedIn and Facebook are Bay Area neighbors, social networks, and both over a decade old, they are fundamentally different businesses: in their philosophy, business model, customer base, and goals. Below are five reasons that they vary and why LinkedIn will continue to avoid the pitfalls regularly tripping up Facebook.

Reason 1 - The Money

LinkedIn and Facebook have two different business models.

LinkedIn offers business services, individual paid accounts, and Microsoft is positioning it as a CRM to compete with SAP & Salesforce.

Facebook sells ads.

More recently LinkedIn sells ads too, but its advertising revenue historically has made up less of an income stream than those other services. So there's a financial incentive not to jeopardize the income from their more mature services. As Kevin Tran at Business Insider reports:

Advertising has been a relatively small portion of LinkedIn's overall revenue. In Q3 2016, when LinkedIn's last reported earnings before being acquired by Microsoft, Marketing Solutions — its advertising unit — generated $175 million, or 18% of its total $960 million in revenue. In comparison, Talent Solutions, which is its recruitment business, generated $623 million in revenue, which was 65% of its total revenue. This could indicate that LinkedIn's advertising business has room for growth, which LinkedIn Audience Network and serving Outlook users ads are likely to boost."

Facebook has always sold ads. Even before Facebook was Facebook (Previously, [thefacebook] in 2004), it sold ads. Dubbed 'flyers' the display banner advertisements were pitched as a way to target an ad to a specific college campus.

And unlike a search engine where the search is a trigger for advertising, the only thing determining the targeting of ads on Facebook is user demographics and behavior. This means that in order for Facebook to stay in business it will continually look for ways to parse, sell, and monetize its users.

Reason 2 - The Customer

A time-worn phrase, "The customer is always right" endures because it consistently points to how a business will behave. In other words, if you know the customers and their expectations, you'll have some idea of what a business will do to get their money.

The customers on Facebook are advertisers.

The users on Facebook are the product. The content they upload, the time they spend using Facebook services, any and every area of life that users put on Facebook--all of it is the focus of being a product to sell to advertisers. The Facebook slogan of, "Be Connected. Be Discovered. Be on Facebook." has no qualifiers, because Facebook wants as many users--and as much user information--as possible.

As James Temperton writes for Wired:

"[Facebook's Open Graph] didn’t just collect people’s personal information on an unprecedented scale and with little to no oversight; it also turned clicks and likes into a searchable psychological profile covering tens of millions of people."

The customers on LinkedIn have always been subscribers.

Since the beginning of LinkedIn's business lines in 2005, revenue comes from charging to post jobs, and providing business services via profile subscriptions. The business lines have expanded since then into more tiers and foci, but their primary structure has remained the same.

Even today the LinkedIn slogan is more nuanced than Facebook, "Connecting the world's professionals to make them more productive and successful." The social network aspect of connection is still there, but it's qualified with 'professionals' alongside the goals of productivity and success.

Reason 3 - The Past

As instructive as following the money and knowing your customers, understanding the history of a business can help determine its trajectory.

For Facebook, the Cambridge Analytica scandal isn't the first time they've run into legal issues regarding the manipulation of the data they collect. From 2011 to 2013, a USD 20 million settlement was reached when Facebook had been found to be using profile names and images next to paid advertisements, falsely implying an endorsement of those ads from those profiles.

Before that, from 2007 to 2010, Facebook settled another case in which it had run the Beacon program--another advertising program connecting profile behavior to advertisements. In that case, Facebook users that had visited a Beacon advertiser website would have their purchases broadcast to their network.

Working backward from 2010, the Electronic Frontier Foundation lays out a further timeline going back to 2005 of how Facebook has transitioned its privacy policies from the benefit of its user base to the benefit its customers, the advertisers.

LinkedIn has also settled lawsuits in its past, most famously Perkins v. LinkedIn, regarding spam emails sent via the LinkedIn "Add Connections" mechanism and more recently a settlement over weak password security measures due to password encryption being too easy to decode. In both of these cases, however, advertisers were not involved. The failing on LinkedIn's part was to its paid user base. The distinction matters and is what contributes to a better overall record than Facebook.

Reason 4 - The Present

Today Facebook is contending with congressional oversight, further class action lawsuits, and regular negative news coverage concerning how it uses the data it gains and generates from the people using its service. The hashtag #DeleteFacebook gained traction and notoriety when it trended on Twitter and saw follow through from people like Elon Musk when he deleted the Facebook pages for SpaceX and Tesla; and Brian Acton, the co-founder of WhatsApp the encrypted messaging service which Facebook earlier acquired.

Perhaps most instructive is even Facebook's home address: 1 HACKER WAY. Is this reflective a mentality that's ok with the most human-based hack: social engineering? The definition from Wikipedia is pretty telling, "Social engineering, in the context of information security, refers to psychological manipulation of people into performing actions or divulging confidential information. A type of confidence trick for the purpose of information gathering, fraud, or system access, it differs from a traditional "con" in that it is often one of many steps in a more complex fraud scheme."

Meanwhile, LinkedIn continues to chart a paid user model with MarketRealist reporting that Microsoft intends to make it part of its CRM business Dynamics. The recently announced redesign of LinkedIn profile pages further backs this up as it will better integrate with Microsoft Dynamics design. Functionally, LinkedIn is available in nearly every country in the world, most notably China. LinkedIn users also self-regulate, sticking with presenting public-facing data and working towards improving productivity and success. And sorry, no drama with their address: 222 2nd Street. Classically business-boring.

Reason 5 - The Future (and Reason 1)

The future of LinkedIn is anyone's guess, but with Microsoft ownership, a business model that relies on subscriptions from users, and a willingness to abide by data security legislation, the company will likely avoid the recent face-plants of Facebook. The siren song of advertisers is a strong one though, and it could also entangle LinkedIn. So far though, their course is set, and their horizon is clear.