So what transactions benefit from Proof of Identity? There are a couple of obvious candidates. One, which most journalists are pointing out, is proof of ownership. You can link my Facebook account to your government ID card. You can then prove ownership of it by producing your document and comparing both. This scenario though isn’t the most critical for the company’s interests. The scale of ownership requests pales compared to other situations.
The most critical transaction for them involves an exchange of goods
. In this case, advertising inventory. Right now, anyone can buy advertising on the platform, without verifying who they are
. As long as you have a valid account the company can charge, the rest is mute. The company does this at scale through automation. This means they process thousands of ads per day. It would be impossible for them to confirm each advertiser by hand
. This wasn’t a problem until Congress starting demanding liability
. They needed a scalable solution for this, and fast. This is where Confirm.io came in handy. The amount of advertising transactions per day is orders of magnitude bigger than any ownership claim. Hence the strategic acquisition
Adding an ID verification step will impact their growth metrics
. They know it. But having Congress take matters into their own hands would be worse
. Also, they already command, with Google, the majority of the online advertising market share
. While they’ll feel the hit, they’re still an aggregator, and they’ll retain most legit users. This is due to the simple fact that they own the user’s relationship
like no one else does.
The moment Facebook rolls out the change, it will set a new precedent. One that will have broad ramifications. Governments might pass regulations that enforce such verifications. They can even extend it to another type of transactions like posting news.
The potential for abuse doesn’t stop there. Confirm.io ensured they didn’t retain any personal information
. We don’t know what will happen in the case of Facebook. Once again, we have to trust Facebook
, something that’s becoming harder and harder. No wonder decentralized platforms powered by Blockchain
technology are gaining adepts.
Another ID company called SheerID raised 18 million dollars
this same week. The Portland organization focuses on verifying specific sectors of society like students, teachers or the military. Their goal is to enable their customers to check their users and decrease coupon or discount redemption fraud.
While a lofty goal, companies can also use their verification process to segment and discriminate their users.
It’s one thing to use your internal data to infer, with a specific probability, what segment a user is in. It’s a very different thing to know it as a fact.