Tuesday 20 August 2019 6:00 pm

Facebook risks hit to advertising revenue as it unveils new privacy feature

Facebook has unveiled a new feature that gives users greater control over their personal data, in a move that could impact the social media firm’s advertising revenue.

The tech giant said it will allow users to prevent information about their browsing activity from being passed on to third parties for advertising.

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The feature, dubbed “Off-Facebook Activity”, will initially be rolled out in Ireland, South Korea and Spain, before being introduced to more markets in the coming months.

The move marks Facebook’s attempt to win back trust following the Cambridge Analytica scandal last year, when data belonging to roughly 87m people was misused for political advertising.

Mark Zuckerberg’s company has since come under fierce scrutiny over its data practices, and was last month hit with a $5bn (£4.1bn) fine by the Federal Trade Commission.

MPs have also ramped up the pressure on Facebook to explain its role in the scandal amid accusations the company has given contradictory evidence to officials.

The privacy boost is likely to have an impact on Facebook’s revenue, as reduced data will make advertising on the platform less targeted, and therefore less attractive to brands.

Facebook relies heavily on advertising, which accounted for the vast majority of its $16.9bn second-quarter revenue. However, the impact of the new privacy tool will depend on how widely it is used.

Users will be required to opt in to the new measures, meaning their data will continue to be used for advertising unless they take action.

Shares in Facebook slipped roughly one per cent after it unveiled the new feature.

Read more: Senior MP slams ‘disingenuous’ Facebook response over Cambridge Analytica

Jim Cridlin, global head of innovation at WPP media agency Mindshare, said the move was “clearly an attempt to win back consumer trust”.

But he said Facebook would maintain “rich targeting capabilities” from data gathered through its messaging platforms and Instagram.

Main image credit: Getty