A media firestorm erupted after an academic study that brought attention to Facebook’s two-year-old experiments with its user base (followed by OKCupid’s revelation). Though experimentation is the norm for online businesses, some have likened Facebook’s studies to treating users as lab rats and questioned its ethics.

Recognizing the value of the data consumers provide, social media platforms are simply making use of one of their most valuable resources. What’s more, social media and search companies have made their policies very clear.

In an interview with The Atlantic, Google’s former CEO Eric Schmidt commented that “Google policy is to get right up to the creepy line and not cross it.” In the same interview, Schmidt, now the company’s chairman, also noted that, “With your permission, you give us more information about you, about your friends, and we can improve the quality of our searches.”

Google’s Chairman Eric Schmidt: “Google policy is to get right up to the creepy line and not cross it.” Photo credit: Wikimedia Commons, Charles Haynes.

Google’s Chairman Eric Schmidt: “Google policy is to get right up to the creepy line and not cross it.” Photo credit: Wikimedia Commons, Charles Haynes.

That’s the fundamental exchange that users have entered into with Google. For being able to access the world’s information via its search engine and using tools such as Gmail at no financial cost, you give Google the right to make use of all the information you provide through your online activities. Google spells out in its terms of service that “when you upload submit, store, send or receive content to or through our services, you give Google (and those we work with) a worldwide license to use, host, store, reproduce, modify, create derivative works (such as those resulting from translations, adaptations or other changes we make so that your content works better with our Services), communicate, publish, publicly perform, publicly display and distribute such content. The rights you grant in this license are for the limited purpose of operating, promoting, and improving our Services, and to develop new ones.”

The same holds true for Facebook and Twitter, whose fine print reads similar to Google’s. In exchange for the online services to which we’ve become accustomed, we provide detailed information about ourselves: what we’re interested in, the places we’ve visited and the people to whom we’re connected. And according to the terms of service that we’ve agreed to, social media platforms can use that information.

One way in which this information is put to use is to serve up advertisements that are targeted to us. Sponsored stories, promoted tweets and promoted pins are all just advertisements. Instead of showing those advertisements to everyone, marketers select whom they’d like to target, hopefully with more precision thanks to the information available to social media platforms.

Another way in which the information that we provide is put to use is by making the data we exchange available to other businesses for marketing purposes. Twitter provides access to its trove of data through Datasift and recently acquired Gnip. In 2013, Twitter generated more than $70 million in revenue from licensing its data.

Why would marketers want access to the data? Beyond advertising on the social media platforms directly, such data offer insight into consumers, and that data can be used to power other marketing efforts. The messaging used in television advertisements could be informed by online conversations. Such conversations can offer a quick read on the efficacy of television advertising and suggest which movies are likely to earn more at the box office. Those same conversations are also useful to brand managers who can use them to monitor the health of their brands.

Whichever side of the debate you fall on, the recent Facebook controversy should force social media platforms and other online businesses to re-evaluate how they communicate their data practices to their consumers. Will doing so lead consumers to flee those online service providers engaging in experimentation en masse? Probably not. But, increasing transparency will provide consumers with information to make informed decisions about how they use the social media services, and it could go a long way toward alleviating the concerns of privacy advocates and regulators.