Reports from The New York Times and The Observer surfaced over the weekend alleging that political data analytics firm Cambridge Analytica used psychological data obtained from a Facebook quiz to target ads on the platform for President Donald Trump during the 2016 election.
Ad targeting from Facebook is so eerily accurate, people have begun to believe that Facebook is somehow listening to them through their phone. But Facebook has said time and time again it does not use microphones on people's phones to listen to conversations.
So what's really going on?
Let's look at this real scenario that happened to an editor at CNBC. He was looking at a furniture retailer's website for bed frames on his iPad and mentioned it out loud to his wife. His wife opened her computer and went to Facebook, where she saw an ad for that specific furniture retailer.
We talked to several sources who are familiar with Facebook's advertising technology to see how this could have happened. Here are several possibilities.
1. The furniture retailer asked its ad be shown to a certain demographic, and she fit the bill.
Businesses can show Facebook ads to people within certain parameters. This targeting can get pretty specific, down to a one-mile radius of an address. Facebook is also testing household targeting, meaning some advertisers have the option to reach family members in addition to the initial target customer.
These methods are "completely compliant" with the law, said Jess Richards, executive vice president and managing director of North America at Havas Media's agency Socialyse.
"It allows advertisers, if they are doing it right, to be more relevant based on the information they know," she said.
So, let's say the editor's wife listed herself as a female, her birthdate and the city she lives in on her Facebook profile. The furniture retailer was looking to show an ad to women in her age group in the New York metro area and showed her the ad. The fact that her husband had just been talking about it was coincidental.
It could also be the furniture retailer intended to target someone who fit the description of her husband, and she was simply part of the household targeting test. She would also receive the ad.
2. She showed interest in the subject matter by her activity on or off Facebook.
Facebook knows what you like and post on its platform. From that, it determines what ads it thinks you'll like.
But it can also figure out what other sites you browse as long as you remain logged in on that device. It does this courtesy of tiny pixels publishers and businesses embed in their websites. These dots send a message back to Facebook when you visit — the technology is called Facebook Pixel. It allows companies to target people based on other sites they previously looked at.
You can see which sites have Facebook Pixels using the company's Chrome extension.