Erste Asset Management

Engagement – Better handling of user data

Engagement – Better handling of user data
Engagement – Better handling of user data
Share post:

Social networks are made for communication, for example about the aesthetic appeal of the breakfast egg, selfies at picturesque places, mountains just climbed [guilty as charged; author’s note], or whatever is keeping some presidents up at night (“Covfefe”?).

Unfortunately, the large operators of social networks are decidedly less outspoken when it comes to their use of the data thus obtained. The companies we contacted did not want to talk about the maintenance of the private sphere nor about data protection. But that was not surprising.

Let’s look at Mark Zuckerberg’s two most recent appearances before the US Senate and the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs: he fell clearly short of giving satisfactory answers to the urgent questions concerning facebook’s handling of personal user data. While at the US Senate this was easy due to partially rather tame questions (possibly furthered by the ignorance of the company’s business model on the examiners’ part), in Brussels he unfortunately had to catch a flight before responding to all the questions that had been posed by the parliamentarians.

Such tendencies of going against transparency or political control harbour substantial risk, not the least from an ESG perspective. The scandal around Cambridge Analytica is well-known. Initial studies have questioned the democratising effects that social networks were being praised for during the Arab Spring.

Independent of these political aspects, the lack of transparency in handling the personal data of EU citizens suggests enormous, latent legal risks. In 2019, the General Data Protection Regulation (GDPR) is to be complemented and tightened by the EU E-privacy Regulation. From that moment onwards, every citizen has to actively opt into the use of their data. facebook claims that this requirement is being met by the user’s login on their homepage. However, the business model of the company is not only based on its users, but also to a significant extent on the shadow profiles it keeps of all other individuals, partly by buying external data from third parties. It is completely unclear how this model can continue within the context of the new Regulation. In view of these uncertainties, our fund managers have been advised not to buy any further facebook shares for the time being.

The opportunities that the transparent handling of user data within the framework of Big Data applications creates have been illustrated by our engagement with the German Otto Group. Otto claims to be able to mine about 250 data points simply on the basis of the connection of its customers with its servers. The data thus generated are under no circumstances sold; instead, they are used to model customer behaviour and prevent fraud. In addition, this approach also offers clear environmental benefits (on top of the financial ones): a cut-back on returned items and a resource-efficient organisation of the flow of goods. If the desired product is close to the customer at the right time, this reduces transport distances and the resulting greenhouse emissions.

Netflix is going down a similar route: instead of re-packaging its user data into a product, the company uses them exclusively to improve its product for the user and thus to retain subscribers.


Legal note:
Prognoses are no reliable indicator for future performance.



Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English.

The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in conjunction with the InvFG 2011.

The currently valid versions of the prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key information document can be found on the website under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the key information document is available, and any other locations where the documents can be obtained are indicated on the website A summary of the investor rights is available in German and English on the website and can also be obtained from the Management Company.

The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.

Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at

N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated. Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance.

Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

We are not permitted to directly or indirectly offer, sell, transfer, or deliver this financial product to natural or legal persons whose place of residence or domicile is located in a country where this is legally prohibited. In this case, we may not provide any product information, either.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens.

It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.

Erste Asset Management GmbH is affiliated with the referring Sparkassen banks and Erste Bank.

Please also read the “Information about us and our securities services” published by your bank.

Subject to misprints and errors.