Data is apparently the new oil, and unlike the nonrenewable petroleum liquid we unearth with giant drilling rigs, it’s an unlimited resource that can be extracted in seconds. So why do we give it away for free?
To find an answer, you have to look back to the early days of the internet.
Decades ago, tech giants and the people who signed up for their services shook hands on a tacit pact. In exchange for access to their apps for free, companies like Facebook and Google would reserve a portion of our screens for advertisements. At the time, it seemed like a fair deal. After all, we were already used to ads on other content channels such as newspapers and televisions.
While years later the premise remains the same, that agreement’s boundaries have expanded in unimaginable ways at the cost of people’s privacy. Tech platforms have built empires by siphoning heaps of data from our internet (and real-life) activities to predict behaviors, by selling it (often covertly) to third-party brokers, and by leveraging that data to gain insights that other tech companies simply don’t have. Whether you’ve tapped on a button or relocated to a new home, chances are these internet giants know about it.
This business model turned out to be outrageously profitable. In 2007, Facebook made about $150 million. Last year, it earned over $85 billion.
These companies wouldn’t be as profitable as they are if they relied on private subscriptions instead of ads because, with a surplus of data, they can target way more people, extract invaluable insights out of it, and enable endless targeted campaigns, says Dr. Murat Kantarcioglu, a computer science professor and director of the Data Security and Privacy Lab at the University of Texas at Dallas.
“An ad-free version will kill their services,” he added.
A new paradigm: Paying you for your data
So, if our personal information is such an indispensable cog in these multibillion-dollar businesses and the web itself, should we be getting a piece of the pie? A legion of emerging startups believe so, and they want to balance that increasingly uneven trade by paying you for your data.
Most recently, Datacy, a Delaware-based company, raised $2.4 million to help you “make your data earn for you.” Its browser add-on tracks you and collects anonymous data on which websites you visited and what kind of computer you are on, as well as information you may choose to link to from third-party platforms like Facebook.
Datacy puts your data up for sale, alongside other users, and depending on how much buyers bid on it, it deposits a monetary amount in your account. It usually ranges from $5 to $10.
Paroma Indilo, Datacy’s CEO, says if businesses have the option to acquire high-quality data directly from people, they won’t have to rely on shady and intrusive tracking practices. Arming users with controls over what and how much of their data is being processed and in whose hands it’s ending up in will foster a healthier and more transparent market, she added in a conversation with Digital Trends.
“That [healthy data market] can only happen when the relationship between buyers and sellers is more transactional,” Indilo told Digital Trends, “where both parties benefit proportionately and have an informed choice in deciding what to sell, to whom, for what purpose, and for what price.”
Datacy isn’t alone. Several data-monetization apps have cropped up over the years, although most of them haven’t quite been able to capture mass appeal.
Killi, a publicly traded Canadian firm, is one of the more successful ones. It works across mobile and the web, and it allows you to sell a wider range of your information, including your browsing habits, online shopping history, and location. Based on how regularly and how much you’re willing to auction data off, you earn points that you can later swap for vouchers like Amazon gift cards.
So far, Killi hosts more than 100 million accounts — although it’s unclear how many of them are actively trading their data — and claims it’s adding at least a million new ones every week. It also told Digital Trends it has clients in leading companies such as Microsoft and HP that are looking for first-party data.
Microsoft and HP didn’t respond to requests for comment from Digital Trends.
Neil Sweeney, Killi’s CEO, calls the data market a “black box of human arbitrage” and says the company wants to change that by letting people decide what they want to do with their information online.
The idea of selling your data, something which you are already giving away for free, sounds like a bargain many internet users have been waiting for. But there’s a reason why data-monetization apps have struggled to go viral.
A confounding problem
Data’s value lies at scale. Ad platforms, as well as machine learning algorithms, rely on information from billions of data points for effective yields. But these data-monetization apps don’t have that volume to entice data buyers, and if they don’t have enough buyers, they won’t be able to shell out more than a few bucks to users. When Facebook, for instance, began actively tracking its users, it already had millions of profiles.
But what if Facebook and Google were forced to cough up a data tax by law? A few states and politicians such as Andrew Yang have proposed doing just that. The bottleneck here, however, is that such initiatives will be a nightmare to implement because it’s close to impossible to put a price on an individual’s data. There are dozens of factors that could influence the compensation, and if left up to unregulated tech giants, they can manipulate their models to come up with the lowest figures.
Kantarcioglu feels that as long as there are safeguards to prevent misuse, there’s merit in services like Datacy since they will help shed a light on what is the market value of a person’s data. “It will be an interesting data point for us to understand the value of the data, how we could price it, how we could understand the value creation,” he told Digital Trends.
A digital privacy divide
Irrespective of the value, advocates believe personal data monetization could worsen user privacy and undermine its future as a fundamental right. It can potentially commoditize data and turn it into a product, which ultimately will allow tech companies to exploit it however they wish to by paying just a paltry fraction of their revenues each year.
More importantly, such initiatives couple potentially spawn an environment of pay-for-privacy models that could put vulnerable groups at a disadvantage, says Stacy-Ann Elvy, a law professor at the University of California, Davis School of Law. It will lead to a digital divide between people who can afford to protect their information by opting out of the data tax and those who will have to trade their data to retain free access to services, she added.
What we urgently need today, Elvy says, are movements like the California Consumer Privacy Act that could help consumers better understand their privacy rights and make it easier for them to exercise them. “Whether consumers will trust entities associated with such movements to act on their behalf or in their best interest remains to be seen,” she said.
