The controversy around online privacy has been on for a while, but it exploded only recently with this blog post. On March 1st, 2012, Google turned on its new privacy policy which now enables the company to “combine personal information from one service with information, including personal information, from other Google services”. In other words, your activity and data from Gmail can now be used by let’s say the Youtube or Google+ team in order to get a better idea of your online behavior. The goal is to enable Google to display better targeted ads. The downside is that you don’t have any choice.
Being an Hacker News addict, I read more and more articles complaining about this privacy intrusion Google is leading. The reason why all these articles only focus on Google is simple: Google services have become so massive that they are now considered as a primary need in our lives. What if you were asked to disclose your marital status, political opinions, and the names of the 10 last places you visited every time you took your car to go to work? That’s what I thought… Using Google is like driving your car.
Yet, what Google is doing is part of a bigger movement that is called the Monetization of Privacy. In short, the monetization of privacy happens when a company offers a service for free to its users in exchange of the exploitation of their personal data. By default, companies can’t share your data with other companies, but they can do whatever they want internally, and are totally allowed to share general statistics externally. Tons of organizations are currently using this model, including Facebook, Pinterest, Foursquare, Path, Instagram, Yelp, Zynga, among others. To understand this movement better, let’s get back to how it was before, and how we got here.
From Bills to Data
The traditional way to estimate the value of a certain item depends on 2 factors:
- Cost of production, which includes the value of raw materials needed to produce the item, the cost to transform them, the cost of labor force, etc.
- Rarity, which is the relation between offer and demand of a certain product.
That’s how we know that if Justin Bieber would decide to sell one of the t-shirts he’s worn, he could probably make several thousand dollars. The cost of production of the t-shirt wouldn’t exceed $20, but the rarity of the product – only one t-shirt worn by Bieber, and millions of hysterical fans ready to buy it and wear it until it’s tattered – makes it extremely rare, hence highly valuable. That is also how we measure the value of money. Money is highly valuable to us because it’s expensive to produce – we need to work hard to get salaries that we always find too low – and really rare – well, except for Carlos Slim and Bill Gates.
Thus, money has a high perceived value, and we don’t give it away that easily. However, we don’t really care about information. Information is very cheap to produce thanks to new technologies, and is far from being rare. It is actually so massively occupying our lives that we need to create tools to filter it.
So when companies such as Google came to us and asked us to give away our information instead of our money to get the same product other companies were making us pay for, we jumped on the opportunity! Yes, please! Take all the information you want, it’s cheap! Well… we failed. And here is why.
The real value of information
On March 13, 2012, Encyclopedia Britannica announced that the company would discontinue the printed editions of its centenary volumes. The encyclopedias don’t sell anymore because costumers estimate that the value of those books is not worth the price asked to buy them. They also know that they can find as relevant and probably more recent information faster and easier on Wikipedia. Paying newspapers such as The New York Times also see their revenues drop in 2012. I don’t think you need more examples to see where I am going: information is everywhere and is so easy and cheap to produce that people are not ready to buy it anymore. And the behavior they have with external information is the same they adopt for personal information: no value, might as well give it away.
But our way to estimate the value of information is mistaken. The take away of my article is here: just forget the traditional valuation model. The value of information doesn’t depend on how many resources it takes to produce it, or how rare it is. The value of information is measured by the benefit you can take away from it. Don’t think income, think outcome.
And it changes everything. Pinterest has in its database millions of pictures. Among them, a lot are fashion pictures posted by women. Do you imagine the value of knowing what are the biggest fashion hits, and being able to segment it by ages, geography, type, for a company such as H&M? It can give H&M the possibility to produce items that are better adapted to their highest potential buyers, hence make more money and increase customer satisfaction and loyalty.
I know what some of you are going to say: It’s a win-win situation. The company makes more money, and we end up with products that are more adapted to us. And I totally agree. The problem is when we don’t have any choice anymore.
No means Yes, and Yes means…
Companies want to get our personal information in exchange of their services? Fine, but if we don’t agree, we should be able to opt out and replace our personal data by cold hard cash. Being tracked should be a choice, not something forced, and Google is not necessarily taking the best approach right now. What if I want to pay to watch a YouTube video without disclosing my Google+ profile? I can’t.
Consider another concrete example: Paul Graham recently mentioned the good old days of Google Search and how the invasion of privacy had corrupted the results of our searches: “Google used to give me a page of the right answers, fast, with no clutter,” explains Graham. “Now the results seem inspired by the Scientologist principle that what’s true is what’s true for you.” Tracking biases our online user experience, replacing a universal common knowledge by individual results that are supposed to “suit” us better.
Don’t get me wrong: I do see the benefits of online tracking and targeted advertisements – I work in marketing, after all. However, when online tracking becomes standard and there is no way to opt out, it becomes dangerous as it gives endless power to the company that owns your data. For instance, you can end up in the situation where a company announces to your father that you are pregnant before you got the chance to tell him anything.
Microsoft didn’t waste any time figuring out Google’s new weakness and already created a video that says it all: Yes, Office 365 is not free, but at least it doesn’t read your emails.
The Monetization of Privacy is a growing movement, and is already becoming the standard for tech companies. In my opinion, monetizing our privacy should be something that we decide to do. The option to opt out and pay should be mandatory and available to everyone who cares about their privacy. However, I’m part of the minority: According to a report published by the European Network and Information Security Agency, only 1 on 3 web users consider paying an online service to protect their privacy. And you, what do you think? Would you rather pay to protect your data? Or are you fine with having companies owning your personal information?
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