After the Cambridge Analytica scandal broke, Mark Zuckerberg was called before the United States Congress to be grilled for political points. It is not yet clear what political payoff Congress will receive from the event; but Zuckerberg made $ billion. It is not clear what, if any, action congress will take in response to the matter, but there are some interesting subjects here. I will focus on the idea that private data is a currency.
When I signed up for Facebook, I quickly realized that the deal was quite simple: Facebook would squeeze every droplet of data from my online activities, siphon them up for processing and monetize the results. In return, I would get access to certain Facebook services. Google also offers a similar deal—in return for the data blood they can suck out of my online life, they offer various useful services. I had no delusions that my data would not end up in the hands of third parties so that they could exploit it for monetary gains or other, more nefarious, purposes. Naturally, neither Facebook nor Google put it in these terms. Facebook, for example, makes a rather large production of how they respect our privacy and tout their suite of privacy controls. When Facebook gets caught doing what it does, Zuckerberg or his minions engage in an apology tour, wringing their hands at how naïve they were to put their trust in some wicked organization. Then they go back to monetizing the data and crafting new apology algorithms.
It might be suspected from what I have just said that I have no issue with what Facebook and other companies have done. After all, it seems that they acted exactly as I expected. However, this does not entail that I agree with their actions. To use an analogy, when I go into the woods behind my house, I expect the ticks to try to get on me and drink my blood. I do not, however, approve of these actions. This is because they are stealing my blood and only giving a risk of disease in return.
But, if allowing the ticks to drink my blood somehow yielded a meaningful advantage to me, such as improving my resistance to diseases (rather than exposing me to them), then I would certainly consider striking a “deal” with the ticks—it could be worth trading some blood for something useful. This is my relation to Facebook—I am trading some digital blood for some useful services. Unlike ticks, the people of Facebook are intelligent—so I can strike a meaningful deal with them. The key question is sorting out what sort of deal would be rational and ethical.
While Facebook and Google say that many of their services are free, there is no such thing as a free service (to modify the old saying)—the user trades something of value for something of value. There is obviously nothing inherently wrong with an exchange—one might even argue that is how reality works even in terms of basic physical laws. As such, Facebook, Google and others should not be criticized for engaging in receiving value in return for their services. However, by presenting them as free they are being disingenuous. Going back to the tick analogy, imagine that Tammy the tick said she would give me resistance to diseases for free by biting me, but left out the part that she would be sucking some of my blood. This is what Facebook and company do: they profess to offer a free service, then extract value from the users.
It could be said that just as a person should know that Tammy the tick will suck blood, one should know that the “free” Facebook is really paid for by allowing Facebook to profit from user data. The easy and obvious reply is that people should not be expected to know that “free” services come at a cost; such exchanges should be made openly. If Tammy the tick made it clear she would take some blood in return for disease protection, then I could enter an informed deal. Likewise, if Facebook was clear about the money it makes off its users and how it does so (without, of course, revealing key trade secrets), they could enter an informed deal. If ticks could really grant disease resistance, it could be quite reasonable to trade a little blood for this advantage. Likewise, users who know what they are yielding to Facebook and other companies and regard it as worth the real cost would find it quite reasonable to enter such deals. This does, of course, require that these companies are honest about their business model: they are not free, users are paying in the currency of private data.
While our economic system is built on power imbalances and intentionally maintained ignorance, a rational and ethic deal requires that users know the value of what they are giving up. To use an analogy, if Tammy the tick could exchange my blood with other vermin for far more than the value of the disease resistance she offers, then I am being ripped off—Tammy is exploiting me. But, if Tammy is honest about her blood profits and makes it clear that she is earning them through her efforts, then the deal can still be rational and ethical. Going back to Facebook, if they are clear about what my data is worth to them in terms of profits, then I can enter a rational and ethical deal by deciding if what I give up is worth what I get. Obviously enough, for Tammy the tick and Facebook to make a profit, they must give the user less value than what they receive—but this is a matter of capitalism and not a special matter for companies like Facebook.
If private data is looked at as a currency, Facebook, Google and other data dealers who offer goods and services for data could and should work out an honest payment system. Just as a person can select various goods and services based on their monetary costs, users should be able to do the same in terms of the privacy costs. To illustrate, a user might have the option to provide Facebook with the bare minimum of data needed for the account to exist and get in return the bare minimum of services. A user could elect to upgrade their services in return for giving Facebook broader permission to monetize their data.
It could be argued that the value of private data cannot be calculated like a currency, so this could never work. The easy and obvious reply is that Facebook and Google already monetize privacy—they are aware of the value of the data. While the value can fluctuate and vary between people, this is no different from any other commodity or currency that is assigned value. As such, it is time to end the lie of “free” services and put the private data dollars on the table for all to see. The question that remains as to what the private data currency should be called. While it might be amusing to say “Google has got me by the privates”, “privates” would thus obviously be a bad choice. So would “P coin”, “P dollars” and anything involving “P” (though Trump might be intrigued by “P” as a currency). Perhaps Privcoin? Hmm, that would allow the “Privycoin” joke. Well, the naming must be left to the folks in marketing.
I love your comparison of Facebook to a “blood sucking tick”. It’s one of the reasons, but not the only reason (and not even at the top of the list) that I don’t use it.
I do have a Google + account, and I’m not really sure which is worse. I don’t use any of the social media aspects of Google +; I don’t “share” things, I don’t post things, I don’t participate in conversations; Google seems to be much more surreptitious about their tracking. I don’t know what Apple does with their iPhones, but my Android is inexorably intertwined with Google – from maps to searches to inquiries to “location services”, it’s all “on” by default. It’s a little shocking to discover that I (or anyone) can access my location history for any period of time, and frustrating that it’s so difficult to find and disable all of these features. Of course, there are definite rewards for leaving them on, so there’s that.
Anyway, I want to make a couple of points about the ethics and perception of the phenomena.
My kids and I have been playing this game called “HQ Trivia”, maybe you’ve heard about it. They give away $5,000 twice a day, split among all those who are able to answer 12 questions correctly. On Sundays they have a special $25,000 jackpot, and there have been sponsored games with prizes of $300,000. That’s a lot of money – and I wondered about their financial model. “If you’re not being sold to, you’re the product”, my daughter astutely said.
You have to sign in with your phone number or email address – but it’s really, really easy to just say “Sign in with Facebook” or “Sign in with Google”. As easy as this is, it is equally difficult to disable all contact information and sharing and just play the game. In the end, you have to link a PayPal account to HQ in order to collect any prize money.
In this particular model, the founders of HQ Trivia are operating entirely on venture capital, in the hopes that they will draw a big enough audience (games typically have participation of about a million or more) who will share enough information through various sources as to make them players in the “Private Data” marketplace. I think you’re right – it’s the new currency, or at least a new form of currency.
i would caution against calling out only Facebook and Google, though. Even though they are the obvious major players, they aren’t the only ones by far. Everything you do on line is tracked in one way or another – your bank, your investment company, store transactions like those with Amazon, Best Buy, Walmart – media entertainment companies like Amazon, Netflix, Hulu, and any of the other streaming sites all track your preferences and your locations and your choices, and use that data not only to provide you with “personalized service”, but to have a marketable commodity in their collections.
I think we ought to do a little bit of semantic parsing, though. I don’t think that these companies are misusing the word “Free” too much – to the extent that something is absent of any transaction fee or cost. You don’t pay for it, so most people would regard that as “Free”. To say that someone is making money from your acceptance of the “Free Offer” is irrelevant – their profit is not of any cost to you.
This has been done for years – even before this digital age – and this recent upsurge is really only a natural development of the practice. Remember “Free Magazine” subscriptions? Big media companies would offer multiple subscriptions to magazines for no cost or low cost to consumers. Why? On the consumer end, they have information about your likes and dislikes and can offer you targeted paid subscriptions at a later date. On the other side, bigger subscription rates means bigger advertising rates, and that’s the real bread-and-butter of that whole market. So I get LIFE magazine in my mailbox every week, and TimeLife gets to charge more for their advertising … the fact that they make money from providing me with the magazine is irrelevant, and actually works in my behalf because their profit enables them to provide the magazine to me. The equivalent “safety measure” for me would be to go to the local newsstand and buy the magazine with cash. I don’t get the benefit or convenience, and they don’t get the subscription and the ancillary profit it provides.
And – all of these media companies engaged in the secondary marketplace of selling and trading their subscription lists to others. When I was in the insurance/financial services business, mailing lists were a very hot commodity. Companies made lots of money by compiling lists of who had just bought homes and borrowed money, who had just retired, who had just moved to better neighborhoods, who drove what kind of car – the kind of information that was available back then was no less astounding than it is today – probably more so, because it was several orders of magnitude more difficult to come by and compile.
Your point about being “ripped off” is well noted, but also needs a little bit of parsing. Being ripped off means that something of value to you was taken from you without your consent. I do not consider that the recycling truck rips me off, for example. They take what is mine, that I willingly give them, and they re-sell it and make money through recycling networks.
My personal data is of no value to me, except in the sense that I want to protect it for my own privacy. However, in the true sense of Capitalism and the definition of “A Good Deal”, this sort of personal data transaction probably should be addressed. I think that if Mark Zuckerberg is making billions of dollars a day based on my personal information, that should be something I’d want to negotiate with him about. In fact, I think that he should be paying people to use Facebook, allowing individuals to profit from the commodity they are giving up. I doubt that would ever happen, though, because “Free” is good enough for too many people.
And besides, they do compensate us for our compliance. Just like in kindergarten – if we behave well, we get cookies.
We may be at the point where disclosure agreements and privacy policies need to be more like mortgages. Sitting in a lawyer’s office borrowing money is all about full disclosure and understanding – while going through 100 pages of documentation signing or initialing dozens of pages and paragraphs, with the attorney at the ready to explain everything and answer every question.
Right now, most of these online agreements are a checkbox – “I have read and agree to the Terms and Conditions”. You only have to say that you have. Some companies just have a link, and say, “By clicking “NEXT”, you certify that you agree to the terms and conditions …” The most careful of companies have a little script that requires that you at least scroll down to the bottom – but still, all you have to do is say that you have read them. They are protected. It’s up to us to actually read them, but frankly, they’re just too difficult and take too much time. Perhaps the information should be “chunked”, with a checkbox after every paragraph. Maybe there should be a “layman’s explanation” for each paragraph – kind of like they have on Turbo Tax if there’s something you don’t understand.
But if they did that, maybe no one would use Facebook. Or Google. Or the Internet.
Finally, there’s this issue of Zuckerberg making $3 billion during his Congressional hearings … there’s a patina of class envy in that statement that I think probably doesn’t belong. Facebook is a public company – and Zuckerberg’s 400 million share stake is considerably smaller than the 2.9 billion shares outstanding. Over 70% of the company is owned institutionally – meaning mutual funds, pensions, annuities, etc. Many people made lots of money over the few days that Zuckerberg testified – and many people (myself included) stand on the sidelines and cheer every time there is an uptick in Facebook’s share price. As I have stated so many times before, I don’t give a rat’s a$$ how much money Zuckerberg is making – if he is able to guide the stock price higher, that means a more comfortable retirement for me. If I did have a problem with it, I’d sell my shares and be done with them, and find another company to invest in or just settle for Social Security.
And in fact, Zuckerberg didn’t really make that money – it’s a paper profit until he sells. It’s great fodder for CNN or Forbes or anyone else peddling that kind of gossip – but if Facebook tanked he’d be broke.
Again, you are laboring under the gross misconception that Mike understands squat about economics and by extension, corporate valuations. Mike does not comprehend even the most fundamental basic concept of economics such that two entities can engage in a transaction to each’s greater benefit. See his comment:
Obviously enough, my emphasis. Now you and I know that this is simply not true. Yet to Mike and similar ilk, it is “obvious enough”.
OT but…curious when comments such as this one below come out of “moderation” do they not appear on the sidebar? Also, what constitutes a comment going into moderation? I presume the time past the original post? The original was less than three months ago. Is there a time limit? Is this configurable or a global WordPress thing? Should we not bother to comment on old threads anymore?
http://aphilosopher.drmcl.com/2018/03/17/aristotle-assessment/#comment-31181
Multiple links tend to trigger the quarantine of comments’ I have no idea why they don’t get into the sidebar-but presumably it has something to do with the code for releasing them.
“Again, you are laboring under the gross misconception …”
No, I’m not, really. I’m posting my opinion and thoughts on a blog. Mike, or you, or anyone else is free to read my opinions and agree or disagree with them in part or in whole. I don’t expect to change anyone’s mind, necessarily, but rather to engage in discussions on important issues.
What I like about this blog is that it doesn’t descend into nasty ad hominem remarks like so many others do. I posted some thoughts on Facebook once that resulted in a flame war against me, to the extent that I took down my page and profile. I recently posted some thoughts on linguistics and the changing meanings of words that went against the common “politically correct tiptoing” based on the fear of offending someone, and I was attacked personally for that one too.
At least here I can post my sometimes-controversial points of view and expect that they will be treated with intelligent discourse, not offense and name calling.
Re Facebook, I think I see your problem. Facebook is way too personal to be discussing politics to any significant degree. Certainly not in the historical context I speak of below.
Facebook is good for keeping in touch with old friends, former classmates, roommates, cousins, and other extended family. It’s not the platform for getting personal. Family/life values type stuff are about as close as I care to get and even that needs to be wrapped up in a big spoonful of humor.
As for “At least here…”, decades ago it became “wisdom” to not discuss politics or religion and thus to shun those who did. This was a bad move by society. People consequently only brought up such subjects in safe spaces where they knew everyone agreed with them. This resulted in an inbreeding of ideas that only saw light of day at the polls and maybe the media. Since most people do not make the effort to seek out alternate points of view, other ways of thinking, other ideas now are such a shock to people that they don’t know how to handle them. This is at the root of the latest attacks on the First Amendment, the restrictions of speech on campuses, and a much broader, more damaging incivility in society than the original “wisdom” was supposedly meant to contain or avoid. With the advent of the internet we have the opportunity to discuss ideas in spaces completely separate from our personal lives. The ideas can be much less muddled with the personal this way. This is a good thing. But since people still get upset at encountering new ideas, they find petty reasons to not deal with them. Banning is a favorite. Short that, labelling such people “trolls” (not that trolls don’t exist but the epithet is thrown around way too loosely), similarly the overuse of the term “ad hominem attack”, and general pearl clutching have arisen to protect people from having to genuinely think. To question their assumptions. To state that things are “obviously true” when you don’t understand or are ignorant of the fundamentals of the subject matter whilst refusing to engage in debate is quite the passive-aggressive form of this. And short of all that, to hide in The Narrative. Much of this I blame on the Clintonian (though its roots are Alinsky AIUI, though the Clintons were much more open about applying it) strategy of making the personal political. People need to stop taking disagreements so personally and the only way that is going to happen is to challenge their intellectually inbred, echo chamber assumptions.
You are safe on Google+; or at least mostly alone. 🙂
You are right to point out that this concern is relevant to more than just Google and Facebook. Unfortunately, I could not think of a non awkward way to keeping saying “Facebook, Google, and other companies that use private data as part of their monetization strategies.”
On the one hand, I do agree that we do get “free” services and stuff in the sense that we do not buy them with money or labor. On the other hand, we do pay a currency for them-we exchange data for services.
Well, as I said, it’s a matter of semantic parsing and how we define the words “Free” or “Ripoff”. I don’t disagree that we pay a currency for them. At this point in time, though, we consumers cannot put a dollar value on that currency, nor is there a mechanism for trading it. We’d have to stage a massive, worldwide boycott of Facebook to force them to pay us what our data is worth – or at least strike a good deal with them so we could get some kind of compensation.
There’s another little tug-of-war going on, chipping away at the concept of the “Free Internet”. I use an ad blocker – and in retaliation, many web pages have developed ad-blocker identification algorithms. They have started hitting me with a popup, saying, “We notice that you are using an ad blocker. Our revenue comes from advertising, which is how we are able to give you the information on this page at no cost. Please disable the software to continue reading”.
Some sites offer a subscription in lieu of ads, but at least they are ‘fessing up to their revenue stream. I suspect that if more people start using ad blockers and get this message, this kind of model will change. I don’t agree with your assessment of capitalism – that order to make a profit companies “…must give the user less value than what they receive”. Rather, I think they need to find a way of providing maximum value to the customer at a cost both parties think is fair. There’s some distance between those points of view.
Currently, my data is of no value to me. I have no idea how to sell it, I have no idea what it is worth to anyone – although I would suspect that my individual data is really worthless to anyone. It’s only when combined with millions of other data points that the entirety has a value. Outside of my privacy concerns and the little nagging voice telling me that someone is making money, it’s not something I am able to sell. On the other hand, the whole world of social media, of connections to other like-minded people, of reuniting with past friends and schoolmates is really of no intrinsic value to Facebook, except that they know how to parlay that into a great deal for them.
The experience of Facebook is of immense perceived value to its users, who exchange something that is valueless for them. The millions of datapoints Facebook gets is of unbelievable value to them (and, by extension, their investors), and all they have to offer is some dry code.
The problem arises with the nondisclosure of what they are doing with the datapoints.
Holding up remarkably well after 50 years…
http://youtu.be/RqAm62U17Pg
The data privacy problem may be solved to some extent as people realize that although there are billions of people on social media, few of them have much of anything interesting to say, and the platforms typically are specifically designed to discourage any kind of interesting conversation.
I’ve been working online since 1994 and have seen so MANY things come and go. Novelty is a primary driver of so many net experiences, and once the novelty of a service wears off those kind of sites die off. The main thing propelling social media is the novelty of the fact that for the first time in history everybody can talk to everybody else. Sooner or later this will become so normal that it will be boring.
We have a young family member (late twenties) whose been posting regularly on her Facebook page for a decade. Last six months or so, almost nothing. Instagram, the same. For her, it appears the party is over and she’s moving on. Many of us will be following in time.
The issue of social media is only a very small part of the problem. Anyone with the right credentials can put together a highly accurate and robust profile of you via your credit card transactions, your GPS data, your Google searches, your movie and entertainment selections, your EZ Pass data, your voting registrations, and everything else you do in your life. Where did you go to school? What was your major? What were your grades? What clubs were you in? Who is your doctor? What conditions do you have? What medications do you take? Have you ever seen a psychologist?
Facebook is relevant now only because it’s in the news and it’s an obvious target for this kind of inquiry – but the true danger exists in the media magnification of Facebook, keeping the issue in front of us 24/7, and quietly coercing us to take our eyes off of all the other ways in which data is collected and abused in the guise of providing us “better service” We will get bored by this story. Facebook will self-correct. Maybe the novelty will wear off and it will be used only by a few; maybe it will only continue as a primary advertising venue for companies and groups, maybe it will go away altogether – but ultimately we will settle back into our lives and allow ourselves to be scrutinized and followed with increasing detail.
Taken in the aggregate, it is harmless. Millions of data points creating a demographic picture for the purpose of marketing can easily be seen as a benefit, and as long as these companies are being truthful when they say, “no personal data is being collected”, what’s the harm?
My data is irrelevant, for the most part, unless I’m doing something wrong. I guess part of me, part of all of us, appreciates this kind of data collection if it can lead to the capture and arrest of heinous criminals, but there’s another side to it.
We need to be very careful about who we define as having “the right credentials”, and how we define “doing something wrong”. A striking (and hopefully fearful) example occurred in 2012, when a New York newspaper published an interactive map of all gun-owners in Westchester and Rockland counties. Did they have the “right credentials” to invade individuals’ privacy like that? Were these law-abiding, constitutionally protected citizens doing anything wrong in their legal and vetted purchase of firearms?
This is the stuff of science fiction, or dystopian futurism. Maybe you think it’s OK to publish a list like this, because you hate or fear guns and you think this will benefit the other residents. But what if some pro-life organization were to get hold of medical records, and publish a list of women who had had abortions?
The “no-fly” list is another area where huge amounts of data are collected and misused.
https://ccrjustice.org/home/press-center/press-releases/leaked-guidelines-placement-no-fly-list-show-system-ripe-abuse
It’s not going to go away, regardless of how tired we become of posting pictures of our dinner on Facebook.
Good catch, WTP.
I took an econ class in my first year. I did get Comparative Advantage without too much trouble, but I fought the idea that trade creates wealth for almost the whole year.
This stuff is counter-intuitive, and not easy to grasp, but it’s one of the things I believe should be a solid part of everyone’s education. When otherwise informed people haven’t got their heads around it, they make judgements on false premises, never realising that they have just assumed the equivalent of 1+1=4.
I swear I clicked the Reply link to WTP’s comment on “Obviously enough, for Tammy the tick and Facebook to make a profit, they must give the user less value than what they receive” when making my last post, but it came out at the bottom anyhow.
Oh well, on to the post itself.
I think personal data is more appropriately considered as a commodity rather than a currency. It is a terrible store of value because it deteriorates quickly, and it’s not universally accepted. I might be paid in dollars or yen or euros, but never in personal data.
I recall seeing that Facebook did put a dollar value on its service. I’m almost sure Sheryl Sandberg mooted a number close to $85/year in one of her recent interviews, but I can’t find it now. This would be for Americans, obviously. If you divide worldwide accounts by revenue, you get about $20 per account, but Americans have the money and are the priority target market for advertising.
I have never had a Facebook account, under my own name or from my own IP at least, and I never will. However, I am also wryly amused at all the people who are Shocked, SHOCKED, I say! to find that what was clearly always going on with Facebook, Google, Twitter et. al. is actually going on. This episode is just a correction, and the new normal will resume shortly.
Right; you could see it as a commodity as well-it has value and can be traded. In a way, currency can also be seen as a sort of commodity and commodities as currencies. There are, of course, differences that can be pointed out.
I’ve heard the same number; Facebook sells access and it makes use of private data to give that access value, so they can put a dollar value on the data.