We are living in unprecedented times. The technological revolution has given way to the information revolution and we are impacted in profound ways that are only starting to crystallize. At the crucible of this incredible shift is the very meaning of the self, and what our data actually means to us.
When I say data, I’m not just talking about things that have been in the news recently like location tracking or hacks that expose people’s sensitive information like sexual orientation or bank account information. I’m talking about everything that we do with digital services, our behavior and what we like on social media, our interests and what we search for on Google.
The most powerful digital companies in the world give their services away to their users for free. You don’t spend a penny each time you visit Google or check Facebook. Yet those companies make tons of money. Why? Because you are the product. Your attention, what you do, who you are – in one word: your data. This concept is so abstract that we need to define it in a couple of different ways.
First, we need to understand what your data is worth to them in monetary terms. This is rather straightforward. Then we need to figure out what your data is worth to you. This is not nearly as easy.
The different types of data
There are different types of data. The first is basic personal information: our names, birthdates, address and so on. We readily give this information to nearly every service we encounter, particularly if there is a need to deliver a physical good. While most people probably don’t want their address and phone number on display across the Internet for all to know, this type of personal information is documented in other places and could be found through official channels. This information also existed before the digital era so its place in the digital world therefore doesn’t have the same type of “value” as the data that I’m going to talk about in a minute. Companies will pay to have your phone number so they can call you or send you SMS marketing, but it doesn’t matter which combinations of numbers makes up your phone number.
Your physical address could have more dimensions of value than a phone number. Where you live determines where you go to school, how much you earn (or how much money you have or don’t have), and who you vote for. This information then can be used in more ways than one.
There are strict laws in place to control which types of personal information companies can collect about you. They can ask about what profession you hold or what your income level is, but they can’t ask who you love and what diseases you suffer from. Generally speaking, this information forms the “what” of who we are as people and is very objective.
But when the Internet came along, everything changed.
Data about your preferences and behavior
The first thing to understand is that digital services record everything that happen on them. This includes all actions taken by a user, and if it’s a social network, all the connections that each person has to each other. It’s safe to say that every single action you’ve taken in the history of using digital tools has been recorded and in many cases still exists.
This is not some creepy big brother thing, it’s the reality of how we use digital platforms. Imagine if you checked Facebook and found that you lost a lot of your connections because Facebook was worried about knowing too much about you. Or you wanted to find a post that you liked but you couldn’t find it. You would be pissed off. The platform is supposed to remember everything you did, but you can’t have one and not have the other.
Where the gray area begins is in the reality that the digital world is creating types of data that have never existed in the past. Before Facebook’s Like button came into existence, if you saw something on the street that you liked you just naturally liked it, without clicking a button. Nothing other than your brain recorded it, and in many cases it was just a natural reaction that created no lasting effect. But because the Like button exists now, Facebook knows what you like. With their reaction button they also know what you find upsetting, sad, or when you really love something. It’s the digital manifestation of your personal preferences. You are copying – and in some ways offloading – a part of your personality to a business.
Google is the same thing. Before search engines, people had to consult books, experts, or just spend all day arguing about a subject. Searching is a clear indication of what you’re interested in, and the data created (which is stocked) can be extremely deep. Sure, you can see that I searched for what temperature water to use when making pizza dough and extrapolate that I like to cook and eat Italian food. Harmless enough. But if I search for something sensitive, like symptoms for a disease or what to do about an abusive relationship, and all of a sudden that data is not so innocuous.
Google treats the different types of searches the same way. In order for them to not treat those searches in the same way they would have to have some sort of moral authority to do so and decide how they treat different data. Their motto “don’t be evil” can give us a direction of their intentions, but the only true intentions of a for-profit business is to continue generating profits. There is no question in today’s society anymore that anything trumps profits.
Search data is just one of the most obvious ones. Google maps knows almost everywhere that you go. It can tell how long you spend in different places and when you type in directions, it knows where you are going to go. On a philosophical level, it exists in your future. And in many cases it determines an aspect of your future. Again, a part of you, literally where you exist, is documented and partially controlled by a business.
“What a minute,” you say, “those services are extremely helpful!”
You’re absolutely right.
Who cares if you give up that type of information for free access to incredibly practical tools that have fundamentally changed how we live in many ways for the better. Of course there is a trade off, how else could those apps work??
What is your data worth to businesses in monetary terms?
So let’s try to find a way to answer the question at the start of 2019, accepting that data is the currency that we use to gain access to platforms. What is your data worth today?
Facebook has 2.2 billion users (counted as people who check Facebook at least once a month). The 98.3% of their revenue comes from advertising, which is only possible because you are there and they have your data. It’s safe then to tie the monetary value of their ad revenue to the data that users make available. In the 3rd quarter of 2018, Facebook brought in $13 billion in revenue (the highest ever). That breaks down to $4.33 billion per month. Divide that by 2.2 and we come out to almost exactly $2 per user.
On average, your data is worth $2 to Facebook each month. Sure, this is a mega generalization that could be mocked as misunderstanding reality, since what we’re talking about is advertising dollars and not everyone has the same purchasing power. If you are targeting ads to Swedes it’s going to be more expensive than running a campaign in Haiti because of the ability for people to act on advertising and spend money, but ARPU (average revenue per user) is the going metric in terms of measuring what we are worth to them since we do not pay Facebook anything monetary.
When we single out North America (Canada & the US) the ARPU jumps way up to $9 per user per month.
This is what your data is worth to Facebook. When you put it in monetary terms, $9 a month doesn’t seem like that much. Considering the way that Facebook treats our data, I think of lot of people would be happy to pay $9 a month to use Facebook with no ads and with the condition that Facebook can’t do anything with their data.
We cannot simply add this number up over time since it is constantly changing. Facebook’s usage is in decline in the western world, but the way that advertisers can use data is becoming increasingly powerful. So while there are fewer eyeballs, advertisers are paying more to reach the ones they want.
Now let’s take a look at Google.
Alphabet (Google’s parent company) brought in $26 billion in the second quarter of 2018, or $8.7 billion per month. Google’s advertising makes up 86% of that business, or $7.4 billion per month. Google’s ecosystem is much more difficult to pin down, since it has seven different products with more than a billion monthly active users each (and we don’t know the overlap). This includes the classic search engine, the Android operating system, and YouTube. Not all products are created equally in terms of usage. Not all of them adhere to the same type of advertising model. Google gets paid by clicks on search, and it doesn’t discriminate between who clicks.
But advertising on YouTube is targeted based on your interests. So is the Google Display network. If we apply the 2.2 billion from Facebook (which I think is a relatively good comparison since there is a ton of overlap between the star products on Google, and considering that there are 3.2 billion internet users in the world – a lot of which are in China where Google and Facebook are not accessible, that number should be close enough for a general argument) the value of your usage and the data Google uses to target ads jumps to about $4 per month.
Facebook know what you like, Google knows everything else
The gap between Facebook and Google in terms of how much they know about you is large. Sure, Facebook has lots of apps that we use, like Instagram and Whatsapp, but they are essentially the same thing as Facebook except in different colors. You share information, connect and chat with friends, and browse what other people are sharing.
Google’s ecosystem is embedded much more deeply in our lives. Google is itself a verb for finding what you are looking for. No one says “I’m going to Facebook that.” Google provides email for a huge portion of Internet users, and they have for over a decade. They scan the contents of each of your emails to provide targeted advertising. They say that it is anonymised but the truth is that Google has read and processes every email you’ve ever sent. Google maps knows where you are at all times and in many cases knows where you’re going. It can pinpoint where you will be in the future when you ask it directions.
If you are an Android user, Google knows even more, from the way that you use all of your apps to any other information that you give with connected devices like a smart watch or Fitbit. Google home records your voice searches and “listens” to your daily life waiting to answer questions and commands.
Plus, Google is tracking you even when you don’t use a Google product. Their DoubleClick cookies get deposited all the time in your browser as you visit different sites where they use advertising. Those cookies track all of the other places you visit on the web, even when you think that you are out of the Google ecosystem.
But all of that still only adds up to $4 per month on average (again, a gross generalization but useful for the argument in 2019). Relatively harmless. Now things get much more complicated.
What is your data worth to you?
What would happen if tomorrow Google disappeared? As a heavy Google Drive, Gmail, and Google Photos user, this would be disastrous for me as I would lose all of my work history, personal projects, and photos of my family and vacations. If Google held all of my content ransom tomorrow, how much would I be willing to pay to get it back?
Probably thousands of dollars.
Google is worth much, much more to me on an individual level than I am worth to Google.
You might say that I’m confusing my content with my data, since Google targets to me based on my preferences and interests and not the actual content of the speadsheets that track my earnings or photos of my family on the beach in Thailand. In reality, those two things are inseparable. Google provides me with tools, which I use for content, and how I use those tools creates the data about me.
The outstanding philosopher Yuval Noah Harari says in his latest book 21 Lessons for the 21st Century that since we don’t understand what the real value of our data is yet, we are giving it away for free services the same way that Native Americans gave away swaths of land in America for a few shiny beads. Take one look at the future and you’ll see why.
The monetary value of your data will skyrocket in the future
As I said, these digital services are creating real extensions of who we are that were once before things that were personal to us: our preferences are extensions of our personalities and characters. Who we talk to and our social circle are being recorded as is everything that we’re saying.
All of that is in some ways based on actions, which are necessarily external.
But what happens when we start to fuse ever more deeply with technology in the form of biotech, for example? What happens when we feed information about how our bodies operate to programs in order to optimize how we function as organic beings? Data about how our bodies operate will open a new frontier in the value of data.
How much would politicians pay to know how you really feel about their message? How much would businesses pay to be able to manipulate your preference about their product? How much would insurance companies pay to know exactly what your future health risks are?
As we use more and more digital services to address the needs of our lives, we will continue to generate more and more data. The companies that hold that data will become ever more valuable and ever more powerful. Once your body is quantified by data, you will not be able to unplug, since you cannot separate yourself from your body the way you can delete your Facebook account today.
There are no easy answers to the question of what we can do about any of this. It is unprecendented and therefore impossible to comprehend. We seek convenience, and the other side of that coin is that the company offering convenience for no monetary exchange needs to get compensation from somewhere. Since our data doesn’t cost anything to us, we readily give it away.
Maybe we should think about agreeing to pay for services now to retain control of the data we are giving away, before we realize just how bad of a deal we’re getting.
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