Consumers Deserve a Data Dividend

It is well understood that consumers are the product on the internet. We are packaged by ubiquitous click-to-accept data collection policies that have all the usurious qualities of payday loans. Euphemistically called “privacy policies” these click-wrap contracts force consumers to hand over an increasing amount of data in exchange for browsing the internet, using apps and consuming the web services that are now essential parts of our daily lives. This decades old arrangement is fundamentally broken; it is past time for change.

The economics of the internet currently boils down to a simple transaction. As consumers search, browse, post, subscribe, like, click, purchase, or even walk around, their data is harvested, analyzed by algorithms, and auctioned, often instantaneously, to advertisers by Google. Google’s core business model is to collect massive amounts of personal data, place it in an AI-driven black box, and monetize it by brokering advertising through an electronic marketplace. The transparency of Manhattan’s Madison Avenue has been replaced by the opacity of Google’s Amphitheatre Parkway.

But with this business model, consumers are shamefully under-compensated for the data they generate as they go about their daily life, both virtual and physical. Consumers are told that the trade of their personal data in exchange for “free” services is a fair one. It is not. The marginal cost of any of these services is effectively zero yet the ad revenue generated from consumer data easily exceeds $200 billion. On the other side of the market Google’s privacy policy and terms of service guarantees its cost to acquire consumer data is zero. It’s a taking. The only one actually getting something for free is Google.

And that’s not all. The most subtle unfairness of this exchange is that consumers never stop paying, and the amount of data taken from them keeps rising. The data extracted from consumers now wildly exceeds the value of what they receive. What’s worse, Google’s data collection is increasingly untethered from a user’s underlying activity. For instance, on an Android phone, Google collects a range of location and sensor information irrespective of what services or apps the user has active, without their direct action, via processes hidden in the background.

Much of this consumer data is not, or should not, be Google’s to take in the first place. The “consent” for this data collection comes from the “notice” provided by “privacy policies,” which in turn embeds Google’s all-encompassing terms of service. So, not unlike the shrink-wrap licenses of the 1980’s, Google’s click-wrap licenses—or contracts of adhesion—give Google cart blanche to collect whatever user data it desires, whenever it desires. Boiled down to its simplest terms, the consideration consumers receive for their highly valuable stream of data is worth a lot more than what Google is providing.

And as more and more sensors are packed into our mobile phones the problem is getting worse. Google uses these sensors to track our every move—from waking up in the morning, to riding down in the elevator, to meeting up with friends, to walking past the coffee shop. These sensors are constantly sending data to Google’s consumer profiling systems even when a device is not in use. It’s not that Google and others shouldn’t monetize data collected through innovative services, it’s that consumers, at a minimum, have earned a piece of this ever-expanding pie.

Consumers face a classic monopsony market, where there is only one “buyer” (actually taker) of their valuable data. For markets to work, consumers need choices and alternatives, not the Hobson’s choice presented by Google, which is really no choice at all. Consumers are paid nothing for their data and Google takes a usurious cut of all advertising revenue. Google chose an auction model to ensure it received the best price for each ad at scale across billions of instantaneous transactions. Consumers should have the same benefit, auctioning data of their choice in a market that provides the best price.

What’s more, apparently this all leads to a new surveillance industrial complex. Consider this recent quote from Eric Schmidt himself:

“’Ad-Tech’ will become ‘NatSec-Tech’ as adversaries recognize what advertising and technology firms have recognized for years—that machine learning is a powerful tool for harvesting and analyzing data. Using espionage and publicly available data, adversaries will gather information and use AI to identify vulnerabilities in individuals, society, and critical infrastructure.”

Talk about a lack of self-awareness. The individual most responsible for the creation of the surveillance economy warning us about… the surveillance economy. But Eric’s dystopian, 1984 view of the world only flows if 2.5 billion Google Android phones continue to kick off hundreds of billions of sensor readings 24 hours a day, collecting and cataloging hundreds of millions of wireless base stations and Bluetooth beacons, and harvesting the app metadata constantly streaming off one’s device. It’s a problem of Google’s own making. You can almost hear Google saying, “This mission is too important for me to allow you to jeopardize it.” (Google it).

Consumers need a new business model, where they can participate—or not—in a market for their data. A business model where consumers are in control and companies actually compete for your data. A business model where fair consideration for their data is offered—perhaps in the form of a data dividend through micropayments, or incentive programs, or loyalty rewards, or some other innovative model. A business model where firms compete for consumers’ information directly much like we see in functioning markets where consumers regularly exchange information and loyalty for value.

Here’s a 12-step program that might restore balance in favor of consumers and competition and help to resolve Google’s data addiction:

First, the term “privacy policy” is itself a deceptive practice. Privacy policies say nothing about privacy. These are data collection policies, let’s call them what they are.

Second, since when is Google a first party? The consumer is the first party to their data. Google is a third-party and they should be treated as such.

Third, let’s make our new data collection policies mean something. Consumers deserve easy to understand, clear descriptions, like food labeling, not a legal treatise. More sodium, less sodium. We’ve got this.

Fourth, choice can’t be an all or nothing game. Consumers deserve granularity in choice and ease of use. It’s 2021. Perseverance just landed on Mars. This can’t be that hard.

Fifth, opt-out is the monopolist’s game. Heads they win, tails consumers lose. Opt-in is the only way to ensure consumers have actual control and everyone knows it.

Sixth, consumers need data portability. Rather than just one company harvesting and monetizing their data on that company’s terms, what if a consumer chose their partner(s) in return for real value? This type of data portability could unlock competition much like number portability did for the mobile phone.

Seventh, with micro metering (and billing) and micro payments and blockchain and crypto currency, there is no technical reason why consumers can’t be cut in for even a small piece of the pie.

Eighth, we need to reestablish some baseline for property rights. Google, let’s say this slowly, if law enforcement needs a warrant to track my location why do you think you get to take my location at all, not to mention for free? The fact that an Android user is at a religious institution, or health care provider, or a red-light district is none of your business.

Ninth, in a world of invasive, connected devices, self-disclosure is not enough. We need real transparency. Consumers have a right to know what exactly is triggered when you merely walk near a Google Home, or say: “Hey Google, what’s the weather?” Exactly what data is sent when you turn up the heat on your Nest thermostat, start a workout while wearing your Fitbit, or simply put your Android phone down for the night?

Tenth, “super-profiles” of individuals are the domain of repressive regimes, not consumer advertising companies. It’s not just the collection of myriad kinds of data that is worrisome, but the combination of that data into a single profile that’s the problem. If Google wants to own Fitbit, fine, but don’t combine that data with the frequency of one’s trips to the health clinic, searches for symptoms online, and your email with friends and family.

Eleventh, the least important part of a consumer’s profile is a name. Even so-called “anonymous” data that is tracked and categorized under a device ID is just as “personally identifiable” as data that is tracked under John or Jane Doe, in fact more so because each device ID is unique.

And twelfth, we need to create space for others to innovate, differentiate, create value (and get paid) without also paying the Google a “data vig.” Google does not have a default right to the app metadata created between a consumer and its favorite services (sports, finance, health, gaming, etc).

You can already feel the market working. Why should consumers pay dollars for broadband and content when they can use data? Why should “premium” services cost anything, when consumers can pay with more data? Why shouldn’t consumers be able to trade “data loyalty” for something of value? What about data for premium content? Or why can’t we just opt out of the whole system entirely and… here’s a novel idea… use a mobile phone to make a phone call, send an email, or text a friend.

The all too convenient big tech market division needs to give way to innovative market competition. It’s past time for consumers to have a seat at the table and benefit directly from what is rightfully theirs.

“Open the pod bay doors, HAL. I’m sorry, Dave, I’m afraid I can’t do that.”

Retrieved from here.

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