If You Think The Reason Internet Companies Snarf Up Your Data Is Because Their Services Are Free, Allow Me To Introduce You To The Telcos
from the free-is-not-the-problem dept
It’s been a few years since this kind of argument has come up, but it’s one that we’ve had to swat down a few times in the past: it’s the argument that somehow if a company offers a service for free, it means that they’ll absolutely snarf up all your data, and that requiring services be paid for directly by users somehow would fix that. This is easy to debunk in multiple directions and yet it still pops up here and there.
The latest is from the technology columnist for the Wall Street Journal, Christopher Mims (whose work I usually enjoy). His latest (possibly paywalled) piece is called, Why Free Is Too High a Price for Facebook and Google with the subhead reading: “Most of the ills traced to these companies are a direct consequence of their no-cost business models.” Here’s the crux of the argument:
In fact, most of the ills traced to these companies are a direct consequence of their ?free? business models, which compel them to suck up our personal data and prioritize user growth over the health and privacy of individuals and society, all so they can sell more advertisements. They make money from the attention and in some cases the hard work?all those status updates, videos and likes are also a kind of uncompensated labor, if you think about it?of their most devoted users.
Of course, it seems rather easy to point out why that’s wrong with two examples. First we pay for other services such as our broadband and mobile data providers and they are so much worse on the privacy front, it’s not even remotely comparable. It’s not as if magically paying for the service has stopped AT&T or Verizon from being horrific on the privacy front. The snarfing up of data doesn’t go away if you pay for services.
Second, there are businesses that have been built on giving away free tools without having to snarf up your data. Indeed, that’s actually how Google succeeded for much of its early history. It didn’t need to know everything about you. It just needed to know what you were searching for. And that was massively successful. It’s true that, over time, Google has moved away from that, but others (like DuckDuckGo) have stepped into that space as well. DuckDuckGo is free, and I don’t see Christopher Mims concerned that they are magically “compelled to suck up our personal data.”
As the saying goes, correlation is not causation. Just because Google and Facebook offer both free services and collect a lot of data, does not in any way mean that one automatically leads to the other (or that removing the “free” part lessens the data sucking).
Much of the rest of the piece is quite a thoughtful look at questions around big tech and antitrust — which I appreciate — but then it jumps back into these inevitable claims about “free” including the positively bizarre suggestion that free services undermine democracy. Seriously:
When an online service must be paid for solely through advertising, the company?s overriding incentive is to increase engagement with it: Users see and click on more ads. This drives all sorts of unexpected outcomes. Owing to its engagement-maximizing algorithms, Facebook appears to bear, by its own admission, some responsibility for a genocide in Myanmar.
Other well-documented ills that may have been exacerbated by Facebook include the erosion of global democracy, the resurgence of preventable childhood diseases and what the company itself acknowledges may be wide-ranging deleterious effects on the mental health of millions.
On YouTube, Google?s engagement-maximizing algorithm has been recommending material that denies the Holocaust, Sandy Hook and other tragedies, as well as white-supremacist content and other forms of hate speech, a policy the company on Wednesday pledged to redress. Over the years, YouTube has been criticized for other practices, from driving viewers to the internet?s darkest corners to pushing questionable content on children. Meanwhile, the globally dominant Google search engine has had a hard time avoiding accusations of bias in its results.
Except, once again, this seems like a correlation/causation error. Indeed, there’s a strong argument that these “wide-ranging deleterious effects” on mental health or democracy are the kinds of things that would create long term problems for these companies (which does, indeed, appear to be the case). Any company that takes a longer term view of things would recognize that if the platforms optimize in a manner that creates serious problems for the world, that can’t be good for long term business, and they can and should correct. Indeed, that’s exactly what these companies have been struggling to do over the last couple of years. And it’s got nothing to do with their services being “free.”
There are plenty of reasonable questions to ask about the power and position of Google and Facebook. And there are reasonable debates to be had about antitrust and the impact of these services on the globe. But tying “free” into the equation without any evidence that that’s the problem (and, in fact, with tons of evidence to suggest “free” has nothing to do with any of it) doesn’t seem particularly productive.
Filed Under: business models, data, free, privacy, subscriptions
Comments on “If You Think The Reason Internet Companies Snarf Up Your Data Is Because Their Services Are Free, Allow Me To Introduce You To The Telcos”
Welcome to the world of publicly-traded companies. It may be a bit of an exaggeration to state that they are legally or contractually incapable of long-term thinking, but not a very big one!
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Indeed. A singleminded focus on quarterly profits ain’t so great for looking at long-term consequences.
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What to think about the oil industry (burn more fuel and don’t care about the CO2), mining companies polluting rivers, tobacco.
Then what is your data worth?
This nicely brings up the question of whether it is you or the corporation that is getting screwed…or neither. I recently came across a Bruce Schneir piece that quoted an abstract (there are comments on that page as well) for an academic paper entitled Return on Data (PDF) .
There aren’t many answers in the piece, but I believe the right questions are being asked. The fact that the same piece of data might have different values depending upon what it is exchanged for and how often highlights the difficulty in trying to discern what the value of that data is. Then conversely how often a particular service is used by one individual might set the value for them at one price point, but for another user, who uses that server either more or less, sets different price points.
One thing I did not notice, but might have missed, is where privacy comes down in all this. But if one is understanding of what is being collected, and how it is being used, and is still willing to use the service/give up the data, then they are foregoing their privacy on purpose.
Anyone who is writing about data usage and uses words such as "price point" is clueless as to what the real issues are.
In order to discuss data in terms of "price point" one has to assume that the basic issue is money and that what is being sold, exchanged, and bought is a commodity.
That is not what is happening.
The question is, and this is the blunt question, are you a slave or not which means are and are you the property of the government, some powerful people, or yourself?
If you are not the property of the government or some powerful person then the data is not the property of the buyers and sellers as the only way they could obtain such data is by some form of illegal means. In simple language the buyers and sellers are thieves trafficking in an illegal commodity.
There are many high priced things you can buy that will result in your identity being sold out.
You’d think that considering the cost of a college education, universities would not be so cash strapped that they’d sell your identity to advertisers, but you’d be wrong. Filling out the opt-out form after the flood starts is by then practically useless.
Buying a new car is another. The local dealership’s sales manager promised that they didn’t sell customer identities. Then the phone calls started flooding in, so that was obviously a lie.
Yeah, and remember when "pay" TV meant it was commercial free because you were paying for it? Now, it is almost impossible to find even a "premium" channel that is not inundated with commercials.
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It becomes entirely impossible to find a commercial-free channel when you cancel cable and only ever watch commercial-free streaming services.
Just sayin’.
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That used to refer to stuff like HBO, but people have extended the term to refer to all cable TV. Cable TV was never commercial-free. The free-to-air channels were the main feature from the beginning.
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It appears that you’re right.
WILL CABLE TV BE INVADED BY COMMERCIALS? (New York Times, 1981) is an interesting snapshot of the early days of cable. Some cable stations, like CNN and USA, were already running commercials; others weren’t. It was an open question at the time which paradigm would become more common.
When microtransactions and lootboxes migrated from F2P
Free-to-play games started as a mobile thing, and from there evolved quickly into a whale-hunting industry. Move forward a few years from when Team Fortress 2 was released for free and now featured hats: Now AAA feature games (especially ones connected to popular franchises) are commonly loaded with microtransactions including lootboxes.
The old derisives from the mobile game community, pay2win and pay4fun are now used to describe PC / Console games as warnings what a player is getting themselves into. At this point, many companies are trying to promise microtransactions are for vanity objects only, but that doesn’t really make them any less user-antagonistic.
Given this history is just for the game industry, I would expect more serious industries would develop in the same customer-antagonistic direction. Heck they’re probably looking for a way to include lootboxes.
All this is to say: I’m totally not surprised.
Re: When microtransactions and lootboxes migrated from F2P
Actually, F2P was heavily innovated in Asian territories (I think Korea was the big innovator) where low wages made MMO subscription models impractical, long before the mobile market was a thing. This lead to F2P online games like those imported by Nexon a big market, with services (story access, boosts to reduce grind) being sold on top of a solid base service, along with a la cart access to in game consumables.
It is true that it was the western mobile market that developed this into a obscenely predatory gambling mechanic based business model, but that is in part because the western market had the disposable money to indulge in that market, and the evolution of platforms to make these monetization efforts simple. But even in the west, F2P micro transactions first came in with Online and browser games, not the mobile market.
Old idea.
Newspapers used to make money on adverts in local newspaper.
then for some reason many decided to take abit of that $0.25-0.50 that they were selling for. Which was money given to the kids/distributor of the papers. Who then had to Share 1/2 the profits for the paper..
Soon Adults got the idea that delivering a FEW newspapers wasnt enough, that they could take over and Distribute 4-10 times the number and make Pretty good money, esp. with Slave labor at home(the kids and wife)
Anyone remember when being a kid ment you went out to Mow lawns?? and make a few bucks? its not a Full time business.. 56 yards(4 per day) in 2 weeks, then REPEAT, is enough money for 2-3 kids to make a small fortune.(56x$20=$1,120 Every 2 weeks)(try to get someone to mow your yard for $20..
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$20 in 1980 is about $60 now. I have someone mow my yard for $40 and it’s pretty hilly. I got a great deal I guess.
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AND??
4 yards per day for 2 weeks?? 160×14=$2240..Which beats min wage into the dirt.. make it 2 days off per week…and still $1600 fpr 2 weeks.
Credit agencies
The corps know more about us then our OWN gov.
Unless you get rid of Credit card, debit cards, CHecks, Bank access.. you can be tracked and every sale you make..
they know how much you make, and everything else..
and our gov is restricted from using this data.. WHy do the corps have better knowledge??
"First we pay for other services such as our broadband and mobile data providers and they are so much worse on the privacy front, it’s not even remotely comparable."
I believe we call that whataboutism around here.
e.g. Hate speech on YouTube is incomparable to other sites such as reddit or 4chan, so I am not sure why people are whining and complaining about YouTube and/or Crowder
Used to indicate dismissal of entire argument when post isn’t likely to get hidden.
Thad? Stephen? How did you guys miss this? First time I haven’t seen at least one of you jump down someones throat for this abhorrent transgression. Tired of that dismissive shtick? Certainly an asshole shtick, which is a good place for that shtick to be shoved. Bigots who practice discrimination. Interesting. Stephen, aren’t you also the tough guy whose moral compass cannot be wavered, despite any threats or intimidation to yourself or your family? I think you are full of shit as is evidenced here. No pliers required.