BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Google, Facebook And Others: Are They Offering Enough For Using The Consumer Created Content?

Following
This article is more than 5 years old.

Professor Brett Frischmann at Villanova University writes the main reason why companies abuse consumer data is because “we let them.” As Frischmann and Selinger explore in the recently published book Re-Engineering Humanity, "the world of frictionless e-commerce and information utopia is driven by data and its usage to scientifically manage most facets of our lives.”

Most consumers either do not know, are resigned or do not care that their online behavior footprint is being harnessed, shared with developers and data-aggregators and used for financial benefits and profits. In return for services marketed as free, provisioners do not disclose the true value of the information/knowledge that exists in the online behavior footprint data continuously being created by billions of consumers. 

Consumers are signing up for these services marketed as free, offered by companies such as Facebook, Google, Twitter and others, unaware of the acute information asymmetry, that exists in these engagements. This information asymmetry creates an illusion in the mind of the consumer about the proclaimed free services available online. Either they are unaware or do not understand the need to care about what or how much in true value they are bartering away in return for media platform services available for zero-price.

Social media companies market their services and platforms as free and holistically try to project themselves as philanthropic organizations. For example, as of the publishing of this article, the Facebook data privacy page reads as, “we give you the power to share as part of our mission to make the world more open and connected,” and the sign-up page displays, “Sign up, it’s free and always will be.” Similarly, Google Privacy & Terms page positions its data gathering practices altruistically: “We use the information we collect from all of our services to provide, maintain, protect and improve them, to develop new ones, and to protect Google and our users. We also use this information to offer you tailored content – like giving you more relevant search results and ads.”

A proxy for the true value of the consumer online behavior footprint left in the service provider’s proprietary data networks is reflected in the extraordinary financial benefits received by the publicly traded service provisioning companies such as Facebook and Google. These two companies alone, in Q1 2018, reported over 40 billion dollars in revenue, and 13 billion dollars in net profits. These reports underscore the financial benefits these companies are garnering from the inherent value hidden in the aggregate consumer online behavior footprint data bartered for providing free services to billions of consumers around the world.

The operating business model of these companies is to monetize and extract financial benefits as profit from the consumer online behavior footprint data. The burgeoning and rapid advancement in the field of data mining, artificial intelligence and predictive analytics, combined with the exponentially growing trove of consumer online behavior footprint data, has allowed these companies to profit handsomely from the voluntary yet acutely asymmetric exchange by the consumers. The evolving slicing, dicing and alternate measures of the consumer data in their proprietary networks allow these companies to extract the intelligence - golden nuggets that are the necessary inputs to the designing and targeting of the advertisements from their paying client companies towards billions of individual consumers.

The golden nuggets hidden in the online behavior footprint data, continuously being created by the billions of consumers, are generating the superlative revenues and profits. 

In this Barter or Zero-Price model, companies are provisioning services, marketed as free, to the consumers in exchange for authorization and entrustment to extensively collect, store, share and use to make the profit from the consumer online behavior footprint data. This arrangement makes these companies fiduciaries to their billions of signed up consumers.

It is unclear as to who has ownership rights to the exponentially growing online behavior footprint data, being continuously created by the consumers.

These companies as fiduciaries to the billions of consumers, need to explicitly educate the consumers about the Barter nature of the engagement. The consumers must also be made aware of the rights and privileges they may potentially be forfeiting through these electronic contracts.

Professor Alexa K. Fox at the University of Akron and Dr. Marla Royne Stafford at the University of Memphis write, “Most consumers do not understand or have much control over their data in the digital world; what information/ behavioral data is being collected, stored, shared, stolen, and misused by the public and private businesses." They further state, “most privacy statements are frequently written with the modality marker 'may.' This language can mislead consumers because the word 'may' suggests the use and harvesting of consumer data may or may not happen. But in reality, it is likely to occur." Such language is designed to understate and underplay the frequency of consumer behavior data usage.

The sign-up process for these services include a few simple clicks, and it implicitly gives these companies the right to mine the consumer data for profit purposes. The user is not explicitly made to accept the terms of the privacy and data policies of the company during the initial sign-up process. Consumers are unaware of the true value of the rights and privileges they are potentially giving up in exchange for the services, marketed as free, and hence are perceived as non-caring. The policies typically include explanations and usage practices that make it seem that the user information is being collected only to benefit the users and never articulate the financial benefits to the host company collecting the data, and therein lies part of the information asymmetry.

Companies should refrain from marketing their services as free. They need to be aboveboard and market these services with concomitant disclosures that reflect, a) the Barter nature of the engagement - company services in exchange for consumers data, b) the intention to extract financial benefits as profits from the usage of the data and c) potentially the forfeiture by the consumers of the rights and privileges to their online behavior footprint data. The disclosures should be interposed in the sign-up process to make the consumers clearly understand the nature of the transaction.

At inception, the founders and management of these companies probably did not fully appreciate the hidden lucrative nature of the consumer online behavior footprint data. This data created by the consumers - the most valuable commodity in the digital world, is being given away to these companies in an information asymmetrical Barter.

For the social media companies, is it time to create innovative transactional arrangements to acquire and profit from the content that is continuously being created by billions of consumers?