How free are your online services?

Photo by Lucas Gallone on Unsplash

If you are one of the few people left in the developed world that does not have a Facebook account or you simply need to sign in again, you will currently be shown a "Create an account" call to action with great news - "It's free and always will be". Good times.

That's jolly nice of you Facebook

The difficulty here is that the word free needs a bit of clarification. It is a word that can be used in quite a few ways(see the definitions on dictionary.com).

We could interpret that phrase either as a complementary adjective as in Facebook is talking about the service being provided for free, or playing Devil's Advocate maybe this was not a mistake...

free: verb (used with object), freed, freeing

  • to make free; set at liberty; release from bondage, imprisonment, or restraint.
  • to exempt or deliver (usually followed by from).
  • to relieve or rid (usually followed by of): to free oneself of responsibility.
  • to disengage; clear (usually followed by from or of).

Now I'm no language expert, but it could also be used as a verb describing Facebook itself as the object, correct? So does this not mean that Facebook itself has been set at liberty and a little more creepy - it has been freed of responsibility...

Before I begin...

I think the services offered by many of the large free online companies such as Facebook, Google etc are fantastic and are a regular part of my Internet life. I purely have a belief that there is a problem with their underpinning business models.

FREEEEEEEEEEEEEEE

You see the problem for me is that word "free". Even if their services are being provided for free - as in the fact that I can use their services without spending any of my own money, in reality you are still paying for the service.

I often talk to friends about the concept of currency. When you ask most people about currency, they talk about "pounds", "dollars" etc. And quite rightly these are indeed forms of financial currency - money. But currency is greater than purely money. Currency is simply an agreed upon medium of exchange, whether it be paper, digital, gold, snails or kisses.

Remembering the concept of "currency" is important.

Let's also briefly talk about another concept - currency exchange. You have most likely done this before when you visit a foreign country and go into a foreign exchange to replace X dollars to Y yen. In fact before this happens you are even given the courtesy before any transactions of knowing the difference in values of the two currencies - the exchange rate.

But currency and currency exchanges can really be used for anything.

Everytime you are using a free online service you are in fact trading in another form of currency. You are trading in the currency of your personal data. This currency is then exchanged into a financial currency to sell to advertisers. They don't necessarily buy and own your data (the free service owns this or though sometimes they also sell it), but it will then be used to target advertising at you.

"So what's the problem with this? I sort of know this already!" you may well be saying.

The issue is transparency. With your local fiat currency e.g. for me this is sterling, I know how much I earn a year, how much work I have to do for this etc. My relationship with the value of £1 enables me to make decisions about what I am buying.

If I decide to buy a new pair of shoes, the price is relative to me and my relationship to my own available assets. But importantly the price is transparent. I am shown the price of a pair of shoes up front and I can use my own judgement to decide whether they are overpriced, good value, affordable etc. Both parties make their values transparent and this enables both to make clear decisions for the exchange.

Not knowing the value that sits the other side of the table is not trading - it is gambling. But you are playing with your most personal information as the chips.

So what happens when value exchanges become less clear? Hmmm, well it could well be argued that many of the rich financial institutions use obfuscation as a convenient way of making sure the general public don't understand the values so we just have to trust them.

Now for one second just imagine walking into a foreign exchange booth and saying I would like 500 Yuan but not knowing what you are going to give in exchange. They ask you to wear a machine that gathers information about everything you do and tell you - "Hey, don't worry. The Yuan are on us.". Would you not be suspicious?

If you are like me then you too will have a problem with this. Not knowing the value that sits the other side of the table is not trading - it is gambling. But you are playing with your most personal information as the chips.

You may think personal data is not important, but it may become a little more valuable to you in the future without you knowing it and have you ever looked at where some of that data may be going? Why not take a look at http://deepmind.com/?

So how much is this data currency actually worth to the companies that sell to advertisers?

Well according to the IAB quite a lot. In 2014 the total Internet Advertising Revenues in just the US totalled a cool \$49.5 billion. We now are moving to closer to a world where all countries are coming online.

And due to the financial models of the large free providers you can expect that value to grow with further expansion and greater data-mining.

We also now have big ventures such as Internet.org (Facebook) and Project Loon (Google) that want to connect the world for free. Hmmmmm. They are going to offer the Internet to people who cannot connect (a good thing) in exchange for taking their data and translucently selling it (a bad thing). And the annoying thing here is it is due to the advertising business models these companies have built their empires on.

So the next time you use a free online service just remember...

... is this really free? And ask yourself how much you are really gambling with.

Further reading

You may also be interested in reading this blog post from The Guardian in April 2014 entitled "How much is your personal data worth?". You see, that invisible bit we are trading is the financial building blocks behind the big free service providers and yet it is clearly not free. And it is certainly not transparent.

And if you fancy taking a bit of time out to calculate how much you are worth then try this Personal Data Calculator from the FT.