What’s Wrong with Free Products in Exchange for Your Data?
Most consumers now understand that free services like Google search, the Chrome browser, Facebook, and Gmail come with a hidden cost in the form of giving up personal data. As the old adage tells us, “if you don’t pay for the product, you are the product.” Nonetheless, many argue that this is a fair trade. We believe it is highly asymmetric and unfair. Here’s why:
For a trade to be fair, you have to know what you’re selling and buying. Multiple independent studies, including our own, reveal that a shockingly small percentage of the population has full awareness of what’s in the data they are trading in exchange for free products or services. Firms like Google and Facebook who give away these “free” services know exactly how much your data is worth to them and how much the service costs, but you as the consumer don’t know either. In any other regulated financial or product market, this wouldn’t merely be unethical, it would be illegal market manipulation.
The product you receive is relatively static, but your data is dynamic and growing. The value you get from using these services is pretty much the same year over year. Sure there are new features to enhance the services, but fundamentally on Facebook you get a place to read news and connect with friends, and that has not changed markedly for over a decade. By contrast, your data grows in volume and value with every single online interaction, including the search or link click that got you to this article. The asset you are trading is actually expanding over time, becoming more and more valuable, but the product access you are receiving is finite. Further, your data is a renewable resource that doesn’t diminish with usage; it’s sort of like getting paid for an egg but giving someone the whole chicken with its ability to lay more eggs.
You have no re-seller rights on the products. When Google grants you access to use Gmail, you don’t have the right to sell access to other people and charge them. The companies collecting your personal data currently are not limited in most jurisdictions in their ability to sell and then re-sell your data as often as they please. In essence, you pay into the transaction with your data every single time Big Tech wants to make a sale but you receive no complementary rights to do the same with the products you get for “free.” It feels like a one-time trade at the moment of sign up, but in truth, it’s a one-sided exploitative relationship in which Big Tech gets your information whenever they need it, and you get access to a product just once in the form of a single user license.
The data you give up changes how businesses and organizations treat you outside of the transaction for the free product. As soon as you give up control of your data, businesses, news outlets, or even political organizations begin to target, or not-target you for their products, services, or messages. As a result, the impact of the trade changes not only how the vendor giving you the product treats you, but also how every single downstream organization acts around you. On the positive side, you may receive more relevant advertisements or messages, but on the negative side, you might not even see offers for products you’d like, or you could find that your life insurance costs more and you’re stuck in a rabbit hole of fake news. The impact on your experience can be for life. Further, because you don’t get to choose who gets the data, you may also miss out on great opportunities to work more with brands that cannot access your data who you would be willing to share it with.
Offering free products in exchange for data disproportionately disadvantages lower income consumers. For consumers with the disposable income to choose to protect their privacy by paying for a service that is otherwise offered for free, there is a real choice. For anyone below that income threshold, it is a false choice to say that a modern adult can choose to forgo access to basic services such as email, Internet search, or participating in e-commerce sites like Amazon.com or Walmart.com.
