Why Google and Facebook Should Be Treated Like Banks
For hundreds of years, banks have paid us interest in return for holding our money and extracting profits from it. In the process, they became the richest institutions in the world.
Related: We Need an Internet Bill of Rights
Now companies like Google and Facebook have become the world's richest institutions -- by extracting profits from our data rather than our money. But, this time we are getting zero interest in return.
Paying a high price
When we use products from Facebook, Google, Twitter and other giants who make their money from advertising, we feel they are free. After all, we're not handing over any cash or tokens in exchange for the services. But, we do pay a very high price for these services -- through our personal data.
Some people might be of the opinion that the exchange they're personally getting is a fair one -- the services of some amazing social networking, business and search tools in return for a possession that until recently would have seemed too cryptic for us to consider a source of value. Yet, too many people don't realize the extent of the value they are in possession of. This is a financial mistake on our part that is becoming ever-more profound as the value of our data rises.
A $3,000-a-year asset
In the coming years, AI-driven marketing techniques are going to be able to predict with unerring accuracy the type of products and services each person wants and needs. So the value of our data is going to rise exponentially. AI is going to create value in countless other ways, too -- and it will need our personal data to do so.
Analysts estimate that the total revenues from digital advertising in the U.S. alone in 2017 were around $88 billion. The number of U.S. internet users was above 270 million. If we divide the $88 billion by the number of users, the worth of data to each person is over $325 a year. This is an average figure -- higher-worth individuals and those that do a lot of online product searches will be worth far more.
Whatever the exact figure is, it is set to rise -- exponentially. I'd conservatively estimate to $3,000 a year or more to individuals with reasonable wealth.
It's also worth bearing in mind that data doesn't just have value to the advertising industry. For example, Facebook data might have altered the outcomes of a U.S. election and the Brexit vote.
We, as people, will provide crucial data points for the AI programs that'll soon run our world. The tech companies need our data, and they should pay for it.
Misuse and manipulation
Not only are we losing the monetary value that resides in the data itself, but the misuse of that data can cost us dearly in other areas of our life -- through fraud, power imbalances and privacy violations. That's why "free" companies like Facebook and Google need to treat our data like banks treat our money.
When a bank uses my money, I get a return on it. If a bank loses some of my money, I get compensated. Banks are held to a higher standard than regular businesses because they are taking custody of something valuable. If a bank loses our money, or is found doing something wrong with it, there are serious consequences.
What's more, the money that we deposit with banks is insured for even more protection against financial loss. If money is stolen, it is replaced. But, in the case of companies that are dealing with personal data, that unique, valuable asset can't just be replaced if something goes wrong. When personal information is stolen, there can be long-term, far-reaching effects on the victims.
So maybe regulations over the use of people's personal data should be stronger than those applied to their money.
A new solution
At the heart of this issue is the lack of control users have over their data. When we delete it from Facebook, there is no proof the platform doesn't keep records of it. Meanwhile, many of the startups we hand data to, many of whom go bankrupt, sell it on to generate revenue. So, perhaps there is another solution to the data exploitation problem.
Blockchain technology was originally designed to disrupt financial systems and change how money is controlled. By applying the same decentralization principles, the personal data ecosystem looks set to be disrupted in the same way. New business models and applications will soon emerge that give control to individuals. Data wallets will determine who has access to our data, and we'll be able to turn off that access when we choose. There will be proof on a blockchain that Facebook can no longer see our data.
It's an exciting vision that I believe is about to be realized. But, the first step is for the world to start treating data as a currency and as a potential source of income. Then the blockchain will emerge as a tool that gives people back control over their data and the value they receive from it.