A Major ISP Wants to Give Consumers a Cut of the Online Data Market

The personal data market is there. Thing is, the owners of that data are not participants.

Jul 17 2014, 7:16pm
Image: Shutterstock

From ads to apps, the internet runs on our data. And yet, we have few privileges as producers in the big data industry. Control over where our personal data goes? I don’t think so. Monetary compensation? Forget it.

Telefonica, a major international telecommunications company based in Spain, wants to change this by giving users a cut of the data economy. How? A free market approach to personal data.

Over the last year, Telefonica, in partnership with the MIT Media Lab and Telecom Italia, has bankrolled several studies at the Mobile Territorial Lab (MTL) in Italy—a living laboratory that serves as a testbed for data research—into what they’ve dubbed “transactional privacy” in personal data markets.

The idea is simple, at least on the surface: give consumers some skin in the data game by allowing them to control access to their personal data and sell it on the free market to whomever they wish, at market price.

Given the option to control and know the value of our data, a lot of people will probably be willing to part with it for monetary compensation.

“The data market is there. The thing is, the owners of the data are not participants in the market, fundamentally,” Telefonica researcher Nuria Oliver told Motherboard in an interview. “What my research projects are developing into is how to make us part of the market that already exists, because people are selling my data and making money off it.”

Telefonica’s latest study at MTL tested a personal data market’s viability. To do this, the research team outfitted 60 participants with smartphones running OpenPDS, a data privacy tool that keeps raw data from being picked up by data miners, and FUNF, a piece of data analysis software that makes sense of it through visualizations. The participants’ data was separated into categories like “location,” “app usage,” and “media,” and at the end of each day they were asked to auction it off.

The study found that location data was the most valuable to the study’s participants, although they were willing to sell it for less on days when they frequented their usual haunts than when they visited atypical locations. Even with this sensitivity regarding locational data, 79 percent of the participants opted to sell it rather than not.

In short, the pilot market was a success and the results suggest that given the option to control and know the value of our data, a lot of people will probably be willing to part with it for monetary compensation.

“Besides the monetary valuations of data, one of the main findings of the work is the desire subjects expressed of being in control of it,” Jacopo Staiano, a researcher from the University of Trente in Italy who coauthored the study, told Motherboard over email.

Control over personal data and a slice of the financial pie sounds nice indeed, but a free market for data could have some undesirable consequences. For example, there’s no guarantee that an auction-style data market wouldn’t lead to a race to the bottom, with participants bidding against each other to offer their data at a desirable price. And, since markets tend to favour players with the most capital to invest, who’s to say that Google won’t snap up everyone’s data, leaving little for others in the private and public sectors?

According to Oliver, these concerns are non-issues, because we don’t know how much our data is really worth in the first place—we need the market to dictate that.

“If I ask you how much you’d sell your T-shirt for, you could probably tell me a price. Or, if you see someone’s pants, you could say, ‘Oh, this is worth 20 or 30 bucks.’ But if I ask you how much you’d sell your location for, you’d have no idea because you don’t know the intrinsic value of that data, because you've never been in a market where you can buy that item before,” she said.

But let’s not forget that the conversation surrounding data privacy isn’t just an economic one; it’s a discourse that folds in ethics and questions of value. Is value really just market price? If “what the market will bear” ends up being pennies for our locational data and personal media, should we be content to call that the sum of our privacy’s value?

In fact, should privacy be assigned a price tag at all? Letting the free market decide the value of our privacy could very well lead to an impoverished understanding of our data and what it says about us. 

Despite these concerns, Telefonica’s researchers are adamant in their belief that a free market approach to privacy is the way to go instead of government-led solutions to data privacy. “I'm convinced that innovations supersede strong regulations by governments,” Staiano wrote. “Eventually, governmental regulations have no choice left but to adapt.”

The market is good, and regulations are bad; it’s an all-too familiar sentiment that runs rampant among the tech industry’s elite. Still, data markets could be better than the daily shafting we currently receive from the big data industry.

According to Staiano, the widespread implementation of data markets isn’t far-fetched. “It could well be a reality, and sooner than we think,” he wrote.

“In its simplest form it could just look like a more sustainable digital ecosystem, in which data producers are granted monetary returns (in form of micro-payments, bonuses, etc) derived from the aggregate value resulted by the use of their data, under a trusted framework designed to preserve privacy.”

Staiano’s words are prescient, if a little behind the times. A personal data market of sorts—it’s run by one company and it’s a closed market—already exists in the form of Datacoup, a recent tech startup that helps people understand, package, and sell their data. The return? About $100 a year. The idea has slowly been gaining popularity in the tech world, and now that a global telecom company has thrown its R&D resources behind the idea, it’s worth taking seriously as a future possibility.

As personal data markets increasingly appear to be a feasible way to give users a financial return on their data, the question we have to ask ourselves now is: can we trust the free market with our privacy?