Two years ago, Mark Zuckerberg made a bold statement.  Privacy is a thing of the past, the founder of Facebook declared. A “social norm” that “has evolved over time.” Could that be true?

written by Reinier Kist, NRC Handelsblad

Barely a day passes without the media reporting on a database leaking large amounts of personal information.  Throughout Europe, people were out on the streets last month because the ACTA trade agreement allegedly threatened online privacy.  The same month, Google was heavily criticised when it adapted its privacy policy in ways that European Data Protection Supervisors said are contrary to European privacy regulations.  

The American Shane Green, founder of the Washington-based company Personal, is one of the young online entrepreneurs whose opinion is the opposite of Zuckerberg’s. He believes people have come to value privacy more and more, particularly now that privacy violations on the internet are commonplace. And particularly now that people are discovering that companies like Facebook make so much money from trading their data.

Various new companies, like Personal, but also the British Allow, the Dutch Qiy and the American companies Singly and Reputation, answer what they consider an increased need for online privacy. Their common mission:  to give internet users control of their personal information again.

Take a moment to think about how revolutionary that idea is. Getting to decide exactly what happens to your data. It could potentially mean the downfall of the economic model that’s been dominating the internet for years: offer some free online service, gather data about your users, then sell that data to advertisers. It’s made Facebook and Google into two of the most prominent companies in the world. “The ultimate service in this regard doesn’t exist yet,” internet economist William Hoffman recently told the New York Times. “But I’ll bet that sometime during the next year, something big is going to happen in that area.” No, these new companies probably won’t strike much of a blow to the almighty power of Facebook and Google any time soon. But they might be able to put the first scratches on it.

When Facebook recently announced it would be going public, the actual value of the data of its users became clear. From Facebook’s estimated value of at most 100 billion dollars, analists deduced the value of each unique user:  120 dollars.  “Personal data”, Green says over Skype, “are the oil of the digital age. And internet users are slowly starting to realise they themselves produce that resource.”

In the model of a company like Personal, from now on it’s the user who decides what happens to their ‘oil’. Personal offers online vaults, in which users store and manage their personal information. These vaults Personal offers, which are protected by the most state-of-the-art encryption software, are called ‘gems’. They can be used for example to store someone’s birth date, but also for specific information like their preference for spicy food or the destination of their last holiday. The user decides what company or organisation is allowed access to their data. Legal agreements regulate access to, but – if the user decides so – forbid trading of the data.

The charming thing about digital vaults is that besides storing sensitive information, they can be used for many more purposes.  Personal is still in a testing stage at the moment, but it’s working on software that intelligently reads online forms. Once data like address, place of residence and bank account number are stored away in a vault, the owner will never have to manually fill those in on any online form again. Just one click and the site connects to the vault in question, and voilà, the form is all filled out.

Users can also store their passwords in a vault, so they’ll never lose them again. Companies can put data for their employees in them, which are currently often still stored on an intranet.  There is even some speculation about vaults as a new form of blogging: a lot of people would like to know where a celebrity buys their clothes, or what car they just bought.  Moreover, Personal enables companies to create apps on their platform. A garage owner could create an app that uses data about your car to indicate when your oil needs to be changed.

But what really excites most internet experts and investors (Green got 7.6 billion dollars’ worth of investments for his company) is the advertising model Green proposes.

He does not only want to help users control their data and make them manageable. He also wants users to profit from their own data, if they choose to. “Advertisers pay 24 dollars for every unique Google user”, Green says. “This presents an opportunity for private individuals. Because advertisers are willing to pay many times that amount if they’re certain that their offer will reach the right people”, Green continues. “Imagine people being able to indicate themselves what product they’re interested in at the moment. If you’re planning a trip, an airline would be very interested in the details of that journey: is it a business trip or a holiday, are you taking children along, do you want to travel economically or luxuriously?” Green says. “If you share that information ahead of time with a number of airlines, there are bound to be a few that would give you a discount in exchange for that information. Bear in mind that the current online advertising model assumes every advertisement will reach only 2% worth of interested people. So basically, users could offer advertisers the information they want so badly, and be compensated financially in exchange.”

Personal intends to offer this form of advertising for a wider audience soon. Another new company, Allow, is currently already making the same concept a reality for users in Great Britain.

One of the first members of Allow is someone named Giles Sequeira. He is an estate agent in London who registered with the advertising service in December.   He neatly filled in his personal information for Allow, who say they’ll sell access to this information for 5 to 10 pounds per advertiser. Like in February, Sequeira indicated thinking about buying a credit card, and that month he made £ 5.56 from advertisers who were interested in that information.  “I don’t think it’s going to make a life-changing amount of money,” Sequeira recently told the Wall Street Journal. But he was so pleased with the minor financial boon that he now also grants access to his data to other advertisers. “I can see this becoming somewhat addictive.”

For the time being, Facebook and Google won’t have to worry much about competition from companies like Personal and Allow, internet expert Danny Mekić says. “The real value of a company like Facebook is in the amounts of data they have at their disposal. Advertisers can reach an enormous number of users, and very precisely targeted as well. For example, Facebook doesn’t just look at only your own preferences any more, but also at the interests of your friends.” Only when millions of people join a service like Allow or Personal will those become interesting to large advertisers, says Mekić.

But to small business, a service like that is all the more interesting. “They don’t have the budget to advertise on Facebook, but using Personal they can still use personalised marketing. Who knows, if Personal gradually grows by serving these small and medium businesses, they’ll eventually be able to compete with Facebook and Google.”

Mekić also doubts whether Personal is the ultimate service in this area, but he is convinced that the advertising model used by Google and Facebook will end up under pressure in the long run. “Our aversion to privacy violations is growing enormously. What Google and Facebook are doing now is handing out candy to people, in the form of free services. But you can’t keep giving people candy forever, it’ll just make them nauseous. It’s inevitable that either control will return to the user, or privacy violations continue in a much more subtle and cunning way than with the information we knowingly share with the platforms.”