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    The fastest growing economy today – selling of our digital, personal data

    May 2019

    What is the fastest growing part of the American economy today? The answer is the gathering, analyzing and selling of our digital data. The extraction of American’s personal data – the most valuable resource in the world today – is worth a whopping 76 billion USD in yearly revenue not just for the usual Big Tech suspects, but a lot of other companies, according to a new study commissioned by the Democratic strategy group Future Majority.

    The study, which was conducted by the economic and security analysis group Sonecon, found that sales derived from data harvesting have grown by 44.9% over the past 2 years. That’s faster than in the online publishing, data processing and Information Services industry itself, according to the Bureau of Economic Analysis data. That category has a 2 year growth rate of 24%. If the current trends hold, our data will be worth 197.7 billion USD by 2022 – more than the total value of American agriculture output.

    That is resource extraction on a massive scale. If data is the new oil, then the US is the Saudi Arabia of the digital era. The leading Internet platform companies are the new Aramco or Exxon Mobil. Google, Facebook, Microsoft, Amazon, Verizon and Twitter drill for their digital oil by watching everything we do or say on the Internet. They then monetize that information by selling it in the form of targeted advertising. Over half of the value of online advertising is in the targeting, according to Robert Shapiro, the Future Majority studies co – author. Google or Facebook would still make money without knowing what people write in emails or post to online communities. But they’d make a lot less. The collection and sale of personal data via targeted advertising is the business model.

    But the tech platform companies are not the only ones in the digital resource extraction business. Data brokers such as credit bureaus, along with health-care data firms and credit card companies, collect and sell all sorts of sensitive personal user data to other businesses and organizations that do not have the scale to do so themselves. These include retailers, banks, mortgage lenders, colleges, universities, charities, and – as if we could forget – political campaigns.

    This is one reason we haven’t seen more companies outside Silicon Valley pushing for antitrust action against the big technology companies – they are the ones buying what the Valley is selling. The advent of the Internet of things, in which web – enabled sensors are embedded in objects all around us, will exponentially expand the opportunities for digital resource extraction. Every company is getting into this business.

    As a result, we may not be able to simply regulate away the problems that are being posed by a system that has been dubbed “surveillance capitalism”. Recently there have been a series of proposals in the US designed to curb the digital giants, from a bill that would allow publishers to team up in negotiations over revenue sharing with companies such as Google and Facebook, to calls for stricter regulation of children’s online media. But legislators in advocates are attempting to drink from a fire hose. It is clear that we are in desperate need of tough, national privacy regulations along the lines of what the state of California has passed. It requires companies to allow customers to opt out of any sort of data collection and requires parents to opt in for children, and insists on much clearer disclosures of the way companies use personal data. Me personally, I would like to see a digital Consumer Protection Bureau, tough rules around discrimination by algorithms, and a system for ensuring individuals can access and understand how their personal data is being used, the way we can today with our credit scores.

    It is also worth considering whether the companies that extract our digital oil should have to pay for it. California has also proposed a “digital dividend” paid by data collectors to the owners of this resource – all of us. It is akin to the way Alaska and countries including Norway have created wealth funds into which a percentage of revenues from commodities are invested for the benefit of future generations. The extractors can afford it. Google and Facebook have high double – digit profit margins because they do not pay for their raw inputs – our data. But we should own our own personal information. And if the extractors use it, they should have to compensate us.

    If the US imposed a 50% digital dividend payment, for example, the four major categories of data harvesters – platforms, data brokers, credit cards and health-care firms – would have to pay every American who uses the Internet 308 USD by 2022, assuming current growth rates.

    Or the extractors could be forced to put a portion of that money into a public fund that invests in education and infrastructure. The same levy on digital revenues could plug the majority of an American infrastructure spending gap estimated to be 135 billion USD by that date, according to calculations using World Bank figures.

    To me, that seems more than a fair exchange for allowing them access to the country’s most valuable resource.