Senator Mark Warner.
Photo: Mark Wilson/Getty Images
There’s no shortage of ideas on how to deal with the megaplatforms of Big Tech. Break them up! Make them more transparent! Enforce stronger privacy rules! Fine them into oblivion! Do nothing, and accept the benevolence of our corporate overlords! All of these are equally good ideas with pros and cons. As is the proposal put forward by Democratic senator Mark Warner of Virginia and Republican senator Josh Hawley of Missouri: legislation that would require Big Tech companies like Facebook to disclose the value of the user data that they possess.
The laboriously named Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data Act (or DASHBOARD) would affect companies that gain material revenue from data collection and processing and have more than 100 million monthly users. According to Axios, it would require these companies “to disclose to users the types of data collected, how it is used, and to provide an assessment of the value of that data once every 90 days.” Users would also be able to delete this data from the service. Companies would also need to provide “the aggregate value of all of their users’ data” to the SEC on an annual basis.
It’s well-worn knowledge at this point that “free” online services are actually subsidized by revenue created through the monetization of user data. Usually, that means precisely targeted ads. “But the overall lack of transparency and disclosure in this market have made it impossible for users to know what they’re giving up, who else their data is being shared with, or what it’s worth to the platform,” Warner said.
This is a nice idea, and I guess it couldn’t hurt, but the initiative suffers from too much wiggle room and a misplaced focus. The idea of what constitutes a “monthly user” is not standardized across the tech industry, and this new legislation, according to Axios, directs the SEC to figure out the specifics. “The bill would direct the SEC to develop methods for calculating the value of user data, accounting for varying uses, sectors, and business models,” it reports. If the congressional testimony of Big Tech is anything to go by, these companies prefer to obfuscate and stall by splitting hairs about language and terminology (“Facebook doesn’t sell user data, it sells the ability to utilize that data for targeting,” and so on).
Even setting the workability of this idea aside, I don’t think anyone remotely cognizant of these large platforms needs to be informed that their data is of value. In fact, it’s already pretty easy to quantify the average value of many of these users. Here’s an example: Facebook earned $16.9 billion in profit in 2018, off of 2.32 billion monthly users, according to its Q4 report. That’s roughly $7.28 per user, a metric already in use by Wall Street known as “average revenue per user” or ARPU. This is a back-of-the-envelope calculation, however, and certain factors weigh more than others. A North American or European user is more valuable to Facebook, for instance, because they are in the geographic regions most heavily bombarded with targeted ads. Still, the general principle holds that quantifying the value of an individual user is already not a strenuous task.
Now, it’s possible that under more strict accounting rules, that $7.28 figure won’t hold up. Depending on how you count, my data might be worth $100 to Facebook, or $1,000, or just $1. But even if we were to get more granular, I’m not clear on how putting a precise dollar amount on what my name, email address, favorite bands, and old pics from college are worth to Facebook will change how I — or anyone else — behaves on the platform. Not to get too twisted up in a logical ouroboros, but what is the value of knowing the precise value of my data to Facebook or Google?
It’s a shame the law is misguided like this because there is a market sector adjacent to Big Tech data-reliant companies for which legislation like this would be incredibly useful: data brokers, which do actually sell user data to other firms and advertising companies. You probably know Facebook and Twitter, but maybe you’re less familiar with names like Acxiom, CoreLogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, RapLeaf, and Recorded Future. Those are some names I grabbed from a 2014 FTC report outlining the complex data-broker industry and the granularity of the data that these companies trade in, “largely without consumers’ knowledge.”
This activity happens out of public view, but fuels much of the online advertising industry by supplying and collating targeting data for clients. (“Seven of the nine data brokers in the Commission’s study provide data to each other.”) It would do a world of good if companies like these — companies that you probably never gave your data to or interacted with directly — were forced to reveal themselves as possessing user data and that they were profiting from it, and were forced to allow users to remove themselves from the database. But given that Warner and Hawley’s legislation focuses on Big Tech companies with a lot of regular users, instead of enterprise firms with a smaller amount of deep-pocketed clients, it’s unclear whether they would be affected by such legislation.
There is good news on the horizon though. Tucked in at the end of Warner’s Axios interview, the senator gestured at impending legislation requiring tech platforms to make user data portable, so that users could join and leave different platforms with things like their photos and friends lists intact. At a consumer level, that’s a much more effective measure for combating big tech, and something to eagerly anticipate.