The market of personal data

The only authorized institutions to profit from data trading are companies. They invest billions on acquiring user data thus incrementing both their information banks and stock market values. Data-driven monetization strategies are based on information quality - the more well-structured and refined the information, the higher the company’s stock market value will be. In 2012, Facebook incorporated Instagram, which by then had an amount of 30mi users; these days Instagram has almost 1bi users and an estimated stock market value of U$100bi. In 2019 alone, Instagram’s revenue revolved around U$20bi, and that is strictly connected to its use of personal data. 

The trading of personal data is a common practice and it takes place through the classification of cached information. Here’s how it works: the data of those who frequently browse through luxury items shops are more valuable than those related to online bookstore goers. This type of currency is all around us, hidden beneath an interface that users don’t usually perceive - there, data is in constant bargain. Basically, our everyday online transactions make us mere products: information goes through financial evaluation and is then commercialized, but we, up until this point, don’t take part in any of it. That is about to change. From now on, what’s the point in not capitalizing on the fact that our information is being used? Laws around the world concerning user privacy are not an obstruction to this type of practice. As a matter of fact, regulation only increases the reliability and monetary value of the information stored, since it helps us judge its trustworthiness.

That is what a recent change in the General Data Protection Regulation from The European Union (GDPR/EU) is all about. These UE acts are starting a movement around the world on data protection regulation. In Brazil, for example, the General Data Protection Regulation (or Lei Geral de Proteção de Dados in Portuguese) allows individuals to take part in financial transactions involving their own personal data. More and more, users will actively profit from trading their information, and a sign from this change can be seen in the growth of data store services that monetize information in exchange for a part of the profit. Each time data is being traded on the web - for example, when an ad pops up on our screens - users will be financially rewarded for the operation. These intermediation services can be looked at as a kind of “investment fund” that works around data traffic. They allow us to check transactions and cash money whenever needed. And the financial value of the data is determined by our own browsing habits. 

The evolution of Information Technology is impacting people’s lives by creating this new type of economy, the Data Economy. Not long ago, companies were evaluated solely by their profit potential, now they are also evaluated by the amount and trustworthiness of their stored data, particularly those linked to consumer experience. Due to the “Big Data Effect”, information is no longer just a record, strayed on some obscure data bank: it is changing the way businesses operate and is now creating a sense that information has currency status. If we check top-notch companies around the world, we soon realize that part of their active profit comes from this new currency. This represents a quiet and subtle movement that is finally reaching out to the main data sources: us. The regulation of this market will definitely raise awareness to the fact that this can be an alternative source of income for all individuals.

When we turn our eyes to the history of western societies, especially since the Industrial Revolution, we can see that oil was the catalyst of a new economy and a stepping stone of the so-called modern civilization. Nowadays, data has become a primary source for most businesses and a valuable currency: companies will not give it up to the common user that easily. After all, it’s no coincidence that information is referred to as the “new oil” since it has potential for reshaping our economy - and the users themselves are at the very core of this Data Economy system. 

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Originally published at MIT Technology Review Brasil on October 14th, 2021.