The data revenue “model”

The truth about how companies are collecting and using customer data is not a pretty one when we lift the cloak of “customer experience optimization” to reveal the true motivation: profit. Enterprises are selling this data to generate revenue and doing so without customer—or even regulatory—transparency.

Did the average consumer agree to this?

Better put, as this quote from a privacy company executive somberly articulates in this 2018 PCMag article:

“If a company came to you and said, ‘Fill in this form with all your personal information because we can sell it for $39,’ no rational person would agree to it.”

The top data profiteers are, not surprisingly, some of the largest names in tech: Google/Alphabet, Facebook/Meta, Twitter and Amazon are currently large revenue generators from user data. But other companies that hold data may also be poised to benefit from their customers who “agree” to share data, without explicitly understanding that those (and other) companies can then profit from that data. 

Genetic testing companies offer one example, with some holding a repository of customer genetic data that can then be used for what could admittedly be valuable pharmaceutical research. It still, however, follows a pattern of asking customers to share private information for corporate profit without financially compensating customers who have already paid for a service. Why not pay them for their data?

It also leads to other concerns. First, genetic data is not individual—it’s shared by perhaps thousands of family members—yet only one has to consent to having their lineage data shared and sold. Second, this genetic data sharing is surprisingly not covered under our country’s HIPAA Privacy Rule, once again leaving states scrambling to catch up to deepening privacy crevices.

Microsoft and Apple also collect consumer data, but both have enjoyed a (deserved) reputation of being fastidious in their customer privacy policies and practices. Apple’s privacy emphasis was publicly tested in its famous 2015 tussle with the FBI over creating a “back door” that would allow the FBI to unlock data from the phone of a suspected killer. In fact, one of its most recent changes directly targets how Facebook tracks and uses consumer data, putting it at odds with the “mega” Meta social media giant.

Still, that didn’t stop Italy from levying fines against Apple and Google recently, claiming that Apple somehow conditions its customers into accepting its terms—while slamming Google for making it difficult for users to opt out of their consent for data collection and use. (Both companies are appealing the fines.). It’s yet another sign of other countries holding enterprises accountable in securing customer data.

Notable, too, is that the two mega-tech enterprises with the best reputation for protecting consumer privacy as part of the ultimate customer experience—Apple and Microsoft—do not rely on revenue generated by their use of customer data as their business model. And that’s key.

What enterprise experience are customers actually getting?

Even if savvy customers pay close attention to data collection notices, they may not always be aware of how that data is used, or that it is being sold for corporate profit. Some companies that provide free social media interactions or search engines argue that it’s a small price to pay for consumers to get their free services.

If customers, however, realized that their data is sold to a third party, which can then sell that data repeatedly, would they consider that to be a fair “price” to pay for likes and shares? Would customers agree to this “price” if they realized that data detailing their purchases of red meat or potato chips were sent to insurance companies, who used it to justify raising their premiums? Would Facebook users agree that the behemoth site has a right to “own” their Advertiser ID—a footprint that tracks not just customer purchases, but also where they go and even who they visit?