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Social attitudes about the online economy are just as important as privacy regulation

17 Mar, 2021, by Cosmin Marginean

In October 1994, HotWired, the online spinoff of what was a print-only Wired magazine, displayed the first ad banner, landing on the AT&T website. Its success contributed to unleashing the monster of online advertising, which would eventually create the toxic, privacy-ignorant, online business culture we struggle with today.

In all fairness, digital advertising is behind the incredible rate of growth for many online services. And generations of humans will benefit from a host of public Internet services which fundamentally transformed society.

However, the same humans are now being programmed by these same companies in ways that range from conniving to downright diabolical. And it makes mathematical sense: HotWired’s AT&T banner click-through rate of 40% is a wet dream today when this hovers around a shameful 0.1% across all platforms. If that’s not wasteful, I don’t know what is. But it certainly makes one thing clear: with this method, we’ll need more ads as well as better-targeted ads in order to prop up these services. And, when we challenge this dysfunctional and wasteful approach, the argument often lands in the same place: these companies simply don’t have an alternative for their revenue model.

Understandably so. Facebook’s data centres cost close to 1 billion dollars a pop and tens of millions of dollars a year to operate. The digital advertising sector is now worth $322.5 billion globally, with various forecasts too sinister to list here. Someone has to pay for this stuff, and it looks like the ads industry can afford it.

Cooling towers on a data centre building Cooling towers on a data centre building.

But while the lack of revenue alternatives is an apt observation, I believe it’s reductive of the scale of the business problem we’re facing. Free internet services like GMail or Facebook have now created an economic addiction for the individual that will be a nightmare to displace.

The attitudes towards privacy vary. Still, the reality is that it’s tough to put a price tag on potentially being taken advantage of by being provided with an ad for something you kind of wanted to buy anyway. And the problem is that, in the end, the average user just won’t pay for online stuff.

What’s terribly frustrating is how these tech companies have undermined one of the fundamental principles of capitalism and even basic trade: everything has a cost.

Globally, very few Internet consumers are informed enough to justify and privileged enough to financially afford the extra cost that’s required to have privacy, security, and honesty of a supplier - something that we all deserve.

You can talk to people about online tracking, how email hacking can turn into losing your life savings, and all the other horrors that come with the inability to protect your data. Especially when you use a mediocre email provider that doesn’t even support two-factor-authentication.

But the genie is out of the bottle, as they say. The idea of a potential future risk is much harder to internalise for the Sapiens brain than it is to reason about an immediate cash cost. It’s not our fault - it’s biology and evolution.

In other words, these companies have put society and their shareholders in an economic stranglehold. We can’t employ even the most rudimentary, thousands year old framework of trading: charging people money for services. The ones who try definitely have a market waiting for alternatives, but in global terms it’s - for now - insignificant.

A culture of privacy awareness will hinge on accepting that the basic rules of economy also exist in the online world: stuff costs money. Our debate about our use of online services needs to cover both of these and much more.

Hardcore gamers know this stuff: digital content has a cost, entertainment or not. When you don’t pay for the hours you spend online socialising daily, or for the email service that allows you to collaborate with your solicitor to buy a house, it should be alarming. And it’s understandable why it isn’t. Getting people to reflect on whether they actually need certain online services, as well as exposing the real value of things like email - or the cost of losing access to it - is no mean feat.

Regulation will help curb some of the nastiness around privacy, but it will be a while before any government can force a company to be so privacy-conscious that it has to change business models and start charging its customers. It’s us that have to demand that as well. There’s no easy way out of this: if we think this is wrong, then we have to do the work, individually and within our community. So let’s start talking to people one-on-one about these things and hunker down, this will take generations.

I’ll go talk to my father in law about 2FA now.


This is a repost of this article.


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