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Is the Facebook kerfuffle really about privacy? Or is there something more fundamental happening here? I’ve written previously about my skepticism that people really value digital privacy as much as the media or activist groups suggest they do. And if Facebook doesn’t see an exodus of users after the Cambridge Analytica maelstrom, that will be a powerful bit of evidence my instincts are correct.
Another bit of evidence is the study “How Consumers Value Digital Privacy: New Survey Evidence, Program on Economics & Privacy” by Caleb Fuller, assistant professor of economics at Grove City College and a faculty affiliate at George Mason University Law School’s Program on Economics and Privacy. After conducting a survey of 1,579 internet users, Fuller found that “85% are unwilling to pay anything for privacy on Google.” And of the 15% of Google users willing to pay, the median was around “a paltry $20 per year.”
Overall, there still seems to be great satisfaction with “the internet’s grand bargain: the exchange of free or subsidized content for personalized advertising,” as Larry Downes, project director at the Georgetown Center for Business and Public Policy, writes in Harvard Business Review. And what would the internet look like if this bargain collapses due to new government data privacy regulation? Downes:
The grand bargain has been the fuel of digital growth for over two decades. But search engines, social media providers, and e-commerce platforms, along with user forums, news sites, and emerging internet-of-things service providers large and small, may rationally conclude that the new costs and potential penalties associated with collecting, analyzing, and marketing user-provided information have become unsustainable, requiring a new business model altogether.
That may also mean the end of customized recommendations from Amazon, streamlined searches from Google, tailored music from Pandora, and other services that use “private” information to give each user a personalized online experience. Again, the risks of collecting such information may be too great for services providers to stomach, despite the obvious value to users. . . .
The age of the free and open internet may come to an end, and quickly. That may have been the true goal of many calling for “regulation” of tech companies in the first place. If so, the unintended impact on average consumers will be severe and, perhaps for many, decidedly worse than today’s admittedly messy and often leaky online experience.
If the grand bargain unravels, entrepreneurs will no doubt innovate new ways to make money and continue developing disruptive products and services. The easiest solutions, which have evolved in parallel with the free internet, include subscription-based access behind paywalls, supplemented by generic advertising. That’s been part of the longstanding business model of print newspapers, of course, and it’s increasingly favored by their online equivalents.
We may also see more tiered pricing, with teaser or particular kinds of content available for free or for a limited period, or, as with most cloud-based software, free access to a basic product with premium features available only to paying customers — the approach of companies as varied as Dropbox, Spotify, and Harvard Business Review. . . . The transition will be chaotic and even traumatic for users weaned on free stuff, many of whom will be unable to pay for services that are no longer ad-supported and are less personalized. Our great global conversation may become both quieter and more insular.