Data and Goliath (8 page)

Broadband companies like Comcast also conduct surveillance on their users. These days
they’re mostly monitoring to see whether you illegally download copyrighted songs
and videos, but other applications aren’t far behind.
Verizon, Microsoft, and others are working on a set-top box that can monitor what’s
going on in the room, and serve ads based on that information.

It’s less Big Brother, and more hundreds of tattletale little brothers.

Today, Internet surveillance is far more insistent than cookies. In fact, there’s
a minor arms race going on. Your browser—yes, even Google Chrome—has extensive controls
to block or delete cookies, and many people enable those features. DoNotTrackMe is
one of the most popular browser plug-ins. The Internet surveillance industry has responded
with “flash cookies”—basically, cookie-like files that are stored with Adobe’s Flash
player and remain when browsers delete their cookies. To block those, you can install
FlashBlock. But there are other ways to uniquely track you, with esoteric names like
evercookies, canvas fingerprinting, and cookie synching. It’s not just marketers;
in 2014, researchers found that the White House website used evercookies, in violation
of its own privacy policy. I’ll give some advice about blocking web surveillance in
Chapter 15.

Cookies are inherently anonymous, but companies are increasingly able to correlate
them with other information that positively identifies us. You identify yourself willingly
to lots of Internet services. Often you do this with only a username, but increasingly
usernames can be tied to your real name. Google tried to compel this with its “real
name policy,” which mandated that users register for Google Plus with their legal
names, until it rescinded that policy in 2014. Facebook pretty much demands real names.
Anytime you use your credit card number to buy something, your real identity is tied
to any cookies set by companies involved in that transaction. And any browsing you
do on your smartphone is tied to you as the phone’s owner, although the website might
not know it.

FREE AND CONVENIENT

Surveillance is the business model of the Internet for two primary reasons: people
like free, and people like convenient. The truth is, though, that people aren’t given
much of a choice. It’s either surveillance or nothing, and the surveillance is conveniently
invisible so you don’t have to think about it. And it’s all possible because US law
has failed to keep up with changes in business practices.

Before 1993, the Internet was entirely noncommercial, and free became the online norm.
When commercial services first hit the Internet, there was a lot of talk about how
to charge for them. It quickly became clear that, except for a few isolated circumstances
like investment and porn websites, people weren’t willing to pay even a small amount
for access. Much like the business model for television, advertising was the only
revenue model that made sense, and surveillance has made that advertising more profitable.
Websites can charge higher prices for personally targeted advertising than they can
for broadcast advertising. This is how we ended up with nominally free systems that
collect and sell our data in exchange for services, then blast us with advertising.

“Free” is a special price, and there has been all sorts of psychological research
showing that people don’t act rationally around it. We overestimate the value of free.
We consume more of something than we should when it’s free. We pressure others to
consume it. Free warps our normal sense of cost vs. benefit, and people end up trading
their personal data for less than its worth.

This tendency to undervalue privacy is exacerbated by companies deliberately making
sure that privacy is not salient to users. When you log on to Facebook, you don’t
think about how much personal information you’re revealing to the company; you chat
with your friends. When you wake up in the morning, you don’t think about how you’re
going to allow a bunch of companies to track you throughout the day; you just put
your cell phone in your pocket.

The result is that Internet companies can improve their product offerings to their
actual customers by reducing user privacy. Facebook has done it systematically over
the years, regularly updating its privacy policy to obtain more access to your data
and give you less privacy. Facebook has also changed its default settings so that
more people can see your name, photo, wall posts, photos you post, Likes, and so on.
Google has done much the same. In 2012, it announced a major change: Google would
link its data about you from search, Gmail, YouTube (which Google owns), Google Plus,
and so on into one large data set about you.

Apple is somewhat of an exception here. The company exists to market consumer products,
and although it could spy on iCloud users’ e-mail, text messages, calendar, address
book, and photos, it does not. It uses iTunes purchase
information only to suggest other songs and videos a user might want to buy. In late
2014, it started using this as a market differentiator.

Convenience is the other reason we willingly give highly personal data to corporate
interests, and put up with becoming objects of their surveillance. As I keep saying,
surveillance-based services are useful and valuable. We like it when we can access
our address book, calendar, photographs, documents, and everything else on any device
we happen to be near. We like services like Siri and Google Now, which work best when
they know tons about you. Social networking apps make it easier to hang out with our
friends. Cell phone apps like Google Maps, Yelp, Weather, and Uber work better and
faster when they know our location. Letting apps like Pocket or Instapaper know what
we’re reading feels like a small price to pay for getting everything we want to read
in one convenient place. We even like it when ads are targeted to exactly what we’re
interested in. The benefits of surveillance in these and other applications are real,
and significant.

We especially don’t mind if a company collects our data and uses it within its own
service to better serve us. This is why Amazon recommendations are rarely mentioned
when people complain about corporate surveillance. Amazon constantly recommends things
for you to buy based on the things you’ve bought and the things other people have
bought. Amazon’s using your data in the same context it was collected, and it’s completely
transparent to the user. It’s very big business for Amazon, and people largely accept
it. They start objecting, though, when their data is bought, sold, and used without
their knowledge or consent.

THE DATA BROKER INDUSTRY

Customer surveillance is much older than the Internet. Before the Internet, there
were four basic surveillance streams. The first flowed from companies keeping records
on their customers. This was a manufacturing supply company knowing what its corporate
customers order, and who does the ordering. This was Nordstrom remembering its customers’
sizes and the sorts of tailoring they like, and airlines and hotels keeping track
of their frequent customers. Eventually this evolved into the databases that enable
companies to track their sales leads all the way from initial inquiry to
final purchase, and retail loyalty cards, which offer consumers discounts but whose
real purpose is to track their purchases. Now lots of companies offer Customer Relationship
Management, or CRM, systems to corporations of all sizes.

The second traditional surveillance stream was direct marketing. Paper mail was the
medium, and the goal was to provide companies with lists of people who wanted to receive
the marketing mail and not waste postage on people who did not. This was necessarily
coarse, based on things like demographics, magazine subscriptions, or customer lists
from related enterprises.

The third stream came from credit bureaus. These companies collected detailed credit
information about people, and sold that information to banks trying to determine whether
to give individuals loans and at what rates. This has always been a relatively expensive
form of personal data collection, and only makes sense when lots of money is at stake:
issuing credit cards, allowing someone to lease an apartment, and so on.

The fourth stream was from government. It consisted of various public records: birth
and death certificates, driver’s license records, voter registration records, various
permits and licenses, and so on. Companies have increasingly been able to download,
or purchase, this public data.

Credit bureaus and direct marketing companies combined these four streams to become
modern day data brokers like Acxiom. These companies buy your personal data from companies
you do business with, combine it with other information about you, and sell it to
companies that want to know more about you. And they’ve ridden the tides of computerization.
The more data you produce, the more they collect and the more accurately they profile
you.

The breadth and depth of information that data brokers have is astonishing. They collect
demographic information: names, addresses, telephone numbers, e-mail addresses, gender,
age, marital status, presence and ages of children in household, education level,
profession, income level, political affiliation, cars driven, and information about
homes and other property. They collect lists of things you’ve purchased, when you’ve
purchased them, and how you paid for them. They keep track of deaths, divorces, and
diseases in your family. They collect everything about what you do on the Internet.

Data brokers use your data to sort you into various marketable categories. Want lists
of people who fall into the category of “potential inheritor” or “adult with senior
parent,” or addresses of households with a “diabetic focus” or “senior needs”? Acxiom
can provide you with that. InfoUSA has sold lists of “suffering seniors” and gullible
seniors. In 2011, the data broker Teletrack sold lists of people who had applied for
nontraditional credit products like payday loans to companies who wanted to target
them for bad financial deals. In 2012, the broker Equifax sold lists of people who
were late on their mortgage payments to a discount loan company. Because this was
financial information, both brokers were fined by the FTC for their actions. Almost
everything else is fair game.

PERSONALIZED ADVERTISING

We use systems that spy on us in exchange for services. It’s just the way the Internet
works these days. If something is free, you’re not the customer; you’re the product.
Or, as Al Gore said, “We have a stalker economy.”

Advertising has always suffered from the problem that most people who see an advertisement
don’t care about the product. A beer ad is wasted on someone who doesn’t drink beer.
A car advertisement is largely wasted unless you are in the market for a car. But
because it was impossible to target ads individually, companies did the best they
could with the data they had. They segmented people geographically, and guessed which
magazines and TV shows would best attract their potential customers. They tracked
populations as a whole, or in large demographic groups. It was very inefficient. There’s
a famous quote, most reliably traced to the retail magnate John Wanamaker: “I know
half of my advertising is wasted. The trouble is, I don’t know which half.”

Ubiquitous surveillance has the potential to change that. If you know exactly who
wants to buy a lawn mower or is worried about erectile dysfunction, you can target
your advertising to the right person at the right time, eliminating waste. (In fact,
a national lawn care company uses aerial photography to better market its services.)
And if you know the details about that potential customer—what sorts of arguments
would be most persuasive, what sorts of images he finds most appealing—your advertising
can be even more effective.

This also works in political advertising, and is already changing the way political
campaigns are waged. Obama used big data and individual marketing to great effect
in both 2008 and 2012, and other candidates across parties are following suit. This
data is used to target fund-raising efforts and individualized political messages,
and ensure that you actually get to the polls on Election Day—assuming the database
says that you’re voting for the correct candidate.

A lot of commercial surveillance data is filled with errors, but this information
can be valuable even if it isn’t very accurate. Even if you ended up showing your
ad to the wrong people a third of the time, you could still have an effective advertising
campaign. What’s important is not perfect targeting accuracy; it’s that the data is
enormously better than before.

For example, in 2013, researchers were able to determine the physical locations of
people on Twitter by analyzing similarities with other Twitter users. Their accuracy
rate wasn’t perfect—they were only able to predict a user’s city with 58% accuracy—but
for plenty of commercial advertising that level of precision is good enough.

Still, a lot of evidence suggests that surveillance-based advertising is oversold.
There is value in showing people ads for things they want, especially at the exact
moment they are considering making a purchase. This is what Google tries to do with
Adwords, its service that places ads next to search results. It’s what all retailers
try to do with “people who bought this also bought this” advertising. But these sorts
of things are based on minimal surveillance.

What’s unclear is how much more data helps. There is value in knowing broad personal
details about people: they’re gay, they’re getting married, they’re thinking about
taking a tropical vacation, they have a certain income level. And while it might be
very valuable for a car company to know that you’re interested in an SUV and not a
convertible, it’s only marginally more valuable to know that you prefer the blue one
to the green one. And it’s less valuable to know that you have two kids, one of whom
still needs a car seat. Or that one of the kids died in a car crash. Yes, a dealer
would push the larger SUV in the first instance and tout safety in the second, but
there are diminishing returns. And advertising that’s too targeted feels creepy and
risks turning customers off.