How Much is your Online Data Worth?

by Ciro Borriello

The attack started on 12 May 2017. Within a few hours it spread across 150 countries, infecting over 230,000 computers. The scale reached by the ransomware WannaCry represents a significant breakthrough in the history of hacking, bringing the computers of public and private sector networks, ranging from the British National Health Service to Spain’s Telefónica, to a standstill.

All data stored in the infected devices were encrypted and unlocked only upon payment of a lump sum corresponding to $300 in Bitcoin, a virtual currency. Thanks to the large media coverage of the event, very few would pay the ransom. Yet this unprecedented attack can teach us a lot about online security and about the incontestable reality that our data indeed have a price.

Lost in the flow

One-off access to a person’s data can tell us a lot about who they are, and a bit on his lifestyle. Continuous and capillary access to daily activity is the key to unleash the full value of collecting data, especially if we think of the growing potential of machine learning and data mining algorithms.

Several findings confirm a huge divergence from what consumers claim and what they actually do. A recent survey run by Western Digital involved 5,000 respondents and found that, on average, personal data was worth as much as $3,500. Despite this, we constantly accept to give away most of our data for free to mobile or desktop-based applications that we use on a daily basis.

Thus, one of the following assumptions must be true:

  1. Consumers largely overestimate the value of personal data, probably influenced by the context of the interview and the social desirability bias (e.g. I think I am favourably viewed by others when I say that my personal data is worth at lot or it does not even have a price)
  2. Consumers largely underestimate the value of personal data, and of all the information that can be inferred from it (e.g. personality traits derived from users’ digital footprint).

Either way, consumers should be systematically educated on such a crucial theme. However, our education is dangerously avoiding any commitment to this. Most teenagers consume social media and Internet on a daily basis and without any guidance yet in reality it could be as risky as playing with a gun. Data is the new century’s currency and social platforms are still the only ones benefiting from the consumers’ unawareness.

A unique (and still too isolated) experiment

In 2014, the University of Trento ran a peculiar and innovative experiment. They hired 60 volunteers who accepted to share any kind of personal data collected through their smartphone and they gave them the possibility to sell this data on a secondary market, set up for the study, through an auction mechanism.

Collected data included: calls recordings, text messages, emails, app usage, geo-localisation, access to the microphone and camera.

Once a week the participants were allowed to sell some of the data in the auctions in exchange for Amazon vouchers.

An overall number of 596 auctions took place over the duration of the experiment, for a cumulative amount of data sold of around $290, which corresponds on average to nearly 50¢ per transaction. This is enough to see how far we are from the initial estimate of $3,500 per person.

However, it is worth underlying the limits of both results, due to their heavy localization bias and the limited number of participants.

What we can tell for sure is that on the consumers’ side, the data landscape is rather confused. Conversely, the business world seems to be very clear about it.

No large volume discounts

The founding principles of the network effect push technology giants to acquire competition (even if they are not generating any revenue) with the only goal of accessing their customer base. And acquisition prices are extremely interesting, as they constitute the only publicly available information in the battle for data. It shows us how much these companies are willing to pay to know us better.

Warning: the prices will necessarily incorporate some degree of user base overlap, the data analytics technology available to the acquiring company (e.g. the ability to obtain structured insights from raw data flow), and the expected future monetization potential.

If we look at the major digital networks acquisitions over the past 5 years (we considered the ones with a target company boasting at least 100 million user base), we might be surprised to see how narrow the range for the $ price per person is.

  • Youku acquires Tudou (230 million user base) in 2012 for $1.1 billion. $/person = $4.8
  • Amazon acquires Twitch (100 million user base) in 2014 for $970 million. $/person = $9.7
  • Facebook acquires Whatsapp (600 million user base) in 2014 for $19 billion. $/person = $31.7
  • Alibaba acquires Youku + Tudou (570 million user base) in 2015 for $7.3 billion. $/person = $12.8
  • Microsoft acquires LinkedIn (450 million user base) in 2016 for $26 billion. $/person = $57.78

Simply starting from this, we can extrapolate several macrotrends:

  1. The value of data per person increases with time and with the advancements in the data analytics and data mining technologies. This means the predictive power and the associated revenue potential increases by using the same amount of data.
  2. The larger the user base, the higher the value of data per person. We see that with data there is no discount for large volumes. The more – the better – the pricier. And this is clearly explained by the network effect dynamics.
  3. Platforms with a higher and more specialised degree of interaction with the user come with a higher price tag.

The average price per user for these top 5 transactions is around $20. This demonstrates that the Internet giants know precisely how much the dataflow is worth to them, and they are fully aware of the predictive marketing power they can get from it.

Most applications proposed by Facebook, Amazon, LinkedIn, Whatsapp, Google, are 100% free for the users. Yet this can only be possible by monetizing the huge volumes of data coming from the daily use of such applications.

So we are happy to use their services for free and we are also happy to be completely cut out of the value creation process. Do you consider the exchange fair?

Shall we start to demand a fee for letting these companies deal with us?

The value of personalized offer

We questioned the fairness of the exchange purely based on the value creation from data processing. But we cannot deny that the users get in return some kind benefits, which can be broken down into two different levels:

  1. Benefit from the use of a service or application that satisfies one of our needs (e.g. time saved by using Google Maps, increased social inclusion and contentment coming by using Facebook). Such needs are completely personal and hard to quantify.
  2. Benefit from the availability of customised offer – be it applications or targeted advertising. A recent survey run by Microsoft involving 13,200 respondents tells us that 70% of respondents were willing to share search terms for services that enable fewer steps to get things done; 82% of respondents were willing to share activity data for services that provide suggestions for improvement.

A = B?

Every day we choose (consciously?) to make available most of our personal data – with an associated value A – in exchange for some benefit given by the combination of the two points above – with an associated value B.

On one side, business is able to estimate precisely the value of A, based on their technology and resources. However, on the consumer side, B is extremely fuzzy, varying from person to person.

The reality is that for some people the exchange is a sweet deal, for others it looks like a huge fraud. The real issue is that no one is actually sure which category he or she belongs.


About the author

Ciro Borriello holds an aerospace engineering MSc at the Politecnico of Torino and an MBA at the University of Cambridge. Previously R&D and Innovation Project Manager at Airbus, now Space Programme Management officer and Risk Manager at EUMETSAT, futurist author and space entrepreneur.

Further learning

The Value of Your Personal Data [Documentary] by Martijn Kieft

Privacy in the Age of Big Data: Recognizing Threats, Defending Your Rights, and Protecting Your Family by Theresa Payton and Ted Claypoole

Data and Goliath: The Hidden Battles to Collect Your Data and Control Your World by Bruce Schneier

Data for the People: How to Make Our Post-Privacy Economy Work for You by Andreas Weigend

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24 Replies to “How Much is your Online Data Worth?”

  1. I was shocked that they were hacked although they tried to cover it and say the system went down for what i hear. It is quite frightening that people can quickly and easily access our info if they wanted.

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  2. Because most people don’t stop to think about the value of the data they hand over to digital networks, in exchange for an app here and there, they don’t understand they are leaving their most valuable asset on the table.
    We give so much away for internet access and when those companies collect broad and deep swaths of data, they sell their companies for billions.
    What are we getting in return? Not enough. Is the exchange fair? No. I don’t think we are getting a fair cut of this growing, lucrative market.

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  3. Wow I had never really thought about this but how scary to think that someone could steal your online data! Technology is amazing these days, but also opens us up to so many more issues!

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  4. Thank goodness that there was such huge media coverage of the event because otherwise so many people would have paid the money up front. Like you said though it shows us how important security is! x

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  5. I really don’t think I have given enough thought to this, it is a worry how easily data can be stolen! The internet is great but sure has its issues too!!!

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  6. That looks so scary! I always hesitate before I put something on the Internet. The Internet is huge, and there are so many people using it. At least try to be careful with children pictures and information.

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  7. I think it’s difficult to talk about monetary value of data. Sure, you can consider what someone would pay for it, but if you’re an NHS researcher working on a study with very little personal patient data, there is still a lot of value in those data for the researchers. They (and only they) can get funding renewed if they publish their work, but a random hacker wouldn’t know how to manipulate or report the data in that same way.

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  8. I think that Data is the new currency and cannot agree with you more on the subject of Data Security. A lot of times unknowingly, we give away so much information. It actually sounds quite scary after reading your post! Thanks for sharing this.

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  9. It truly is sad how much data we just give away as a society. And then you are right. The companies we give that data to in turn use it to make a profit, which is kind of sad.

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  10. A few months about Planet Money did a fantastic podcast on this very subject. They especially talked about all of the data apps are collecting. It was eyeopening .. and I haven’t downloaded an app since! Now even Google will know if we’ve gone to the store. Incredible. Great post!

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  11. Its funny how I never have stopped to think in the past as I signed up for this app and the other that I gave away so much personal information about myself. Then I wondered how I was being bombarded by spam emails and unwanted contacts months later…..this post is giving me food for thought and making me think that my personal data is worth so much more that some app .

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  12. very true our personal information is being sold. Nowadays I feel we are more trapped under some web or internet. Somehow, somebody is knowing or following you through your personal data on net which can be used to earn fortunes for some other company.

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  13. alot of figures i see here makes me draw attention to how much valuable data is and its fast becoming a global reach for data in the world we live in today. informative post you have here. never really knew the actual figures of some deals here till i read this.

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  14. I’ve never really thought about this in great detail but reading it in black and white is scary.

    Like

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