I used until now the “social media industry” expression to refer to business models based on the exploitation of citizen’s personal data. As for the oil industry where oil is the raw material, citizen’s personal data are the raw material of the social media industry.
From now on, I will use the expression “citizen’s personal data industry” to refer to all legal persons who earn money by using citizen’s personal data.
Private and public legal persons share citizen’s personal data
Bruce Schneier in his analysis of private/public surveillance noticed that public and private sectors share citizen’s personal data.
For example, a public social network collects personal data of citizens and their permission to use these data. It makes them available to the public sector when this one requires them(NSA).
There are also data shared between different private sector companies, or between different departments of the same company. The data collected by Gmail is used to target advertisements sold by Google Adwords.
Some legal persons of the citizen’s personal data industry do business legally.
In France, the Ministry of national security, since 2011, sells the data of the citizens’ vehicles papers.
In the U.S., some companies, such as RSA, make available through backdoors citizen’s personal data to government agencies for a fee.
This operation is perfectly legal.
However, alongside these legal deals, some companies make available illegally accessed personal data for which they have not previously obtained the consent of the owners.
This is the case for some banks among which Barclays. Despite its obligation of confidentiality, it sold the data of its wealthiest clients to rogue City traders.
According to the whistleblower behind this revelation and former broker, it is not the only one to do so.
Thus, there is a black market where legal persons share citizen’s personal data without their knowledge or consent.
The value of this market
A company collecting personal data, exploited or not, is currently considered attractive because of the potential value of these intangible assets.
Take the example of the public social network Facebook. Like many companies in the ICT sector, its intangible assets are an important part of its total assets.
Among these, there are the social network software and the rights on the data of all its users. The valuation of intangible investment is estimated in an aggregate amount. It appears on the public annual balance sheet of the company.
However, it is impossible to distinguish the value of the rights to use citizen’s personal data from the software of the social network. One may also wonder at the method used to assess the value of such personal data rights.
This information is not public, so one has to rely on the information reported by the company.
However, a significant gap between the methods used to assess intangible assets could distort financial market information.
The added value of different companies collecting the same data may differ quite significantly depending on their business models, the methods to assess value of their raw material and the rights on using citizen’s personal data. This is a potential source of a financial bubble: Twitter has been valued at 25 billion dollars (18.7 billion Euros) without ever having made a profit.
In my next analysis, I will discuss the issue of the industry of citizen’s personal data taxation.