What is the Price of our Privacy?

Recently as companies like Phorm and NebuAd? have attempted to contract with major ISPs and put their “new wave” of behaviorally targeted advertising into production there has been a large ground swell of opposition mounting against them. The chief concerns of those who oppose Phorm and NebuAd? all center around the idea that behaviorally targeted advertising as these companies propose it is an unacceptable violation of the privacy of internet users. However, despite these challenges UK ISPs, most notably BT, have continued to test Phorm’s technology with an eye towards implementing it quite soon. If behaviorally targeted advertising as envisioned by Phorm is indeed poised to potentially be the next big step in online advertising, then this begs the question, at what price are those who so strongly object to this new technology—and average, relatively uninformed internet users—willing to sell their privacy?

Because of space limitations and the simple fact that I am not a technological savant I will not attempt a very in depth examination of how Phorm’s system works (though it can be found here if you are interested). The basic principle though is that Phorm’s technology will sit inside the ISP and monitor the browsing actions of all of that ISPs users. Each user will be given an identifying number or tag that is completely unique, and if you believe Phorm, anonymous. Then through the use of cookies Phorm will be able to track and study your internet browsing habits in order to deliver you far better targeted advertisements on webpages that sign up to be a part of their “Open Internet Exchange.” What makes their system interesting though is that they do promise that their system is completely anonymous and no identifying information or browsing history is stored (check out the little presentation on Phorm’s website).

If you believe Phorm’s CEO Kent Ertugrul there are consumers out there who are very excited to have this product put into the market. It seems that Phorm believes that as more and more businesses go online and more commerce is transacted online, there will be a market for very well targeted advertisements that expose consumers to the places where they can do their shopping and research online. The idea, for Phorm, is that if they can actually improve click-through rates on online ads enough (which probably means by an order of magnitude) then the amount of money that each ad is worth (meaning the amount that the advertiser will pay to the hosting website per click) should also go up, hopefully by a corresponding amount. Then Phorm, the ISPs, and the hosting website will all split this increased bounty, and collectively get rich.

The problem however, is that while Phorm insists that people really want this service, and that it is the way of the future, many people disagree. In the UK, the first market that Phorm is going after, numerous groups have emerged to try and fight Phorm and protest the tests of their technology that BT has been conducting. To these groups, Phorm represents a drastic and unacceptable invasion of their privacy. One group likened Phorm’s technology to letting someone open and look through all of your mail in order to improve the quality of the junk mail that you receive. This is an interesting image, and it raises a very important question: what is the upside of all of this to the average internet user?

It is certainly true that people are buying things and doing things (like paying bills) online today that a decade or so ago would have seemed impossible. We are all also very accustomed to seeing ads all over the internet these days, but how many people actually click on those ads? Now, maybe I, and the rest of our class, am not Phorm’s target market, but I spend practically all day online and never click on ads I see online. I honestly cannot see that changing in the future even if the quality and content of the ads improves. Therefore, I am not sure that Phorm’s invasion of my privacy and tracking of all of my online actions is something I support. When Google first came out with Gmail it was a win-win situation for both Google and Gmail users. The users got a great, online email system with a huge 1GB of storage space, while Google got to inundate the site with ads based off the content of the users’ emails. Very few people objected to the fact that Google was feeding them ads based off the content of their emails in the same way that people are objecting to Phorm, because they also got something out of the situation. Indeed, Gmail can be seen as the perfect example of online mutualism, while Phorm thus far appears to simply be a parasite.

The question then, is at what price would those of us who object to what Phorm is doing be willing to accept it? With Gmail it took an email system, however, one feels that to get large scale acceptance Phorm would have to do something bigger. Recently, Phorm has come out with the idea that those BT clients who sign up for their system and help with the tests will receive one pound off of their monthly BT bill. This hardly seems like enough to motivate people who strenuously object to Phorm’s actions, but it might be the first step. What if in exchange for tracking your every internet action in order to try and use them to make money and sell you products Phorm undertook to supply free wireless broadband internet to the entire country and then stopped trying to contract with ISPs? Whenever someone used this free wireless they automatically consented to be tracked by Phorm, but if you chose to still pay a traditional ISP then Phorm could not track you. This is only one idea, but there are others—like Phorm’s ability to use their control over ad spaces on websites for public safety announcements—and I am very interested to hear what everyone thinks, and if people in the class have other ideas about how Phorm might make what they are doing more palatable. It seems that behaviorally targeted advertising is a fact of life at this point, the question then seems to be what the cost of accepting this technology will be for both internet users and companies like Phorm.

-- AlexLawrence - 11 Dec 2008

I believe NetZero? has been offering 10 hours of free dial-up internet access in return for tracking your surfing habits and bombarding you with targeted advertising for some time now. That no company is offering free broadband in return for getting to monitor its users suggests that either (1) the uncertain legal status of such monitoring under the ECPA and state wiretapping laws is sufficient to dissuade ISPs or, more likely, (2) no company (including Google?) is sufficiently sophisticated at behavioral modeling yet to make a profit after paying for the infrastructure costs.

Of course, behavior models are only getting better, and the cost of network infrastructure is dropping every day. A point will eventually be reached where such a service becomes commercially viable. The trends allowing behavior models to get more accurate and useful and network architecture to get cheaper won't grind to a sudden halt when this point is reached, just like they didn't grind to a halt when targeted advertising became good enough and storage cheap enough for Google to profitably launch its free webmail service. Google's profits from each GMail user undoubtibly have continued to grow since the launch date. Has the value they're providing to their users grown at the same rate?

If it wanted to, Google could make Gmail a pay-to-use service at any time. But once Google has your personal information, you can't take it back or stop the company from using it in ways you never imagined when you 'freely' gave it away in exchange. With a few specialized exceptions, American law currently offers no rights to control how your personal information is used once it is collected. If you really want a marketplace where privacy can be commoditized fairly, you need to first set up a legal regime where sellers can control what they are offering to the same degree that buyers already can.

-- AndreiVoinigescu - 17 Dec 2008