In 2005, Google made an acquisition that few people expected and one I'd argue might well turn out to be the smartest purchase made by any tech company ever. Google paid $50 million for Android, an open-source operating system for mobile devices.
The hottest things on the mobile phone market back then were flip phones. The first iPhone was still two years away. Google at the time was famous only for its search engine and the clever way the company had monetized those searches.
But instead of licensing Android to phone makers and recouping its costs, Google gave its purchase away for free. Anyone who made a mobile phone could install the software without paying and save themselves millions on development costs.
The reason for that $50 million generosity has now become clear. In May 2019, Android announced that its software had been installed on 2.5 billion devices. Estimates of its market share range from around 75 percent to as high as 87 percent, with iOS making up most of the difference. That means that about eight mobile phones out of 10 are telling Google where their users are, who they know, who they talk to, where they've been, what they search, what they browse, what they listen to, which websites they visit, and what events they have marked on their calendar.
Almost everyone else is handing over the same information to Apple.
Our private lives have been turned into data, and that data is now owned by a handful of large tech companies: by Google, by Apple, and by Facebook. They sell that data to advertisers or use it to refine their products, and they make a lot more than the $50 million that Google spent on Android. Google is cagey about revenue derived from Android, but in a 2016 court case, Oracle claimed that the OS had given Google $31 billion in revenue and $22 billion in profits over the previous eight years. Facebook made $17.65 billion in the third quarter of 2019 alone.
None of that money, though, goes back to the people--the average consumers--who created that data. While tech companies ask us whether we agree to share personal information before we use an application or a device, how many of us really understand what we're giving to the tech companies?
Increasingly, however, people are expressing concern about how their private information is being taken, stored, and used. Europe has responded with tighter regulations to govern data processing. The U.S. has a mixture of different rules and agencies that determine how data is collected and used: the Health Insurance Portability and Accountability Act protects health information; the Gramm-Leach-Bliley Act protects financial information; the Federal Trade Commission is responsible for applying privacy policies and ensuring that companies implement data security.
But I'd argue that none of this is enough. What's really needed is an entirely new approach to personal data, the commercial value of which is being taken entirely by tech firms. We need an approach that assumes that personal information stays with the individual, and rewards those individuals as they choose to share it.
LBRY, a decentralized video hosting service and application that describes itself as a "new and freer internet protocol," is trying to do something similar for audio and video content. Instead of placing ads targeted by user data and taking the lion's share of the advertising revenue, as Google's YouTube does, it cuts the advertising altogether and lets users tip their favorite creators.
Both these services are taking an entirely new approach toward user data. Instead of assuming that users are willing to hand over data in return for free services and advertising, they assume that the public now wants a better deal. They believe that users increasingly want to hold on to their data and make tech companies pay to access it.
They may be right. The rapid success of Brave and the growing controversies surrounding data leaks suggest increasing concern among users about how their data is being used. For entrepreneurs in general, and for internet entrepreneurs in particular, that's a warning.
You're going to have to get used to rewarding users for access to their data. You can expect to have to adjust your content marketing strategies to make the content itself a sufficient reward for their attention so that they'll want to stay in touch. And instead of paying to mine data held by big firms, you need to start thinking about collecting your own data about your own market. That might mean more effort, but the coming internet model will give you more control and a closer relationship with your customers.