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Here's an idea for 2018: a tax on the revenues ISPs make from private user data


© Flickr/cc-licence/ImagesMoney

  • Getting into the guts of the money-making machines
  • A 2 per cent tax would raise at least $5 billion a year…
  • … To be spent on improving security of private data
  • Data brokers top the hit list

All those who decide to sign-up to "free" apps and services from social networks are selling themselves for a mess of pottage. In fact, it's worse than that; they are giving themselves away for even less than the value of a plate of unpalatable re-warmed lentil stew: they are giving themselves away for nothing. In return for access to the likes of Facebook people allow social networking sites to collect, archive, manipulate and market personal information that they would never hand over to anyone else such as a stranger in the street, a shop assistant, a clerk in a municipal authority or people they don't know personally and don't know that they can trust. But they'll do it on social media.

They are prepared and even happy to provide, gratis, to social networking sites the data that pumps the very lifeblood around those organisations and keeps them powerful and wealthy. If there is no such thing as a free lunch you can be absolutely sure that there is no such thing as a free social networking site, service, app or product. Punters pay for them by presenting on a platter to Google et al all the data they need to make lots and lots of money, time and time and time again.

Research conducted in the US in 2016 showed that the freely donated data was worth an average of $1,000 per person per annum to the social network companies. And that amount has grown since last year and the combined value of the internally processed and continually re-cycled data is the basic gut flora that keeps the money machine churning along – data in at one end and cash in at the other.

I refer you to The Siphonaptera

User data is worth many billions of dollars a year to the social networks and under almost all circumstances they keep their subscriber information to themselves and use it more or less exclusively for their own commercial purposes. That said, there are also data brokerages out there whose sole purpose is to buy and sell personal information for their own profit. Given that the population at large regards real estate agents as leeches sucking cash from the bodies of home buyers and sellers (and they do), attitudes to data brokers are even less benevolent. As the old verse, "The Siphonaptera" has it, " Big fleas have little fleas upon their backs to bite 'em. And little fleas have lesser fleas, and on - ad infinitum."

The sheer economic power wielded by social networking sites and the vast sums of money they make directly on the back of consumer-provided data is staggering. These companies hug their data assets tight and reap all the benefits they provide but share nothing of the vast sums they make with anyone else, including the tax man.

Maybe it's time that changed. Given the established history of tax avoidance by many players perhaps in 2018 some administration somewhere will actually impose a small levy on the revenues earned from user data and use what is raised to ensure that the Internet actually becomes more like the equitable global asset it was originally designed to be and less of a playground dominated by money-grubbing corporate bullies.

Such a tax wouldn't have to be very high, just a couple of per cent on the revenues "earned" from the sale of personal data. The idea of imposing such a levy has been around for quite a while now. In essence it would be a sales tax but, in the past, the idea has been rejected because of the difficulty involved in assigning a fixed pecuniary value to personal data. And of course there have been howls of outrage from vested interests and companies that routinely route revenues to secretive  tax havens tucked away in various strange parts of the world and pay a ludicrously minimum amount of tax anyway. Like the song says, "Money doesn't talk, it screams".

Target the data brokers first

So, how to go about assessing the monetary value of virtual information? Well, one way to do it might be to regard consumer data as something akin to a cargo container of information that moves around in either a real physical network or across virtual infrastructure owned and managed by ISPs and telcos. When not in used an individual's private data is effectively parked in a data centre waiting to be taken out for a drive.

Data centres, by and large, belong to and are operated by platform makers who rent out server space (parking space in this analogy). It surely cannot be beyond the wit of man to construct a regime capable of levying a tax at certain points within such a system and charging for the transmission of containers across a network or for entry to or exit from data centre 'parking lots'. And it should be moderately easy for taxation authorities to target those that target ads to those whose personal information they use to do so.

Then there are the data brokers. The entire and only raison d'etre of the sector is to take all our private information, commoditise it and sell it on to advertisers, marketers, retailers, other data brokers and even to government agencies! The industry currently has a revenue of $150 billion a year which is forecast to rise  to upwards of $250 billion by summer next year. Research shows that tax of two per cent on data brokerages based in the US would generate at least $8 billion a year.

It could be spent on improving the security and privacy of consumer data. It certainly needs to be better protected, just look at the continuing and increasing number of data breaches and hacks that take place and that, in many cases, are, in the first instances at least, deliberately concealed from those whose privacy has ben breached, whose data has been stolen and who have very limited or zero chance of redress from monolithic organisations with deep pockets and little more than contempt for those whose data they use to fill their expansive coffers. Step forward and take a bow, Yahoo.

Straws in the wind?

What is needed is a mechanism that can map and calculate the monetary worth of data personal data as it is traded and transmitted. It should come and must come sooner or later. In Europe, considerable research into the construction of such mechanisms is underway with Austria being in the vanguard. The Austrian government is looking seriously at imposing a form of value-added tax on data transactions effected by social media companies and has been working on methodologies and algorithms capable of giving a fixed taxable value to individual transactions.

As for the US? In general.... you must be joking…. but even in cowboy country there may be straws in the wind. Josh Hawley, the attorney general of the state of Missouri has launched an investigation into the "mishandling" of private customer data by Google and the manipulation of search results to favour its own products.

The investigation will focus on the scope of Google's data collection, whether it has abused its market position as a dominant search engine and whether the company used its competitors content as its own in search results. Missouri had issued Google with a subpoena requiring the company to provide highly detailed information about its collection of private customer data and business practices. It should make interesting reading.

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