The economics of privacy

https://marginalrevolution.com/marginalrevolution/2019/06/the-economics-of-privacy.html

Perhaps the biggest complaint about tech companies today is that they do not respect our privacy. They gather and store data on us, and in some cases, such as Facebook, they charge companies for the ability to send targeted ads to us. They induce us to self-reveal on the internet, often in ways that are more public than we might at first expect. Furthermore, tech data practices are not entirely appropriate, as for instance Facebook recently stored user passwords in an insecure, plain text format.

This entire debate is overblown, and the major tech companies are much less of a threat to our actual privacy than is typically assumed.

For most people, gossip from friends, relatives, colleagues, and acquaintances is a bigger privacy risk than is information garnered on-line. Gossip is an age-old problem, and still today many of the biggest privacy harms come through very traditional channels. And unlike false charges planted on social media, often there is no way to strike back against secretive whisperings behind one’s back. In the workplace, one employee may tell the boss that another employee does not work hard enough, or high school gossip may destroy reputations and torment loners and non-conformists, to give two common examples of many.

If anything, the niche worlds made possible by the internet, and yes by Facebook and Google, are giving many people refuges from those worlds of public scrutiny and mockery – you can more easily find the people who and like respect you for what you really are.

Life in small towns and rural areas is another major threat to privacy – too often everybody knows everybody else’s business. In contrast, if you live in a major city or suburban area, you have a much greater ability to choose whom you interact with, and you are more protected from the prying of your neighbors and relatives. And it seems that so far, contrary to some initial “death of distance” predictions, the internet has encouraged people to move to major urban centers such as New York and San Francisco. To that extent, internet life has boosted privacy rather than destroying it.

There’s also evidence that young Americans are having less sex these days and they are less likely to be in a serious relationship. The internet is likely one cause of that isolation, and in my view those changes are probably social negatives on the whole, and they represent a valid criticism of on-line life. But is the internet in this regard boosting privacy? Absolutely. The internet makes it much easier to be in less contact with other people, whether or not that is always wise or the best life course overall. It strikes me as odd when the same people blame the internet for both loneliness and privacy destruction.

A lot of actual privacy problems in the public arena don’t seem to attract much attention, unless they are tied into a critique of big tech. For instance, autocratic governments are using Interpol and its police powers and databases (NYT) to track down and apprehend ostensible criminals who are in fact sometimes merely domestic political dissidents. It is likely that many innocent individuals have ended up in jail (can the same be said from social media violations of privacy?) That’s an example of using databases for truly evil ends and, while it was covered by The New York Times (p.A10), it is hardly a major story.

It is striking to me how much the advocates focus on regulating the big tech companies, because a true pro-privacy movement might not have that as a priority at all.

By the way, how do you feel about obituaries?  The newspaper collects information on you for years, and then suddenly one day they publish it all and then keep it on the web, whether you like this or not.  They’ll even throw in snide remarks, sarcastic tone, or moral judgments about you, depending on the outlet of course.

If the privacy landscape is so complex, why then is there so much anger at Facebook and other social media companies? First, most users of services such as Facebook and Google are actually pretty happy with those services and with the companies. Some of the opposition is coming from intellectuals with core anti-business grudges, politicians looking to get headlines, or often from media itself, who face Google and Facebook as major and far more profitable competitors.

Second, social media themselves create contagion effects, whereby attention is piled on a relatively small number of select victims. For instance, the #MeToo campaign has focused condemnation on a small set of offenders, such as Harvey Weinstein, then magnified by Twitter and other social media. Many other offenders get off scot-free, simply because attention has not been directed their way. Ironically, one of the better arguments against social media is to look at how social media treat and discuss social media itself. On the privacy issue, Facebook rather than say Google has ended up as the main whipping boy, even though it might have gone the other way (who again controls your gmail?).  Ironically, perhaps the actual best argument about social media is how social media reflexively covers social media itself.

Third, many of the supposed concerns about privacy are perhaps questions of control. It is correct that the major tech companies do “funny things” with our data which we neither see nor understand nor control.This unsettles many people, even if it never means that some faux pas of yours is revealed in front of a party of your mocking friends. Still, I am not sure the underlying notion of “control” here has been satisfactorily defined. Many marketers, and not just on the internet, do things you do not control or even know about.  Furthermore, see Jim Harper on privacy, who covers security, seclusion, autonomy, and absence of objectification as some of the different features of privacy concerns.

Of course, just as privacy violations do not stem mainly from the big tech companies, we have never been in control of what is done with information and opinion about us, again think back on social gossip. This fundamental lack of control is just now being pushed in our faces in new and unexpected ways. In part it is actually unsettling, but in part we also are overreacting.

Privacy is a real issue, but to the extent it can be fixed, most of that needs to happen outside of the major tech companies.  Most of what is written about tech and privacy is simply steering us down the wrong track.

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