A recent study from business strategists The Boston Consulting Group, has underscored the growing importance and value of online personal data for businesses. The report titled ‘The Value of Our Digital Identity‘, says the total value extracted from European consumers’ personal data in 2011 was 315 billion euros and that figure is predicted to grow to a staggering 1 trillion euros annually by 2020.
Now this report isn’t aimed at privacy advocates – it’s been written in order to promote the personal data industry to business leaders – but it’s well worth a read. The above figures are pretty startling and neatly demonstrate how the consumer is becoming the product in a rapidly booming market. Boston Consulting’s senior researcher and report author, John Rose, says that “leveraging personal data” and digital identities can be a “key growth driver in an overall stagnant European economy.” According to the consultants, personal data will be potentially worth up to 8% of Europe’s total GDP by 2020.
The report also found that the amount of available personal data is growing rapidly. By 2015 Boston Group says there will be 7 zettabytes of data available to marketers, which is roughly 1,000 gigabytes for every person on the planet. This is aided by “rapidly improving” ability to process and analyse that data.
While Rose identifies social media sites as the primary drivers of growth, he also notes that ‘the internet of things’ will play a big role in expanding the types of data collected, with over 75 million connected devices in Europe by 2015.
The other trend leading to increased data variety is the “Internet of things,“” reads the report. “In-product sensors that can “call home“ via the Internet and relay usage data are becoming increasingly prevalent. Automobiles, home appliances and energy meters are among the traditional product categories that have – or soon will have – integrated links to the Internet. Not including phones or PCs, we expect to see an additional 75 million devices with direct connections to the Internet in Europe by 2015.4 ”
Thankfully the report does mention the importance of establishing user trust and operating data collection policies in a transparent way. But it also found that of the 3,000 European consumers questioned, only 30% had “a relatively comprehensive understanding of which sectors were collecting and using their information. ”
Data-mining equals growth
As I’ve said many times before on this blog, companies such as Google and Facebook derive the majority of their revenue from your personal data. Ninety six per cent of Google’s 37.6 billion revenue in 2011 was from advertising. So the sure-fire quick way for Google to expand its business and deliver value to share-holders is to increase its data-mining activities, in order to create more a more effective service for advertisers.
This is compounded by the lack of competition against Google and Facebook. These companies are pretty much monopolies. Not only is there few privacy-orientated alternatives to Facebook, but there’s also worrying signs that there’s no alternative to not join Facebook! This creates an environment ripe for abuse and we don’t even have to speculate. Just take a look at Google’s track record so far. The company has illegally collected personal data and lied to governments about its activity. The personal data industry may represent a great opportunity for businesses as Boston Consulting points out, but it also represents a big threat to online anonymity and personal privacy.