The Privacy vs Convenience Fallacy
This is an extract of my weekly newsletter, a highly subjective summary of what I’ve found interesting at the intersection of economics, finance and technology. If you like this, please do subscribe.
Two news stories came up this week that, when put together, offer a stark view of the current state of the technology industry and in particular its stance towards privacy.
The first one was a discovery by Mike Davidson about Superhuman, a new email app/service that is generating plenty of buzz in the industry and that raised capital at eye-watering multiples. It turns out that the service embeds a tracking pixel in all the emails it sends, allowing the sender to see not only when the recipient saw the email, but every time they opened it and from where. Davidson explains with great clarity why this is a privacy nightmare, from every perspective.
The most revealing part of the story however are some of the responses that followed. Supporters trotted out an oft-quoted line, namely that most of us are happy to sacrifice privacy vs convenience. Never mind that in this particular case, it’s the recipient’s privacy that gets violated, and they don’t derive a whole lot of convenience from the surveillance Superhuman subjects them to, nor did they even agree to trade away their privacy in the first place.
The second story was this article in the FT ($), on government watchdogs taking a more agressive stance against adtech companies. The article offered a very revealing glimpse of how this industry works and especially of the vast, vast amount of data these companies accumulate. They tend to be discreet, so most of us have never heard of them, let alone signed any agreement with them that would allow them to collect and use this data.
The ad exchanges that sell real-time ads to be shown on the various websites or apps that we use, run through billions and billions of data points, including location, other sites visited, how long we spend looking at a particular post in a news feed etc., without us even being aware of it. David Heinemeier-Hansson recently posted a jaw-dropping example of all the trackers and data brokers lurking in the background of any given website these days.
If we were fully aware of the amount of data that is being collected and processed, I very much doubt we would feel the same about this privacy vs convenience trade-off. My sense is that when this question is asked in a poll, the respondents understand the privacy traded away to be the data you input when signing up for an account, such as name, date of birth, address, musical interests and what not. These are data points that we’ve been conditioned to be comfortable with giving away over the years. If respondents understood that, in fact, the privacy they’re giving up is their location hundreds of times a day, whether they walked 10,000 steps and which articles they read online, I think their evaluation of the trade-off would be very different.
Maybe it’s time for regulators to force sites that rely on advertising to be transparent to users about what happens with their data every time they visit, and we might see attitudes regarding this privacy vs convenience trade-off change rather quickly.