This ignorant statement, uttered by someone I overheard talking at a dinner party, perfectly captures what’s wrong with the way that most of us think about data collection. As I listened to this person speak, I realized we need to have a deeper conversation about how companies like Google collect our data. What’s at stake is our privacy and our sense of well-being, so let’s jump right in…
Part One: What is the Google Ecosystem?
The ecosystem that Google has built is comprised of three components: the consumers who use Google’s various services (that’s you and me), the advertisers who pay Google to advertise to us, and Google’s various digital services including search, email, calendar, maps, voice, etc. Each component adds something valuable to the ecosystem.
What do we contribute to the ecosystem?
We contribute the most valuable thing of all: data. Simply put, when we use any of Google’s products, we allow the company to harvest our very valuable personal data. Google grabs these data from our emails, calendar entries, map searches, location information, phone calls and more. From this data, Google builds a portfolio about each of us: our likes, dislikes, spending habits, travel habits, family members, and much more. That portfolio is extremely accurate, something that’s very, very attractive to advertisers.
What do advertisers contribute to the ecosystem?
Advertisers contribute money… lots of it: more than $30 billion per quarter and rising. Advertisers are paying these insane fees to Google to advertise to us, because of the extremely accurate digital portfolios that Google provides them about each of us. Those data describe who we are, what we like, where we go, and how we shop. Having access to all of that personal data about us allows advertisers to be extremely efficient. Think about it: traditional advertising on the radio or television advertises to all people regardless of their backgrounds. It’s an incredibly wasteful way, economically, on finding new customers. By comparison, targeting JUST those people who, for example, recently had a baby is something that’s attractive to advertisers because it provides them with a highly-targeted group to whom they can sell.
What does Google contribute to the ecosystem?
Google created and maintains all of the various platforms that we consumers use: search, email, calendars, search, news, photos, phone calling, blogging, translations, and many more. These platforms are provided in exchange for the personal data that we allow Google to mine about each of us. Now armed with loads of our personal data, the company establishes an auction on their “ Google Ads “ platform. This auction platform allows advertisers to bid on placing ads which target certain keywords and, therefore, consumers. Advertisers bid against each other and the winning bidders get their ads promoted to the top of our search results like this:
These websites may or may not actually find you the best airfare to Europe, but they’ve certainly paid Google to get first page results, so that’s where you’ll find them whether they’re a true match for you or not. Ditto for this search for trying to find the “best computer monitors”…
The bottom line: Google prioritizes advertisers who bid against each other to appear at the top of specific search results.
Is it legal?
There’s nothing illegal about what Google is doing: they’re upfront about what they collect, we agree to those terms to gain access to their tools… the end.
Is it profitable?
Ads are a very profitable business for Google. If you take a quick look at Alphabet’s financial statement (Alphabet is Google’s parent company), you’ll see the numbers: Google earned $36.339 billion in total revenue in the first quarter of 2019 (top of page 1) and Google advertising revenues accounted for $30.720 billion in the first quarter of 2019 (top of page 2). With a bit of math, we see that advertising revenue accounts for a massive 85% of Google’s total revenue line. So, yeh: it’s ridiculously, absurdly, and pornographically profitable.
So what’s the problem?
If the advertisers are happy, if Google is making swimming pools of cash, and if us consumers are getting to use products that we want to use… then what’s the problem?!
A fair question.
In theory, there’s nothing wrong with Google’s ecosystem if consumers are truly aware of the data that Google is harvesting about us and decide that it’s worth the price of admission. However, I’m guessing that most of us don’t really grasp just how much data that Google — and others — are collecting about us. In fact, I’m guessing that exactly zero people reading this have taken the time to read Google’s full privacy disclosure, for example. But it’s worth reviewing — even briefly — because the company pretty much tells you that they collect EVERYTHING THEY CAN about us: