Analysis How can you explain the $25.4bn price tag for Microsoft's acquisition of widely-loathed social network LinkedIn? It's easy. It's all about your personal data, of course. But the price Microsoft puts on your personal data is of particular interest here.
Two years ago, Facebook splurged $18.4bn for the over-the-top IM app WhatsApp, a BBM clone with a dozen staff. That worked out at $42 per address book.
WhatsApp at the time had a "mere" 310 million users, zero revenue, and the technology was primitive. With Facebook's ubiquitous presence and vastly superior development teams, why not just blow WhatsApp out of the water?
WhatsApp had only one advantage, but that appeared to be crucial to its buyer. WhatsApp is tied to your phone number, and you can't keep your address book private from WhatsApp. As soon as you log on for the first time, up it goes.
From that point of view, the $42 per address book looked like a bargain. Microsoft has paid more, but in return, acquires the "social graph" as well as the address books of even more active users. It's only paid slightly more: $60.51 per LinkedIn address book. And it's got that social network info "thrown in" for free.
The problem with LinkedIn is that having built the graph it only every sold it - it never built anything valuable to those 400m users.— Benedict Evans (@BenedictEvans) June 13, 2016
In a poll two years ago, two thirds of internet users quizzed in four European countries thought the platform provider got a better deal from harvesting personal data than the punter did. But it got really interesting when pollsters asked people what they thought each piece of personal information was actually worth.
How much would you sell your gender or address for? Or your marital status or sexuality? It added up to £140 (€170/US$191) per consumer.
The $42 and $60 suggest not that Facebook and Microsoft paid too much, but that they paid too little.
Jaron Lanier called the info-harvesting platforms "siren servers," which he defined as internet companies that "depend on accumulating and evaluating consumer data without acknowledging a monetary debt to the people mined for all this 'free' information."
Lanier's Swiftian suggestion was consumer action: to recognise that we're data producers, and start demanding a fair price for this data.
In neither case does the well-worn phrase "you are the product" sound smart, but it's too clever. You are not the product, you are a data producer who's agreed to a rotten deal. The worker who's trusted his wage negotiations not to a union, but to the boss. Is it a surprise that your output is undervalued?
The idea of a rational economic actor is out of fashion today, as "behavioral" economics holds sway. But unless we start acting rationally and putting a price on personal data, we'll keep getting fleeced. Some people are happy with the bargain of handing over their data for free stuff – but many more are not, Orange's survey reminded us. Unless we begin to price our data, we're just there to be fleeced, time after time. ®