By Doug Miller
Back in the 1800s, the possibility of striking it rich simply by picking up gold nuggets that were lying in creek beds – getting something for nothing – was a lure that hundreds of thousands of people couldn’t resist. Today, personal data is the new valued resource and it has become this century’s “gold nugget lying in a creek bed” to simply be collected for free and sold for millions. You might think that the gold extracted in a typical gold rush was much more valuable than personal data could ever be, but the revenue generated from mining personal information is worth much, much more. For example, the California gold rush that lasted about 16 years generated 8.3 million troy ounces of gold which would be worth over $13 billion at today’s prices. But today, Google makes over three times that much in one year from its advertising business which is built upon mining and refining vast amounts of personal data.
The Data Gold Rush Battle
Google began to gather data about people who used its “free” search engine so it could sell advertisements based on searches. As Google acquired other online services, it continued to offer them “for free” because the personal information that people uploaded or shared on Google’s services more than compensated for the cost of providing those services. They were getting something for nothing, and in gold rush fashion, other companies such as Facebook and Amazon.com soon joined the rush. Now, Google is in a battle to keep their users’ data from those companies and others and to ”stake a claim” to extract new data before the other guys can get a foothold. As long as people are willing to share personal data and are ignorant of just how valuable their personal information is to companies that provide services for free, there is gold data to be mined. In today’s gold rush, each company is doing what it can to mine every last opportunity possible from their users’ data before the other guy prospects for new data “gold” or, more importantly, before regulators propose legislation that would limit access to this valuable data.
Given how valuable personal data is, it comes as no surprise that Google keeps staking claims to data it shouldn’t have access to in its desire for ever more data to mine. This weekend came the news that Google has been obstructing the FCC’s investigation into its Wi-Spy scandal or what some have described as the “single biggest breach of privacy in history.” So many people have already written about this that I won’t repeat the details here except to make two points:
- The value of the so-called fine is so small it is ridiculous. At $25,000 this represents 0.0000625% of Google’s annual revenue. That would be like a typical citizen getting a ticket for five cents. Not enough to deter anyone from engaging in questionable – yet profitable – activity.
- Google has stated that they have been exonerated of any wrongdoing, but in fact what the FCC said was there was so much obstruction in their investigation that they were unable to find out not if Google gathered personal information but how far Google went in gathering personal information. The FCC’s Notice of Apparent Liability for Forfeiture stated “Misconduct of this nature threatens to compromise the [FCC’s] ability to effectively investigate possible violations of the Communications Act and the Commission’s rules.”
We will see what comes of this latest privacy issue for Google, but it is hard to imagine that the Wi-Fi data collection program that went on for over two years was an accident or that the senior leadership of the company didn’t know it was happening. If there was any doubt that the senior leadership would like to be left alone to go after our data, look no further than Google co-founder Sergey Brin who was quoted this weekend in The Guardian:
“If we could wave a magic wand and not be subject to U.S. law, that would be great.”
Google and our Children’s Data
So with that background, where is the next data gold rush going to happen? Most of us are already so hooked into the net that Google already knows more about us than our spouses. So that leaves our children. As Google looks for new data sources to strip mine, their attention has turned to providing communication and productivity applications for schools – an area where Facebook and Amazon don’t have formal programs – yet. Google has a product tailored for schools called Google Apps for Education (GAFE), which is mostly based on its consumer offerings for Gmail, Google Docs, Groups, Video (not YouTube), Calendar and Sites. These services are offered for free to schools and Google promises that ads will not be displayed to kids while they use these services. For cash-strapped schools who are trying to provide internet services for their teachers and students, this has seemed like a gift they cannot refuse. Yet, as school boards should know, there is no “free lunch” and while Google may seem very generous by absorbing the significant infrastructure and support costs of providing these services for schools, we need to keep in mind that these services, like their consumer-oriented cousins, are really just a means to collect data for Google’s actual customers, the advertisers, who provide Google with over 96% of their revenue. In exchange for access to student, teacher and school officials’ data, Google can afford to give these services away since the data that is collected is much more valuable than the nominal $50 a year per user that Google charges other customers.
But is Google really mining the data that our children, teachers and school administrators input into Google services such as Gmail? Well, it appears so on at least two fronts.
The Other Google Apps for Education
To Mine or Not to Mine? That is the Question
While Google says is does not display ads to users of GAFE, it does not make a promise that it will not collect and mine the data that these users input. There is a great article in Campus Technology that goes into great detail regarding the GAFE offering and how Google uses student data. One of the most significant quotes from the story is the following:
“When McDonald was negotiating the agreement with Google for Google Apps for Education for his school, he put the question: “Are you going to data mine it?” Their reply: “Oh, we’re not serving ads–don’t worry about it.'” His response to Google: “We understand that; but are you data mining it and correlating it through cookies that aren’t part of that, because that would be the same problem. You’d be using our data for your own benefit. Under FERPA you can’t do that.””
No Free (School) Lunch
Before school administrators rush out and sign up for the “free” Google Apps for Education program, they should step back and think about the real costs. The new currency of our digital age is personal information. Should school administrators be trading access to children’s data in exchange for free email and other services? Do they even have the right to do that?
Again, Google is an advertising company. Having it provide online services to children is like having a full-time market research firm wired into your child’s brain. Even if Google promises not to display ads to our kids, it will be gathering an enormous amount of private information from children as they interact with their computers. Given all the news lately on Google’s issues with privacy, it is hard to imagine that Google is doing anything but using this program to mine as much digital gold as possible until someone finally takes action to protect our collective interests.