Economía English

The Value of Data

It is quite important to note that all the issues discussed in the preceding chapters on digital platforms, the digital economy and all the layers to it, that none of that would be possible without data. In the digital economy, data is the new oil. It is an extremely valuable resource that fuels the whole system. Data is not only valuable to the corporations that mine it, but rather, it has an inherent value to the individual from whom it has come. It is your name, age, preference, all your personal details and if it were to be stolen from you, your privacy violated, you would see it as a crime or theft. But data is even more valuable than that. Your raw data, when mined, is then aggregated until it comes together with other data as Big Data. However, just like in a traditional non-digital economy, this data mining follows a model of the global data value chain. And as in the traditional global value chains, the bottom part, the raw material, is the one with

the least value. Such is the same with raw data. As it goes up the chain, so does its value. And those with the most technological capacity to analyze the data and monetize it, are the ones who use these to create and grow their digital platforms.

And so just as the traditional global value chains, countries that do not have the technical capacity to process the raw material, in this case, raw data, does not earn from the extraction of this raw data from them. There is a great imbalance in the digital economy as in the first place, 50 percent of the global population do not even have access to the internet. Wealth and technological capabilities and knowledge are concentrated in the developed and bigger developing countries while the least developed countries are left out in the dark.

Data is valuable and should be protected and not misused

Data in fact is so valuable that civil society are demanding that digital platforms and other applications not sell their data nor misuse it. Violations to privacy and rights are also being raised as a critical matter that needs to be addressed with regulations, consent and accountability. Big data in the wrong hands can be used to manipulate an election, an attack on a minority or even harm an individual or group. “While there appear to be increasing concerns about data privacy and online security around the world, there is somewhat of a “data privacy paradox”, as users continue to give away personal data and thus their privacy in exchange for different services. Many of these services (e.g. Internet searches, social media and online reservations) are offered by various platforms free of charge or on a take-it-or-leave-it basis.” [27] While it is true that some consumers are giving their data willingly to a digital service, social media or a digital platform, it is also true that, according to many terms and services agreements that consumers sign on to, give an expectation of privacy, particularly that the consumers’ data not be used or sold to any third party. Security is also a general expectation so any user’s information is not easily hacked and used without their consent. While one person’s hacked data may not be so critical or relevant, the data of 87 million users is a completely different situation. And that is exactly the situation that Cambridge Analytica had caused.

This brief rundown below of what happened, should not only be to keep the readers informed but also, see this as a cautionary tale of how data can be misused, manipulated and impact on real world matters such as elections, propaganda and disinformation that had impacted millions.

Cambridge Analytica and Facebook: A tale of misused data, manipulation and disinformation

In March 2018, Cambridge Analytica, a communications, data and political consultancy, along with the social media company Facebook found themselves in the middle of a global scandal. A former Cambridge Analytica employee had resigned and turned whistleblower by sending a cache of documents to the media. The Guardian, The New York Times, and The Observer of London worked together on reviewing and analyzing the internal documents. The cache of documents had contained explosive material against Cambridge Analytica: they had taken, without anyone’s consent, not even Facebook, 50 million American users’ data to test their new strategy in getting then Republican Presidential nominee Trump win the elections.

The New York Times reported, “The firm had secured a $15 million investment from Robert Mercer, the wealthy Republican donor, and wooed his political adviser, Stephen K. Bannon, with the promise of tools that could identify the personalities of American voters and influence their behavior.” [28] They, however, did not have the data they needed. “So the firm harvested private information from the Facebook profiles of more than 50 million users without their permission, according to former Cambridge employees…” [29]

Cambridge Analytica used this data to do psychographic profiling, behavioral microtargetting and predictive analytics amongst other tools. The work on this 50 million users’ data began in 2014. “The company used data
collected online via Facebook to segment voters by their personalities and behavior. The information was then used to target Facebook users on content specifically tailored for them. “If you know the personality of the people you’re targeting, you can nuance your messaging to resonate more effectively with those key groups,” Cambridge Analytica CEO Alexander Nix said in a 2016 speech.” [30] Cambridge Analytica also had another end goal, “create software to predict and influence voters’ choices at the ballot box.” [31]

The New York Times “delved into the relationship between Cambridge Analytica and John Bolton, the conservative hawk named national security adviser by President Trump. The Times broke the news that in 2014, Cambridge provided Mr. Bolton’s “super PAC” (independent expenditure only political committees) with early versions of its Facebook-derived profiles — the technology’s first large-scale use in an American election.” [32] Using psychological profiles derived from Facebook data, Cambridge Analytica was targeting and manipulating voters’ opinions to then have an impact on their choice when it came time to vote at the US Presidential elections.

Meanwhile, Facebook’s Mark Zuckerberg was facing a lot of angry questions. Zuckerberg was called to testify in a hearing made up of the Senate and House Committees. The 50 million users’ data leak was the biggest leak in the history of Facebook and raised questions on whether Facebook had taken its security more seriously. Zuckerberg stated there would be a thorough investigation on how the breech happened and how measures would be taken for this not to happen again. At a later date, “Facebook’s chief technology officer, Mike Schroepfer, issued a new estimate for the number of users who were affected: as many as 87 million, most of them in the United States.” [33]

In the course of the investigation, The New York Times and The Observer found that Cambridge Analytica seemed to have also been involved in “Brexit”. “The Times and The Observer reported allegations that the 2016 “Brexit” campaign used a Cambridge Analytica contractor to help skirt election spending limits. The story implicated two senior advisers to Prime Minister Theresa May. Testifying to Parliament a few days later, a former Cambridge employee, Christopher Wylie, contended that the company helped swing the results in favor of Britain’s withdrawal from the European Union.” [34]

It was also revealed that before running their new strategy on the US elections and Brexit, they had done a test run in another country, the Philippines. Why the Philippines? Cambridge Analytica whistleblower Christopher Wylie explained “The Philippines is one of those countries where you’ve got a lot of people online and a lot of people using social media. So when you’ve got that kind of set-up, it’s an ideal target. A lot of the time when the company was looking to experiment with techniques, experiment with AI [artificial intelligence], experiment with ways of – whether it’s manipulating voter opinion or disseminating propaganda, what have you…it’s more difficult to do that in countries like the US or Britain, or Europe, where there is robust regulatory action, there’s robust law enforcement.” [35] Learning of this, the election of then President Duterte was rife with questions. Cambridge Analytica did a test run in the Philippines, but did it get then President Duterte elected? “Psychographic profiling and behavioral microtargeting were the precise techniques used by Cambridge Analytica in the Trump campaign, and apparently in the Philippines, according to Facebook’s disclosure of Filipinos’ compromised data.” [36] Also taking into account that Cambridge Analytica had at least 1.1 million Filipino Facebook users’ data, only second to the United States. This 1.1 million was part of the 87 million users’ data that was breeched from Facebook into the hands of Cambridge Analytica.

After all they had done, Cambridge Analytica closed operations in 2018 and had been battling insolvency problems. Although Cambridge Analytica blamed their downfall on all the bad publicity, no client wanted to be even associated to the disgraced firm. The firm CEO was also brought to justice. “Alexander Nix, the former chief executive of Cambridge Analytica, has been banned from running limited companies in Britain for seven years. The U.K. Insolvency Service announced the decision Thursday, saying Nix permitted companies to offer potentially unethical services to prospective clients. The 45-year-old, who lives in West London, has agreed not to take any holding company directorships from early next month.” [37] This is not to say however that there is a guarantee that other groups or firms are not employing the same techniques as Cambridge Analytica to influence, manipulate or spread disinformation across the internet, accordingly to various political agendas.

Box written by Malig, Mary Louise, August 2022

Data-driven and targeted digital advertising

This new era of data as being recognized as a very valuable resource has changed many aspects of the economy. For example, advertising, a very large component of the regular economy, has evolved its strategies and technology to target and make an impact to providers and consumers in the digital economy. Traditional non-digital advertising such as billboards, TV and radio commercials, and placements in publications such as magazines, newspapers and such, that are still printed at printing presses, still exist. There is after all, still effective strategies in the non-online world, however, as those who can, such as newspapers, magazines, etc, go online even as they keep their hard copy real world versions, have to adapt their advertising strategies to include online and digital advertising.

Digital advertising is generally understood as online advertisements that target the consumers of digital platforms, but that also, many online advertising tailors and targets potential customers using data and data analytics. Some digital platforms generate revenue from these targeted digital advertising strategies. One could observe that this is a symbiotic relationship between platforms and advertisements in the digital economy. As the digital platforms grow, so do digital advertising.

Statistics show that online advertising has been increasing in revenue. “Internet advertising accounts for a rising share of global advertising revenue. It surged from 15 per cent in 2010 to 38 per cent in 2017 to reach about $200 billion.” [38] And with the growth of the social and economic activities online, this upward trend of digital advertising is only expected to continue. This revenue growth is also seen in the digital platforms. “Digital advertising spending has also become more concentrated. Google and Facebook, together earned $135 billion in Internet advertising revenue in 2017, corresponding to 65 per cent of the global total.” [39] This is illustrated in the graph below.

As digital platforms amass more users, they then also amass more data, as their users give it to them. And as explained at several points in this publication, data is a very valuable resource, and the more data these digital platforms gain, the more they dominate the market. Targeted, data-driven, digital advertising contributes to this and grows hand in hand. The more data collected and analyzed, the higher the ability of online advertising to finesse their targeting to consumers and potential customers.

There are some issues however with this strategy of using customers’ data (that they had given to platform economy companies) to then target them knowing their likes and dislikes and take advantage of that in order to make a couple of sales. It is of course understandable that advertising agencies have always done research, focus groups and market tests to ensure that they are reaching their targeted audiences and if their advertisements and messaging are effective enough for that targeted customer to make that purchase. It then makes sense that in the digital economy, digital advertising agencies would also do data research, market analysis, and decide on how best and effectively to reach their target customers.

Problems arise however when algorithms are designed to follow your every click and like on any digital platform or almost anything online from social media to online stores. That bag that you clicked but hadn’t decided to buy yet, is then going to follow you around online as an ad, stalking you to convince you to buy that bag. The bigger problems are when advertisers use surveillance based advertising. This is exploitative and can not only take advantage of vulnerable people but even put them in harm’s way.

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