Google & Co. – Broken Valley pt. V.

Google, & Co. have their tentacles in almost everything that’s “free”

• RFM’ use of Google as the developed market’s benchmark for monetisation gains greater foundation as it turns out that 88% of free Android apps available on Google Play can share data with a Google-owned entity.
• This enables Google to gather data on almost all activities that are being carried out on Android devices.
• A study from Oxford University (see here) tested 1m free apps from Google Play (approximately 33% of all free apps available) looking for tracker hosts which are services embedded in apps that are capable of sharing data with 3^rd parties.
• The main findings of the research are:
  • First, tracker hosts: were found 93.4% of all apps tested of which the median number of trackers was 10 and where 17.9% of free apps had more than 20 distinct tracker hosts.
  • Only 9.6% of all free apps tested had no trackers.
  • Second, tracker host ownership: Ownership of tracker hosts is quite concentrated meaning that a lot of the data ends up in the hands of the same companies.
  • Despite this, the median number of entities with whom data was shared was 5 with 17.4% of all free apps tested sharing data with more than 10 entities.
  • Third, data destination: 90.2% of apps were sharing data with US-based entities with only 5.1% being based in China.
  • Norway and Russia were next with 3.2% and 2.6% respectively.
  • Fourth, data ownership: The ultimate ownership of this data is extremely concentrated both in terms of geography (above) and digital ecosystem.
  • It is the usual suspects:
  • 88% of all free apps have tracker hosts that can share data with a Google entity, 43% Facebook, 34% Twitter, 26% Verizon (read Yahoo), 23% Microsoft and 18% Amazon.
• Obviously, all of this data is shared following the opt-in of the user, but the problem is that almost all users will be unaware of this.
• This is because every Digital Life service comes with a lengthy user agreement to which almost everyone simply scrolls to the bottom and clicks “agree”.
• In those user agreements are buried the consents that allow the tracker hosts to share the data.
• I think that any indignation or outcry that follows from this study is misplaced, as these companies are doing no more than following an agreement that the user has digitally signed.
• Usage of these services is entirely voluntary and any argument to the contrary is flawed in my opinion.
• Furthermore, the digital ecosystems need to do this to earn a return on the investment that they have made in their Digital Life services.
• The internet is not free and never has been, but I think that going forward things need to be much less opaque and that users need to be given a clear choice.
• Something along the lines of: “We are able to provide this service to you by selling using your data for targeted advertising. If you would like us not to do this, we can offer you a subscription for $X per month.” will be needed to ensure that the relationship is clear.
• I can see everyone based on advertising being forced down this path but the impact on revenues is very unclear.
• This is because it is those that marketers want to target most (the high end) that are most likely to go for a fixed cost subscription and these users generate the most advertising revenue.
• The net result is uncertainty around the outlook for the advertising monetisation business model and its impact on medium-term revenues.
• While this is being worked out, Apple is the only one that emerges unscathed and should outperform while this reality is being digested.