Why Getting Paid for Your Data Is a Bad Deal

One bad privacy idea that won’t die is the so-called “data dividend,” which imagines a world where companies have to pay you in order to use your data.

Sound too good to be true? It is.

Let’s be clear: getting paid for your data—probably no more than a handful of dollars at most—isn’t going to fix what’s wrong with privacy today. Yes, a data dividend may sound at first blush like a way to get some extra money and stick it to tech companies. But that line of thinking is misguided, and falls apart quickly when applied to the reality of privacy today. In truth, the data dividend scheme hurts consumers, benefits companies, and frames privacy as a commodity rather than a right.

EFF strongly opposes data dividends and policies that lay the groundwork for people to think of the monetary value of their data rather than view it as a fundamental right. You wouldn’t place a price tag on your freedom to speak. We shouldn’t place one on our privacy, either.

Think You’re Sticking It to Big Tech? Think Again

Supporters of data dividends correctly recognize one thing: when it comes to privacy in the United States, the companies that collect information currently hold far more power than the individual consumers continually tapped for that information.

But data dividends do not meaningfully correct that imbalance. Here are three questions to help consider the likely outcomes of a data dividend policy:

• Who will determine how much you get paid to trade away your privacy?
• What makes your data valuable to companies?
• What does the average person gain from a data dividend, and what do they lose?

Data dividend plans are thin on details in regarding who will set the value of data. Logically, however, companies have the most information about the value they can extract from our data. They also have a vested interest in using the lowest possible bar to set that value. Legislation in Oregon to value health data would have allowed companies to set that value, leaving little chance that consumers would get anywhere near a fair shake. Even if a third-party, such as a government panel, were tasked with setting a value, the companies would still be the primary sources of information about how they plan to monetize data.

Privacy should not be a luxury. It should not be a bargaining chip. It should never have a price tag.

Which brings us to a second question: why and in what ways do companies value data? Data is the lifeblood of many industries. Some of that data is organized by consumer and then used to deliver targeted ads. But it’s also highly valuable to companies in the aggregate—not necessarily on an individual basis. That’s one reason why data collection can often be so voracious. A principal point of collecting data is to identify trends—to sell ads, to predict behavior, etc.— and it’s hard to do that without getting a lot of information. Thus, any valuation that focuses solely on individualized data, to the exclusion of aggregate data, will be woefully inadequate. This is another reason why individuals aren’t well-positioned to advocate for good prices for themselves.

Even for companies that make a lot of money, the average revenue per user may be quite small. For example, Facebook earned some $69 billion in revenue in 2019. For the year, it averaged about $7 revenue per user, globally, per quarter. Let’s say that again: Facebook is a massive, global company with billions of users, but each user only offers Facebook a modest amount in revenue. Profit per user will be much smaller, so there is no possibility that legislation will require companies to make payouts on a revenue-per-customer basis. As a result, the likely outcome of a data dividend law (even as applied to an extremely profitable company like Facebook) would be that each user receives, in exchange for their personal information over the course of an entire year, a very small piece of the pie—perhaps just a few dollars.

Those small checks in exchange for intimate details about you are not a fairer trade than we have now. The companies would still have nearly unlimited power to do what they want with your data. That would be a bargain for the companies, who could then wipe their hands of concerns about privacy. But it would leave users in the lurch.

All that adds up to a stark conclusion: if where we’ve been is any indication of where we’re going, there won’t be much benefit from a data dividend. What we really need is stronger privacy laws to protect how bu