The Internet Bubble
The FCC in the US just moved to end internet providers', like Comcast or Time Warner, collection of user data to create more targeted advertisement. The move was predictably lauded by consumer advocacy groups for protecting users, bringing the US in line with European regulation. It was of course attacked by internet lobbyists for being overreaching, and misguided. The more interesting impact of this though is what it signals for the bedrock of the overinflated app-economy: a harpoon in the side of ad revenue.
Internet ad revenue props up all of social media and internet economy. Limiting behemoths that make money off ad revenue exposes the shaky foundations of the revenue cycle to the stresses of reality. This bit of sunlight could finally collapse the bubble that props up valuations of "unicorns" whose only value play is in revenue from ads. Facebook, Google, Time Warner, Twitter, Comcast, are all giants whose technological prowess is heralded as unstoppable and titan-like but the thing we often forget is these companies are afloat almost exclusively from the money advertisers pay them to put products in front of eyeballs in the hopes of driving physical sales in the physical economy. Somehow the internet and media economy has not yet figured out a way to capture and trade value on its own terms. Instead it trades in the proxy value of advertising revenue. Content is rarely fully paid for by users, like they do with any other good or service. Instead, users expect free content and companies then gain pseudo-reimbursement from advertisers for each user that they deliver information to.
The secret to all of this is the collection of masses of user information to create hyper targeted advertisements. That is how internet advertisements compete against other forms of advertisement. Users can very easily avoid and dismiss most online advertising, which would make internets uninteresting to advertisers, but internet companies and websites know this and have a solution to the competitive slant. They counterbalance this ease of dismissal with hyper targeting of their advertisements, delivering ad content to those to whom it is most relevant based on the massive amount of information collected about a browsing internet user as they wander through the web.
This is of course the unspoken agreement that underpins the internet economy. Unspoken and unknown to most browsers. But when we find out we are incensed by the fact that our information is demanded in exchange for free internet. We demand the right to not be monitored and the FCC decision is a step toward making that happen. This means though that we are also one step closer to tanking the bargain and the economic machine that it props up. That is the fear that permeates the much more reserved, Bartleby the Scrivner-esque lobbyist critique of this recent decision, and all decisions that limit the ability of companies to monitor, use and abuse the information generated by web traffic. It is a primal, survivalist fear. And it is something that we too should be conscious of, for better or worse, when we insist on further internet privacy. We will soon come to a junction when we have to fundamentally retool the digital economy if we would like it to still be a place where value can be created and exchanged.
