Big tech companies, including Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB), are at war over the collection of consumers' personal data. Yet the truth behind the rhetoric and posturing is that a number of big tech companies are hoarding more of our data than ever before. How will this evolve in the coming years?
On this clip from Motley Fool Live, recorded on Feb. 8, "The Wrap" host Jason Hall, Fool analyst Auri Hughes, and Fool.com contributor Danny Vena talk about the battle lines being drawn between user privacy and data collection and how it plays out in the future.
Jason Hall: Here's the thing, because we think about, you've got this, you've got Facebook, and then Apple's pushing back against Facebook, making that walled garden tighter with making it harder for companies to collect your data without you explicitly giving them permission to.
What's the future going to look like in say, 20 years? The pendulum seems to swing back and forth, as it normalizes. Auri, I want you to start with this one, when it comes to the company's collecting our data to be able to use to monetize, is there going to be more of this in the future, or is it going to be less, or is it just going to look different?
Auri Hughes: Wow, such a good question. I'm a contrarian and I believe personally, if we're going to get a lot of these services and things we appreciate for free, the companies need to be compensated in some way to survive or to seek out revenues to run a sustainable business. In the last few years, that's been data information. But society as a whole from observation, there's been a little bit of push back.
We're seeing some companies trying to separate themselves and say, "Hey, we take security serious," and then some are continuing the practices. I don't know. It'll definitely be an interesting thing to see what happens going forward. If I had to bet, I'm going to say things stay the same going forward. I think the status quo is you give up information to use something for free, and then that information's used for advertising, etc.
Hall: I think it probably just boils down to Facebook, for example. Facebook, people hate Facebook. I think the average American hates social media because either social media is destroying democracy or it's stealing liberty. There's always some take, somebody has about it but then everybody uses it. Then you have other things that, Pinterest (NYSE:PINS), for example. Pinterest does exactly the same thing Facebook does with your information. There's not the same backlash. There's so much about what do you feel about that individual service or products. Danny, what do you think here?
Danny Vena: Have you ever read the novel, Nineteen Eighty-Four?
Hall: I've tried to and honestly I've struggled to get through it.
Vena: [LAUGHTER] I think 20 years from now, we're going to be living Nineteen Eighty-Four. Except for instead of the totalitarian state, we're going to have the totalitarian big tech companies.
Hall: We need to own them is what you're saying so they don't own us. Is that what you're saying?
Vena: Well, let me start by saying, I'm not the average American. I don't hate Facebook. I understand going in that Facebook is going to collect certain data. I spent 13 years in the United States Army. When it comes to collecting data, Facebook don't hold a candle to Uncle Sam. [laughs] Okay. Let's start with that. [laughs]
I understand that the younger generation is a little bit less programmed let's say to worry about giving out their data so I think as long as companies are open and honest about it, as long as we know that they're collecting data, as long as they give you the opportunity to either opt in or opt out, I don't think it's that big of a deal.
I think that the world is changing. I think if you'd if you'd go back 20 years and say to people, "Hey, guess what, you're going to give all of this information about yourself to big corporations for free," people would say, "No, no. I'm never going to do that", but yet that's what's happening today. I think there's going to be more of this, I think the trend is going to continue, but I think there's also going to be a bigger trend for the people that do not want to share this information are going to have the opportunity to hold it back.
Hall: Yeah. First of all, I think your view of the future scares the hell out of me, Danny. [laughs] I think I just want to say that right off the bat. [laughs] I'm kidding.
I know you were being a touch tongue-in-cheek when you said that, but what I'm interested to see happen guys, is at what point does this kind of bifurcate because right now with the exception of buying an iPhone and having again, that walled garden of a company that really charge a premium for a product that people love, and they can because that ecosystem is so great and part of their value prop is privacy, right?
Data collection. If they give more control back to you as the user, at what point does it get to a point where that aspect is so much of a detriment for the data collectors of the world that there has to be another revenue model for them to allow you access because you're no longer the product, because you're no longer giving them that information they can monetize.
I wonder if we get to a point where it makes sense for companies to offer two different tiers. You can continue to have free access and we'll use your data, and we'll monetize it, or there is a paid tier where you can still access certain things without that data sharing. We've been hearing about that for forever and it just never worked, so fun to think about.