Sharing the Spoils of User Data
Tech companies collect people’s data - that’s not going to change. They should share more of its value with their users.
Concerns about data collection
Lots of people, for good reason, are concerned about tech companies collecting user data. User data collection is ubiquitous, like the digital products that it powers. And every week, there seems to be another case of a company profiting from user data in ways that did or could harm users, without users’ consent and/or awareness. General Motors shared driving data with auto insurance companies and Betterhelp shared data on users’ mental health conditions with advertisers. The motive is typically profits; some company is selling something, whether it is the actual data or insights derived from it.
These concerns usually form the basis of demands made to tech companies: “Don’t collect my data.” “Don’t profit from my data.” “If you do collect my data, tell me what you’re collecting and what you do with it.” These are valid, but missing a big one: Share the value of my data with me. This gets more directly to the heart of the economic model behind why these companies collect user data. And it aims to achieve real benefits for users, not just losses for companies.
I don’t mean monetary value, but product value. Companies should seek to build products, features, and user experiences that expose users’ own data back to them in ways that add real value and solve problems. Apple Watch fitness tracking, Mint by Intuit, and MyFitnessPal are all popular examples. Two design projects in my portfolio, Selftalk and Top Ones, are built around this. And as a product manager at Ampla, I worked on a data analytics dashboard that helps consumer goods brands visualize their business data in order to make better decisions.
Can companies still profit?
Can product companies make profits and share the value of user data with their users at the same time? Yes, and as someone building products, the more interesting question is: “How can I use user data to provide value to users and solve their problems?”
These goals can coexist because customers value, and will pay money for, products that help them make better decisions and improve themselves through understanding their data. For example, the market for fitness trackers has grown significantly since 2020 and is projected to continue growing.
A tradeoff
At many companies, the core job of a product manager is to translate this data into decisions about what software the company should invest time and money to build.
This comes with a tradeoff: asking companies to build data-rich experiences that expose users’ data back to them requires allowing those companies to continue collecting extensive data from users. Perhaps even expand it.
Understanding tech companies’ data collection practices is crucial in considering the issues of privacy and user consent. Unfortunately, not all data gathering, some of which could be considered quite intrusive, currently involves much consent from users. It may or may not creep you out to know that the average tech company, on-demand, watch screen recordings of people using the company’s app (usually with personally-identifiable information and keystrokes hidden). Users legally consent to this when they check a box linked to a long privacy policy that they probably didn’t read. I suspect, though, that most users don’t understand this enough to be able to truly, knowingly opt-in to it.
While in-product data collection is widespread, there might be a common misconception that every tech company has tons of personal information about users’ lives. That’s generally not true. Yes, the companies with the most far-reaching products, like Alphabet and Meta, really do have a portal into your life and your most sensitive data. But most tech products take up a much narrower space in users’ lives, so the startups that make those products are largely guessing about what users do beyond the walls of their products. Although companies can buy all sorts of personal data in the marketplace, most startups have neither the business need nor the capability to buy that data and do something useful with it. But when it comes to user behavior that happens within their products, they have much higher-fidelity and higher-quality data.
Data collection is often a primary goal
I think most people know that the business models of tech companies like Alphabet and Meta depend on collecting and monetizing user data. A crucial but less obvious effect of this economic model, as Shoshana Zuboff argues in her book The Age of Surveillance Capitalism, is that the collection of user data is often a primary rather than secondary factor guiding how these companies design products. In this model, tech companies design products primarily to collect user behavioral data, rather than to primarily solve user problems with data collection being a by-product. For example, Facebook’s news feed is optimized for user engagement. This not only maximizes the number of ads that users see but also the amount that their product usage can be tracked.
Can product companies make profits and share the value of user data with their users at the same time? Yes, and the more interesting question is: “How can I use user data to provide value and solve problems?”
This is an oversimplification because tech companies come in all types and sizes, and most don’t have the business need or resources to collect data on the scale of Alphabet and Meta. But as a product manager at smaller companies, I’ve seen firsthand how a business desire to collect customer data can sometimes impact product design.
What do companies do with this data?
Besides using it to make money selling ads, companies use the data internally to improve their products. Understanding what users in general are doing helps them make their products more user-friendly. For example, if Spotify sees that users are enjoying a new collaborative playlist feature but few users are finding the feature in the first place, they can show the feature in a more visible place in the app. Understanding an individual user’s behavior helps Spotify personalize the app to them. For instance, Spotify updates which music genres appear at the top of the page for a specific user based on what they have listened to.
In summary, companies collect product usage data automatically whenever someone uses the app or website. This data is a major input into these companies’ decisions about their products. At many companies, the core job of a product manager is to translate this data into decisions about what software the company should invest time and money to build.
Conclusions
Helping users reap benefits from their own data, by building products for that purpose, is one way to reduce the power imbalance between tech companies and their users. The thing is, companies like Alphabet and Meta are good at building products. And some products, like Apple watches and other “tracker”-type category, are designed specifically to show users their own data in valuable and interesting ways. But for products outside of this space, it’s usually not a top priority.
Building products is mostly about getting value into the hands of users. I appreciate products that show users their own data in useful and interesting ways that they couldn’t do themselves, and I like when product companies prioritize this. As products become increasingly personalized, and users continue to expect ever-higher-quality products, companies that find creative ways to do this will find success.