The next time you use and enjoy a social media site or a search engine, remember that these companies have spent an inordinate amount of money developing these fantastic products…but how can they do that when you are using their services on a daily basis for free? After all, there is the cost of development (employing many employees, especiall engineers), servers needed to run the service, electricity used by the servers, bandwidth of all those users utilizing the service without any slowdown or downtime, etc.

While there are paid services that may not need to sell their consumers’ data, they most likely will have a smaller marketshare and would have to have higher costs for those consumers that pay. However, with more consumers, there is more scale which means reduced costs per user. Providing a free service means that you can reach more users and have a greater impact. However, they have to find other ways to make money. Oftentimes, this will be done by tracking users and their habits and either targeting them with ads and/or by selling their data to third parties.

Is this good or bad? Well, it depends. Ultimately, it should be the consumer’s choice. Transparency of what data is collected, how it is used, and who it is sold to is important for consumers to make informed decisions on whether they’d like to use the product and/or opt-in to these services. Enterprises should not, however, abuse this data. This is why some states are enacting laws around consumer privacy such as California’s Consumer Privacy Act.

If you’re an enterprise that would like to encourage transparency and choice for consumers (which builds trust with these consumers), please make sure to check out Control.My.ID’s Enterprise Platform.