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Data Capital

Europe Calling!

Illustrations: Bart Sparnaaij

Billions in European Data Capital brought back across the Atlantic

At the beginning of 2020, even the most attentive observers couldn’t have predicted the amount of change the Internet world would achieve in five years’ time. Admittedly, this was also when a bold European Union’s data strategy saw the light of day — as one data scandal chased the next, and privacy was suddenly ‘a thing’. But there were other things that preoccupied the attentive observers: A trade war between the USA and China had more or less ceased, as one between the USA and Europe was gaining momentum. There was no green light with Iran, and a new coronavirus had people holding their breath. In short, the international world was in turmoil — plus, rumours of a delay of the new iPhone were simmering online.

During this period of public unrest and big headlines, the small Berlin company polypoly, kicked off its coup, and released the first version of a personal data safe — the polyPod. The release initially only drew attention from the business community and activist scene. Users could now easily reclaim their most personal data from a variety of online providers. Only those in the know were aware of what the polyPod was good for, but they promptly took advantage of this opportunity, seeing it as an endorsement against powerful tech giants.

Upon release in the fall of 2020, several thousand Europeans demanded their rights according to Article 15 of the ‘General Data Protection Regulation’, an EU regulation that had come into force two years prior. Not a particularly exciting event in and of itself. Easy to dismiss under the category of ‘whatever’. Just a small drop in the big ocean. This small drop, however, sent out small but steady waves. Waves that were noticed 9129.83 kilometres away. It was going to be the first of many requests for European data over the big pond.

In the following months, there were mounting signs that something bigger was going on. It was rumoured that an underlying concern was spreading amongst the top management of some of the largest and most powerful tech companies. Company spokespeople were silent on questions regarding official figures, for example how much user data had been released. At a press conference, the press spokeswoman of the largest social media provider dis-missed such questions as unfounded. She said, “Don’t forget, the total user figures paint a clear picture. We are still the largest provider on the market, and revenues from the advertising business continue to put millions into the pockets of our partner companies and shareholders. It’s not going to change that quickly, trust me.” It was apparently business as usual — until it no longer was.

In 2021, the share prices of some of the most valuable companies in the history of mankind plummeted within a matter of days. Nervousness and upright headlessness swept through the stock markets worldwide. One news outlet quoted a stock market professional who said, “This is not a course correction. The market has thrown the baby out with the bath water — it’s brutal.” What was going on? This was clearly not an economic crisis, no other sector was affected. A repeat of the flash crash was also ruled out. There were several explanations, but only one truly made sense — the data vaults had been looted. The world’s largest data silos had leaked and lost what made them so valuable — sovereignty over personal user data.

The invisible hand that slaps

Stock market analysts repeatedly pointed out that the initial slump in share prices was correlated to the estimated value of data for all users located in Europe. The saying “lost data capital” came up a lot. Everything else was mob psychology. A limited number of data requests from European users would not have been a problem. But as polypoly dramatically increased its user­base, a critical mass of users suddenly had the necessary weapons of mass disruption for a data regime change — and they were ready to use them. The popular television economist Adam Ludwig Liebman explained the phe­nom­enon to his 1.5 million followers, in a video titled ‘The invisible hand  that slaps’.

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“Imagine opening a club with your best friends. It’s quite chic, and you go there to exchange ideas and opinions, have fun, and do stuff. “As time goes by, more and more people come to your club and you, as the club manager with a flair for business and a dose of Stasi ambition, keep records on them— what and how much they drink, who they talk to and flirt with, what phone number they use, and so on. That’s a lot of information already, and with time you learn more and more about your club visitors. Then, other companies approach you and want to do business with you because you have so much data about your visitors. Because you are a capable businessperson, you agree. But you don’t make the mistake of giving away your treasure, no no, because that would reduce its value. The secret is to be the only one who possesses this data, so everyone must come to you and you can set the price.

“This goes well for a while and you become a sought-after person, founding more clubs around the world, and making a lot of money. Everyone knows about your club, and they also know it’s not the facilities, furniture, or services that are the most valuable resources of your club, but the data you have about your visitors. The rest is just facade for data harvesting... a Potemkin village. But one day, someone changes the rules, and in one big and important jurisdiction you’re now obligated to give your club members the data you’ve collected on them once they ask for it. You try your best to make sure they don’t ask for it or, if they do, to block the requests. You’re really creative at trying to stop these requests, but you can’t block them for long. More and more of your club visitors are requesting their data, because a new company has given them the opportunity to do this with only a little effort. They are justifiably shocked at what they learn when they see the immense amount of data you have collected on them. Moreover, they have foolishly been given the opportunity to act as businesspeople, and have even formed a collective to manage their personal data.

“Sure, you still run your club and have a tonne more information, but your business partners are now paying close attention. They are no longer willing to pay so much to do business with you, because you are no longer the only one who has this data. All of a sudden, a market emerges around this data, where you are not the only player in control. Too bad for you, but good for everyone else. What were you thinking anyway — that it would work out forever?” Adam Ludwig Liebman’s video soon gained cult status, when one of the major corporations filed a copyright infringement charge, claiming that the business model described was patented, and that its uniqueness was undermined by Liebman’s statements. The claim was dismissed as unfounded, and one of the judges commented, “We might as well patent our democracy.” The company indicated that it would reserve the right to conduct such an inquiry.

Data economy turned upside down

It was clear that things could not be go on as they had before. Business partners had to be calmed, stock market prices had to be stabilised, and requests made by users had to be integrated to the service, so both sides could be pacified — the company could continue to make money by providing personalised, qualitative services, while respecting the rights of their users. The business model of the data economy transformed again.

Instead of seeing users as cows who are constantly milked for their data, providing services became central to the business again. In 2023, the first of many companies transitioned to a ‘social media as a service’ model, which other industries, such as gaming and streaming, had been using for years. They largely abandoned the monetisation of personal user data, and instead concentrated on monetising and improving their actual services. The core services were limited in functionality but available for free, while additional features and benefits required subscriptions, or so-called ‘passes’.

Of course, some companies continued to actively collect and mine data, but a clear message was now etched in people’s minds — when a service appears to be free and there are no additional paid features, you pay for the service in other ways. Namely with your personal data by watching advertisements, as well as the more or less evident manipulation of buying behaviour and opinions through sponsored content.

Whistleblower Ann Durance, who has tirelessly campaigned for more data awareness for years, commented; “Some people are willing to accept the old model. And that’s perfectly fine. It’s their decision. It’s their data. No one has the right to tell them what to do. It’s an incredible accomplishment that we’ve made it so people now have a choice, and can make it an informed and conscious one.”

The winner shares all

The paradigm of the digital world had been turned upside down in a few short years. Instead of large corporations, users  now controlled their personal data. Instead of third parties hoarding the treasured data like dragons, or exploit­ing it at will, entire ecosystems were created where everyone could participate and benefit.

The pioneer and trigger of this fundamental change was polypoly GmbH, the first company to create such a digital ecosystem. Through its platform, hundreds of thousands of confident Europeans reclaimed their data. Each and every one of them acted in their own best interests. Surely no one could have guessed how this would permanently affect the data world. But when billions of euros in combined data capital were transferred halfway around the world back to Europe, it was not only a powerful message — it was the end of an era. Some politicians tried to convey the idea that this was a nationalistic blow by Europeans to destabilise America. One in particular never ceased to reiterate; “Those Europeans really hate our country. They don’t treat the US fairly. They want to destroy our economy, trust me!”

While on one side of the Atlantic, there was a storm, the pioneers on the other side were already enjoying the first fruits of the data revolution. Campaigning done by the opponents of this revolution did not fall on favourable ground, because the benefits were experienced by companies, as well as every citizen with a smartphone, throughout everyday life. This revolution was achieved by a broad alliance of large companies across all business sectors.

The retrieved personal user data of Europeans could be put to immediate, practical use by its owners. The ‘fear’ expressed by company spokespeople that “...users would have no use for their data anyway, so it would be better off within a large company,” did not come true. By freeing the data from its silos, an ecosystem was created where any service from any company could potentially access a person’s data, and use it to enhance a company’s offering, as long as functions were performed locally, and the personal data did not leave the user’s device.

The first phase of the transition was somewhat challenging for participating companies. However, it soon became clear that getting rid of the user’s data points, while still being able to access the data was a much cheaper way forward, with fewer legal and financial risks. It didn’t just lower the IT costs and reduce the pressure from data protection legislators. What drove the companies was the prospect of participating in the European data economy. Europe’s data capital became larger and more valuable as more companies participated in the digital ecosystem, built by polypoly.

The data revolution was met with broad approval and support. More and more companies joined in, and it quickly spread to the US — generating profits that were more than just desired after the big ‘Data Crisis’. Politicians also understood the potential of this paradigm shift for value creation and taxes, so everyone was keen to have been the first to predict it, and to have been in favour of it from the start.

Sweet Dreams

The data revolution was a win-win for everyone. Well, at least, almost everyone. Some business leaders had to take big steps to sell their image change. The social media industry giant mentioned at the beginning of this article was no exception. During a presentation on the transformation of their business model, the CEO had to admit that the original business model had probably been “... pushed to the extreme.”

How right they were became clear the next day, when leaked files appeared publicly, documenting the company’s shattered ambitions. They planned to launch a home device that would provide the perfect sleep experience for users based on their subconscious wishes and desires. But the project was shelved. The privacy and moral concerns for a product that was win­ning the heads and minds of its users were simply too great. Concerns that, mind you, had been expressed by the business partners, not the company in question. Despite the sheer limitlessness of advertising opportunities, none of the partners wanted to be responsible for a new, even more extensive, data scandal. The anonymous leaker quoted a person involved in the decision having said, “It’s not 1984 after all.” The world really has changed significantly in just five years.