Senators have introduced a bill that would require companies like Facebook and Google to report the value of user data to the SEC, as reported by MediaPost. This would affect firms that make money from data collection or processing and have 100 million monthly users.
Good luck. Facebook must have some idea of this valuation, but the accountants at the SEC could find themselves pulling their hair out.
They will have to determine what data is worth — one of the iffiest questions in marketing. It’s no business for amateurs.
Granted, this calculation is not as difficult when the data is strictly part of a customer list.
Those customers have spent money, and they have a projectable lifetime value. The acquiring company — usually another retailer — is savvy enough to know what it is buying.
Things are more amorphous when the asset is data per se. Then you have to evaluate the probable value from advertising sales and other revenue streams and bump it up against the marketing spend and a dozen other variables.
The only people who may be qualified to do this are bankruptcy lawyers who have dealt with such mathematical challenges.
Call it paranoia, but I can’t get a certain fantasy scenario out of my head.
A firm that sells self-reported consumer data, including medical information, has cash-flow problems. So it gives its printer a copy of its database as security, and the printer is free to use the database in any way it wants.
Then it owes one of its CPG clients money, so it turns over a copy of the database to that firm too. So there are two copies out there, and the consumers who volunteered their data are none the wiser.
Then the firm enters bankruptcy, and the assets are auctioned off. Except for some office furniture, the only real asset is the database.
The company brings in an expert, a hidden mover in dataland who has extensively rented the database. He sets a price, but the court and the creditor’s committee reject it as too low. And they challenge the lucrative employment contracts that are thrown in for a couple of the executives.
So everyone tries again, and the price is doubled, although it is not much at that. And just as the deal is about to be signed and court adjourned, a competitor of the buyer comes forward to claim an interest in the database because it discovered that some of its data ended up in the database.
The data mover is called back in — it seems he had something to do with this too. Finally, it is all worked out.
This actually happened. The bankrupt company was an outfit called Computerized Marketing Technologies.
Things have changed since then, although now it is even harder to unravel the spaghetti strands linking data owners and processors of all types.
And the lack of transparency is the same. Consumers may consent to remain on an email list, or they may refrain from opting out. But they have little idea of what it all means.
GDPR supposedly is designed to help clear that up. But the truth is elusive, and the SEC may find that out.