DigitalDUAL-USE

Free as Data Payment

What it is

Offering a service as “free” when its price is paid in personal data and attention — collected, profiled, and sold to advertisers — so that the word “free” switches off the cost-benefit scrutiny a stated price would trigger.

How it works

Zero is not just a low price. Shampanier, Mazar and Ariely found that when a good becomes free, demand jumps far more than the last cent of price change predicts: “free” is processed as no downside, and the comparison a price would provoke does not happen. A data-funded service exploits that switch. The cost is real — behavioural profiles, location, contacts, inferred health and politics, sold or rented to advertisers — but it is deferred, diffuse, and invisible at the moment of sign-up, while the benefit is immediate. Acquisti, Brandimarte and Loewenstein describe the resulting “privacy paradox”: people say they value privacy and give it away for small conveniences, because valuing something abstract against a concrete zero is a contest the abstract loses. The saying “if you are not paying, you are the product” dates at least to a 2010 MetaFilter comment, and the idea to a 1973 video art piece about television. Regulators have started treating data as the price: the EU Digital Content Directive (2019) covers contracts where the consumer supplies personal data instead of money, and Italy's competition authority fined Facebook in 2018 for calling itself free without saying what it took in return. Facebook dropped “It's free and always will be” from its sign-up page in 2019.

Real-world examples

  • •Facebook's home-page slogan “It's free and always will be”, removed in August 2019; Italy's AGCM had fined the company €10 million in 2018 for presenting the service as free while omitting the commercial use of user data.
  • •The 2019 FTC settlement with Facebook — a $5 billion penalty over privacy practices following the Cambridge Analytica revelations — priced what “free” had cost.
  • •Supermarket loyalty cards that trade a discount for a purchase history later sold to data brokers and insurers; the price of the “free” card is the profile.
  • •“Free” flashlight, weather, and prayer apps that requested location and contacts permissions unrelated to their function, some of which sold location data to brokers, a practice the FTC pursued in its 2024 actions against location-data brokers.

Ethical guidelines

Where the line is

An advertising-funded service is legitimate when the funding model is stated where the word “free” appears, collection is limited to what the service needs, and a paid alternative or real controls exist; it becomes manipulation when “free” is used to switch off scrutiny while the data taken, and the parties it goes to, stay out of view.

  • ●If the price is data, say so where the word “free” appears: “free, funded by advertising that uses your activity” — not in the policy, at the point of decision.
  • ●Offer a paid alternative at a fair price so that the data-funded option is a choice, not the only door; and do not price the paid option to punish refusal.
  • ●Collect what the function needs and nothing more; a flashlight does not need contacts.
  • ●Do not sell or share data with third parties without a separate, specific, revocable consent, and honor deletion requests fully.

How to defend against it

  • ►Replace “free” with “paid in data” in your head, then ask the question a price would prompt: what exactly do they collect, whom do they give it to, and would I pay that in money?
  • ►Read the permissions, not the policy: on installation, deny anything the function does not need (location for a calculator, contacts for a game), and audit permissions quarterly in the phone settings.
  • ►Prefer the paid tier when one exists and the data is sensitive (health, finance, children); a few euros a month is often cheaper than the profile.
  • ►Use the rights you have: in the EU and UK request a copy of your data and its deletion under the GDPR; in California use the “Do Not Sell or Share” link and the Global Privacy Control browser signal; in the US opt out of data brokers through their required portals.
  • ►Use alias e-mail addresses and a separate browser profile for “free” services so that what they collect cannot be joined to your main identity.

From the Defense Playbook

Read Every Checkboxseconds

On any checkout, sign-up, or consent screen, read each checkbox and toggle before you continue, noting whether it is already ticked and whether ticking means yes or no, because defaults and confusing wording are how extras, marketing consent, and data sharing are obtained from people who never chose them.

Every playbook entry states how strong its evidence is and when not to use it. Browse the full playbook.

References

  1. Shampanier, K., Mazar, N., & Ariely, D. (2007). Zero as a Special Price: The True Value of Free Products. Marketing Science, 26(6), 742-757
    The zero-price effect: demand for a free good jumps beyond what the price change alone predicts.
  2. Acquisti, A., Brandimarte, L., & Loewenstein, G. (2015). Privacy and Human Behavior in the Age of Information. Science, 347(6221), 509-514
    The privacy paradox and the ways uncertainty, context, and malleable preferences lead people to give data away for small immediate benefits.
  3. European Parliament and Council (2019). Directive (EU) 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services, Article 3. Official Journal of the European Union
    The recognition that a consumer who provides personal data instead of paying a price is party to a contract with the same protections.
  4. Zuboff, S. (2019). The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power. PublicAffairs
    The account of behavioural data as the raw material of the business model behind “free” services.
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