The Data Trends Pointing to a Potential Robust Privacy Technology Market


One of the annual rites of spring in Silicon Valley is the release of Mary Meeker’s (partner at the VC firm Kleiner Perkins Caufield & Byers) annual Internet Trends slide deck (which can be found here http://www.kpcb.com/internet-trends). Silicon Valley folks like to claim they work in an evidence-based environment and Ms. Meeker’s reports provide plenty of data fodder for conversations throughout the Valley and beyond.

The 2014 version of the deck doesn’t disappoint. Ms. Meeker goes through a variety of topics such as the continuing growth in smartphone and tablets at the expense of PCs, rapid growth of mobile Internet usage in China, etc. However, one of the points which caught our eye and one Ms. Meeker covers in quite a lot of detail is: data.

Ms. Meeker of course uses the term industry buzz word “big data” but she goes beyond buzz words to an analysis of just where the data comes from. It is astonishing how fast these sources are growing. One source is sensors. Just a few years ago in 2010, the Samsung Galaxy S smartphone came with 3 sensors but in the 2014 Galaxy S5, that number has grown to 10. MEMS (microelectromechanical systems) shipments (which includes both sensors and actuators) for consumer electronics devices have jumped from 2.8 billion in 2010 to nearly 8 billion in 2013. This doesn’t even capture the large number of sensors going into automobiles which are increasingly being connected to the Internet.

Then there is data created from individuals sharing their data on social media. One of the ways Ms. Meeker quantifies this is sharing of a type of sensor data, pictures. Looking at just 5 social media platforms, Facebook, Flickr, Instagram, Snapchat and WhatsApp, the average total number of pictures uploaded and shared daily in 2013 was 1.2 billion but that number has risen to 1.8 billion through May, 2014. One can only imagine what the numbers would be like if social media platforms primarily used in Asia such as WeChat or Line were included. Looking at the total amount of information either created or consumed (the act of consumption of information online itself can create all sorts of data), the amount was around 4 zetabytes (ZB, which equals 1 million petabytes) but that number is forecasted to grow to 13 ZB by 2016.

The costs of computing are also going down, increasing both the capabilities of the devices which create data and the cost effectiveness of data processing used by organizations to crunch the data flow. Between 1990 and 2013 the cost per million transistors used in semiconductors decreased at an annual rate of 33%, data storage cost per gigabyte dropped 38% per year (1992 to 2013) and bandwidth costs per 1,000 Mbps declined 27% per year (1999 to 2013). Yet, even with the rapid decline in the cost of computing, as of May, 2014, 34% of the data being ingested is deemed useful (likely to go up as analytics techniques improve) but only 1% is actually analyzed. Clearly we have a long path ahead of us in the growth of data analytics, but Ms. Meeker points to some examples of companies which already have thriving businesses relying on data analytics such as Jawbone (fitness sensor devices and services) and Netflix (personalized video recommendations).

Amongst all this, Ms. Meeker rightly points out two major bumps on the road. Instant communication of individual data can help improve our world but the “potential impact to personal privacy will remain an on-going challenge.” Data analysis also has the capability to provide new actionable insights but it can “create new challenges related to individual rights.” We couldn’t agree more, but these issues have gone way beyond the attention of Ms. Meeker and us. On the direction of the President of the United States, the White House undertook a 90 day review of big data and privacy resulting in two major reports released on May 1, 2017 (more at http://www.whitehouse.gov/issues/technology/big-data-review). Privacy and rights in the age of big data now has the attention of the highest levels of government.

Of course, these issues have also reached the attention of the individuals who provide much of this data. According to a survey by the Pew Research Center, in 2009 33% of US Internet users were worried about the amount of personal information about them online and this jumped to 50% in 2013. There is also survey data showing increasing individual concern about privacy has the potential to derail any number of business models and policy initiatives (see http://www.intertrust.com/blog-other/2014/4/28/americans-privacy-concerns-growing-threatens-new-business-models).

One conclusion we think this all points to is a pressing market need for effective technologies to help individuals protect their privacy. This should be a large market, but a major question still needs to be answered, who will pay for it? Currently, much of the onus seems to be primarily on the consumer to understand and manage the wide variety of privacy policies of the Internet tools they commonly use, which is particularly burdensome given the wide variety of powerful business interests arrayed to gather and use their personal data.  It would seem to be an enlightened choice for these businesses to invest further in privacy related technologies to avoid even further governmental regulation and customer backlash.