Why Personal Data Needs to Be Free (or the Issue with Platform Risk)

Similar to the gap between opensource and hosted services, the data section of the stack can be broken into two separate groups:

  • “Personal data” or data tied to an individual
  • “Public data” or data about a company, location, etc

Today, much of this personal data comes from application layer sources – Facebook, Twitter, Linkedin – the big outlier being Hunch, while public data tends to come from a pure data provider – SimpleGEO, Retailligance, Infochimps.

In general – data companies make their money by charging someone for access to the data.

Pulling from our list above – SimpleGEO and Infochimps make money by charging developers for API calls to their data.  On the other end of the spectrum, Retailligance generates revenue by charging enterprise clients to include their information in the database – developers can then access all of the information for free.

But how does this work on the personal data side?

Facebook is both an application and a data layer.

It makes money primarily on the application layer – owning a user on the site and leveraging their social & personal data to better target ads.  However, if their core asset on the platform is my data, their incentive is no longer to keep me happy with openness – but rather to keep my data locked-in their walled garden.

This puts them at direct odds with the developers who want to build on the Facebook platform – Facebook isn’t about maintaing data – its an application layer that just happens to control my data.

The issue (which we’ve seen very distinctly with Linkedin at an extreme until very recently) is that you can’t create a vibrant developer ecosystem without having incentives correctly aligned.   As a developer – I know how SimpleGEO is going to behave.  With Facebook, Linkedin, or Foursquare – I live at constant risk to being upended by the very platform I’ve tried to build upon.

For the next generation of web applications to exist, we need a personal data source that sits below the application layer represented by Facebook, Twitter, and Foursquare.  We need a data store that each individual user can control and that developers can feel safe building on top of knowing that they won’t get pushed out of the way by the application / data provider.

I’m not sure what that looks like yet – I’m betting on the mobile address book or a payment system leading the charge – but when data is free for developers, get ready for the real renaissance of social apps.

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I work for True Ventures, an early-stage venture capital fund with offices in San Francisco and Palo Alto. We partner with promising entrepreneurs at the earliest stages in the technology market providing hands-on management support to guide our portfolio companies through the challenges of early growth.