It’s a cliché of the modern internet data economy to say that if you are not paying for something online, you are the product being sold. Companies like Amazon, Google, and Facebook have built massive data-driven businesses by turning their customers into the suppliers of their most important product — data.
Despite attempts to recalibrate that relationship, particularly in Europe through regulations such as GDPR, consumers haven’t shown much willingness to change their behavior, even if they are concerned about how their personal information is being used. The lure of convenience and low-cost services are simply too great.
To overcome these obstacles, a new German startup called Polypoly (in contrast to “monopoly”) has launched a multi-pronged scheme that aims to reset the relationship between data-hungry enterprises and consumers by creating a new set of economic and technological incentives. The plan mixes elements of distributed computing, a data exchange platform, and a nonprofit association to create a system that motivates enterprises and users to act as partners in managing privacy and data ownership.
“We are creating data, whether we want to or not,” Polypoly cofounder Thorsten Dittmar told VentureBeat in an interview. “There’s not going to be a change where we stop creating data. So we need different incentives.”
New data incentives
Other companies have tried various versions of privacy-focused processing. Apple, for instance, has been critical of data abuses by other companies and designs many of its devices so data is processed locally rather than in the cloud. In particular, the company has been focused on developing AI that runs on devices. In 2016, Paris-based Snips launched a privacy-driven AI app that scanned all the data across the apps on a smartphone to deliver insight about the user, though Snips never gained much traction.
Polypoly is trying to take a more comprehensive approach in order to attract users and enterprises. The goal is to make respecting privacy a cheaper and more economically effective option for companies, one that outweighs the economic drive to hoover up as much data as possible and lock it away from consumers. To do that, Polypoly has created three structures: a foundation, a data cooperative, and a for-profit company.
These three pillars are designed to offer a new data deal. Enterprises can harness the unused computing power on edge devices as a way to lower the capital costs involved in constantly expanding and maintaining data centers. On the other side, users would effectively rent their computing power while also keeping all of their personal data locally on their devices.
At the core of this system is a technology called the polyPod, an application that creates a decentralized network for computing. Consumers can download it as an app that runs on their devices, including laptops, smartphones, tablets, and connected devices. Dittmar said polyPod will take advantage of advances in edge computing and the rollout of 5G networks.
“All of us have an iPhone or something similar that is basically a small supercomputer,” Dittmar said. “These supercomputers are made in a way that it is able to handle peaks. So if you want to unlock your phone with your face, that really needs some computation. But that happens very rarely. So on average, you’re using 4% of the computing power. If we are able to use 1% of the computing power of devices across the world, that would be more computing power than Google has.”
Via the polyPod, users grant permission to other applications and the processing of such data remains local on the phone. This means the company behind the app doesn’t get to add that data to a centralized server. Dittmar believes those companies will see big savings on computing infrastructure, part of which would be passed on to the polyPod end user. Keeping the data local and on devices also offers another potential cost saving in terms of avoiding many data compliance rules.
The technology underlying the polyPod is owned and managed under the cooperative structure. Anyone can use the application for free and potentially be eligible for some compensation. But they can also buy shares in the co-op to become a member, starting at €5 for one share up to €500 for 100 shares.
Each member gets one vote in any policy decisions, but more shares make them eligible for more profit-sharing at the end of each year. The co-op manages relationships with enterprises, which pay in a small portion of their savings on capital costs. Dittmar estimates this could result in profit-sharing that nets the average polyPod user as much as $250 per month.
Each country needs to have its own cooperative structure, ensuring that the data structure conforms to any local laws. This is where the foundation comes in. The foundation will offer guidelines and best practices for setting up co-ops in each country, Dittmar said.
As for the for-profit part, Polypoly will offer services to help companies adapt their enterprise IT structures and leverage the distributed computing network, as well as conceiving of other possible services using this alternative computing architecture.
A win-win for privacy?
Aside from the monetary incentives, Dittmar is banking on the appeal of other intangible benefits. For consumers, there’s the satisfaction of knowing that their data remains under their control. They can also continue to monitor it closely and ensure it is accurate. Dittmar points out that inaccurate consumer data can have a range of consequences.
“That’s really very frightening because you have all these algorithms, which are doing credit scoring calculations for insurance or credit scores, and they are based on data that you don’t know about or that can be completely wrong,” Dittmar said.
Over time the personal data stored in the app will be able to generate insight for users by mining data across all their applications.
“You get a completely unique point of view of you,” he said. “The user interface of Facebook is basically a compromise between what is acceptable for you and what is good for their business model. So something you would like to have but that is not serving their business model, that is something they will never do. Why should they?”
For companies that join the ecosystem, users may be willing to share more data — including in sensitive areas like health and finance — if they know the algorithms designed by companies are being sent to their phones to process locally rather than in the cloud. Dittmar said Polypoly wants to help enterprise partners innovate around new services they could provide based on such data, which in many cases the company would never otherwise request because of the risk of legal liability.
Dittmar said the Polypoly team has been developing the technology for several years but got slightly delayed this year when he and others temporarily broke away to work on COVID-19 tracing apps. But the first Polypoly co-op finally launched this month, and the plan is to release the polyPod app in early 2021.
With data creation surging, Dittmar is optimistic that polyPods will be able to impact consumer and corporate behaviors in ways that laws and regulation alone have so far failed to do.
“The economy needs data to optimize processes,” Dittmar said. “But the struggle has been people saying you can have data privacy or you can have these services, and that you have to balance economic interest and privacy. That’s wrong.”