How those free apps on your phone make money

www.nytimes.com

A NYTimes investigative report showed exactly how at least 75 companies receive precise location data from those innocent-looking apps on your phone that you've once trusted to give you local news, weather, and online friends. Companies like IBM (who owns the Weather Channel’s apps) and Foursquare (which is a location marketing company disguised as social networking app), analyze or sell your data with advertisers, retail outlets and even financial firms who are looking for insights into consumer behaviors.

So how do advertisers even get my data? For example, these free apps that provide you with traffic alerts, local news, or even weather (like the WeatherBug app), have highly sophisticated location-sharing codes that tracks your phone about every 20 minutes logging data on everywhere you go. The data collected by the WeatherBug app is then sent to ad companies who analyze that data to know your exact daily routines and habits such as: where you go to work, places you stop for food or coffee, stores you walk into, gym or health habits, etc. Then a very personalized ad pops up on your phone, based on your own personal deep habits, and you’re thinking to yourself “how the f**k do they know I needed Weightwatchers?” Companies can also use the information to count/analyze foot traffic on people who work on a factory floor, or going to a retailer’s stores, or at schools. Google’s Android system was found to have about 1,200 apps with location-sharing code, compared with about 200 on Apple’s iOS.

But why should I even care if my data is sold to advertisers? App developers “make money by directly selling their data, or by sharing it for location-based ads, which command a premium. Location data companies pay half a cent to two cents per user per month.” Google and Facebook both collect the data from their own apps and sell targeted ads across the internet, while using location services to track whether the ads lead to sales at physical stores. So even though that social media app and weather app is free to you, somebody else is paying the app makers to get your data, and selling your data to retailers and businesses who have specifically targeted you, and you then end up picking up the tab in the form of a successful retail purchase. That’s like being invited as a free VIP to the best NYE party, then you end up paying the entire party bill at the end. Welcome to the location data economy. Here’s a handy guide if you want to control the amount of data companies collect about you.

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