How Does Amazon Determine What It Thinks You're Really Worth?

It uses your browsing and purchasing data to refine the algorithms by which it sells targeted advertising. And it uses that information to further determine how it can engineer consumers' desire to purchase ever greater amounts of what it and its advertising partners sell.

It is a self-reinforcing socio-economic digital ecosystem for optimizing monetization of your financial potential.JL  


Sidney Fussell reports in The Atlantic:

When people talk about “buying” and “selling” data, they’re using shorthand for algorithmic processes by which companies profit from user behavior. This is an imprecise metaphor. They do not sell user information to third parties—they just generate large chunks of revenue from using that information to sell targeted advertising. It doesn’t have to buy or sell user data to profit from it. And besides, these data were never really yours.Amazon will use your purchasing data to improve its targeting, slicing its user base into ever more refined categories that can then be targeted more specifically. That’s what Amazon is actually “buying”: the raw materials to supercharge its targeting. The right to privacy can’t be bought back, but it can be sold.

The owner of a coffee shop approaches you with a $10 bill in hand. It’s yours if you submit to a battery of questions: How did you hear about the shop? How did you get here? Did you walk or take an Uber? They’re simple-enough questions with simple-enough answers. Of course you take the money.

Repeat this same thought experiment again, online: Amazon CEO Jeff Bezos approaches you while you browse, offering you $10 for access to your search history so that the company can find out more about how you shop. In that case, you might have a different reaction.

Amazon’s Prime Day bonanza came with an interesting deal: If users downloaded the Amazon Assistant app to their browser, they would receive a $10 credit.

The Amazon Assistant is a browser extension, shopping assistant, and recommendation tool, all rolled into one. Hover over an item while you’re shopping on another site, and the assistant will compare the item you’re looking at with a similar one available on Amazon. Of course, when Amazon has the cheaper deal, users will likely choose that one instead. But the assistant also allows Amazon access to users’ browser data: the URLs of the pages they visit, the search terms that brought them there, search results and metadata about those pages. Amazon offered the exchange last year as well, for a $5 credit.

In a statement to The Atlantic, a spokesperson for Amazon said that the company values consumer privacy and that the assistant is completely optional. “The use of Amazon Assistant will always comply with our Privacy Policy and About Amazon Assistant Privacy notice. Amazon only collects information from websites customers view where we may have relevant product or service recommendations. We do not connect this information to a customer’s Amazon account, except when they interact with Amazon Assistant,” the spokesperson said.

When people talk about “buying” and “selling” data, they’re usually using a shorthand for any number of convoluted algorithmic processes by which big companies profit from user behavior. This is an imprecise metaphor, and companies tend to chafe at it: Amazon’s privacy notice claims that the company is “not in the business of selling” user data, and Mark Zuckerberg says the same of Facebook so often that it’s become something of a running joke.

Both corporations are technically correct. They do not sell user information to third parties—they just generate large chunks of their revenue from using that information to sell targeted advertising. Data and money exchange hands, though not directly, and with many more actors involved than just the user and the company. It doesn’t have to actually buy or sell user data to profit from it.

And besides, these data were never really yours, not exclusively. Google (or Bing or Yahoo) knows the search terms and keystrokes that led to any specific purchase. Amazon isn’t really “buying” data that you “own,” but paying for access to a data vein that other companies are already tapping.

The data exchange isn’t a typical marketplace, and it can’t be understood as such. People don’t “own” their data. Nor does Facebook or Amazon exactly “buy” or “sell” it. They gather as much as they can as an indirect but potent revenue-generating strategy.

For Amazon, the assistant credit isn’t a purchase; it’s an investment. The company is giving you a small amount of money now because, in the future, it will make much more from you. Amazon will use your purchasing data to improve its targeting, slicing its enormous user base into ever more refined categories that can then be targeted ever more specifically. That’s what Amazon is actually “buying” here: the raw materials to supercharge its targeting. Long term, it’s likely to pay dividends: Imagine logging on to Amazon and immediately being served suggestions for products in your precise size, price range, and favorite style. Now imagine that at the scale Amazon is collecting these extra data.

It’s a one-sided deal. Investing in better ad targeting doesn’t come with a concurrent investment in strengthening privacy, or in the ability to shop anonymously or be free from enhanced predictive recommendation algorithms. In fact, investing in one means losing the others. The right to privacy can’t be bought back, but it can be sold.