credit: Nina Matthews Photography

After Barcamp Seattle and the Privacy Identity Innovation Conference (pii) I am struck by one painful truth about business and technology: All economic incentives favor inefficiency.

I gave a rant-style presentation at Barcamp titled “Your Product Sucks.” The central premise of the talk was that you have a single value to any given customer; either you fulfill it, or you suck. No matter how you strive you will not fulfill every customer need. The customer doesn’t care if you fail; they only care if you fail them.

pii focused on how we protect, legislate, and value personally identifiable information. There was an ongoing current of how people self-report and transport personal information through social media platforms like Facebook and Twitter. The introduction of Facebook Places has created an interesting problem: in order to differentiate from the existing self-report location services, Facebook has introduced other-report location.

During a screaming match passionate discussion I realized that Facebook Places is the continuation of a regular cycle. There are countless businesses that hemorrhage value. Every missing feature means money, every loose piece of data means money, and every support system means visibility.

“Broken” products and services create secondary and tertiary economies that become sustaining for the cycle and the starting product.  Think of tracking programs, cell-phone cases, and demographic data.

Two of the major secondary economies online are the protection of personal data and the reclamation of reputation space.  PayPal and Google Checkout both provide “security protection” by creating an intermediary between your bank instruments and online sellers. This comes at the expense of your credit data and personal data being centralized, the intermediary charges you for the transaction, and they keep a log of your transactions.

Think about that. Logging is a cost. The frightening truth is that there are very few laws about your information. Once people have the information there are few ways that they can’t use it. People can’t charge things to your credit card, but they can sell your e-mail address, home address, and what you like to purchase.

Every time you see information about who buys what, who uses a specific service, or any other identification of a demographic, is in an indication that information has been sold.

Facebook is a prime example of a business that takes advantage of the broken cycle they offer a clear function, connecting your online presence with your friends, but at the cost of sucking at privacy and security. They leave companies like Reputation Defender to clean up after the mess that Facebook “privacy settings” leave in their wake.

Read this infographic to see more data on how Facebook, Google and Apple use your data.

I strongly suggest that you visit the privacy settings at your free products and remember that your personal data is part of what these companies make money from.