Tech giants under threat as online privacy for kids becomes a reality

Facebook could lose $35bn in a decade due to tighter privacy laws, says Irish tech veteran

Dylan Collins says laws such as the children’s online privacy protection Act (COPPA) in the US and its European cousin GDPR-K, which both legally prevent data capture on kids, are triggering a seismic structural change in the internet

Dylan Collins says laws such as the children’s online privacy protection Act (COPPA) in the US and its European cousin GDPR-K, which both legally prevent data capture on kids, are triggering a seismic structural change in the internet

 

Future generations will look back in astonishment at the lackadaisical attitude shown towards protecting children’s privacy online in recent years, according to a leading Irish tech entrepreneur.

Dylan Collins, who founded and leads “kid tech” company SuperAwesome, said people will see this issue in much the same way as we now view smoking or drink-driving. The issue of children’s online privacy is now finally coming to the fore, he added, thanks to increased regulations, and in the US at least, more private class actions.

“Kids growing up now will know that unlocking and releasing your personal data into an open internet where it is then shared by thousand upon thousands of companies is a really dumb idea. They will look back on our generation and think, ‘What was wrong with you people?’” said Collins.

SuperAwesome, the company he founded in 2012, is a kid-safe marketing platform that operates as a bridge for brands to reach those aged between six and 16. It operates a number of channels across physical, digital and mobile, including its “Instagram for kids” app, PopJam. Partners include the likes of Lego, Mattel, Hasbro and Nintendo.

Speaking to The Irish Times at the Web Summit in Lisbon recently, Collins said that laws such as the children’s online privacy protection Act (COPPA) in the US and its European cousin GDPR-K, which both legally prevent data capture on kids, is triggering a seismic structural change in the internet.

“I think that in the coming years there will be considerably more digital protection in place for kids because this isn’t just a localised issue. The US and European Union are pushing this currently but it is also happening in places like India and China as well,” said Collins.

‘Separate internet’

“We will essentially end up with a separate internet for kids and the right to an untracked zero data internet is eventually going to become a basic human right for them,” he added.

This will lead to far-reaching effects Collins said because the less children share their personal data at a young age, the less likely they will do so as they get older. Moreover, it will ensure there comes a time when companies realise that owning personal data is more of a liability than an asset.

All of this is of course bad news for big tech companies who have made their money from what the entrepreneur jokingly calls a “Faustian digital pact’, in which they give their services away in return for harvesting users’ personal information.

Research undertaken by SuperAwesome suggests that Facebook alone could suffer more than $35 billion in lost revenue over the next decade as kids data privacy laws remove under-13s from the social network’s addressable audience. This is equivalent to almost 10 per cent of the company’s current market capitalisation.

‘Collective gasp’

“There has been a collective gasp in the tech sector of late as companies realise that things are changing, but they still aren’t doing enough on the issue. They should be, however, because the this issue is going to turn many of the big tech giants into legacy companies because their whole business models and processes are built around personal data, and things are rapidly moving away from this,” said Collins.

A wave of research into just how dangerous technology can be for children is certainly helping to turn the tide as is the increasing number of leading tech players such as former Facebook president Sean Parker, who have voiced concerns. Nonetheless, Collins said that many companies have still yet to grasp what is going on.

“Companies in Silicon Valley have largely underestimated the political winds of change and still display the same kind of tone deafness around children that they always have,” he said.

“Think about it. If you had an alien civilisation land on Earth tomorrow, tech companies would immediately create the role of chief civilisation officer and would start mapping out how to look after them. But as it is we have the most sensitive audience in the world, one that doesn’t have a voice and which has the least protection, and yet few if any of these companies have thought of creating chief children’s officers,” he added.

Struggling

If tech companies are struggling to come to terms with data privacy for children now, then you can imagine what kind of reception Collins got when he first founded SuperAwesome.

He said he largely faced either indifference or outright ridicule from investors and techies who wondered why he was wasting his time worrying about whether kids were safe online.

“We looked at the number of kids using tablets, watching YouTube and so on, and could only see that growing. But when we started talking to people about the issue of protecting children, people out on the west coast just didn’t want to know” said Collins, who previously founded DemonWare and who is also a co-founder and partner with the $40 million venture capital fund, Hoxton Ventures.

“It was actually emotionally and psychologically very tough because so many people were telling us we were wrong during the first two or three years that it was among the toughest company-building experiences I was ever involved in,” he added.

Connected devices

Collins said the sharp rise in connected devices in people’s homes means there has never been a stronger need for digital privacy rights for children than right now.

“Back in the day no one really thought about children using the internet at all but you look now and it is usually the kids that are leading the way in terms of using smart speakers, tablets and so on and it is also them who are busy watching YouTube. So there are all these devices that were never designed for their usage now in their hands,” said Collins.

“The result is that there are thousands upon thousands of children going online on to what is essentially an adult internet and so you need new technologies to make sure they are kept safe and anonymous,” he added.

SuperAwesome, which employs about 120 people globally, now reaches more than 500 million unique users each month. It was valued at $100 million earlier this year after recording a profit for the first time and is forecasting 100 per cent growth for 2018 with its revenue run rate expected to almost double to $50 million.

“We started the company to build the technologies to provide a safe standard of digital engagement with kids. Our growth is a reflection of how serious the issue is now being taken,” said Collins.

Market listing

He confirmed SuperAwesome is looking at securing a market listing, which he said would enable it to do even more to make the internet a safer place for children.

“We have laid out a plan to potentially take the company public over the next 24 months. If you look at the scale of what needs to be done in this space then going public gives us a lot more scope to achieve our goals,” he said.

Collins isn’t one for boasting and even laughs at the suggestion that he could now easily confront all those naysayers who thought he was on a hiding to nothing with SuperAwesome. But, nonetheless, he’s also not shy about stating how the company is at the forefront of the drive to ensure greater online privacy for kids.

“We are putting all the ingredients in place for children that are growing up to think radically different about data privacy,” he said.

“The bigger we get, the safer the internet becomes for children,” Collins added.

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