Privacy-focused startups see boon in big tech's troubles

by Umberto Bacchi | @UmbertoBacchi | Thomson Reuters Foundation
Tuesday, 9 November 2021 15:09 GMT

People look at data on their mobiles as background with internet wire cables on switch hub is projected in this picture illustration taken May 30, 2018. Picture taken May 30, 2018. REUTERS/Kacper Pempel/Illustration

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Advert-free web browser Neeva and encrypted email provider Proton are among a growing number of privacy-oriented startups that stand to gain as regulators target tech giants

By Umberto Bacchi

LISBON, Nov 9 (Thomson Reuters Foundation) - The leaks and controversies plaguing tech giants are driving users towards privacy-focused startups that are bidding to shake up the online market with a little help from regulators, company executives and digital rights experts say.

Last month, a Facebook whistleblower leaked documents she said showed the social media company chose profit over user safety - the latest in a series of damaging revelations about big tech that smaller rivals say are helping them to grow.

"Tech companies are making our job easier," said Andy Yen, chief executive of Proton, a Swiss-based company that calls itself the world's largest secure email provider, using end-to-end encryption and sophisticated security features.

"This pursuit of higher and higher profits at the expense of users is driving people to seek alternative products and services with values that are more aligned with their own," he told the Thomson Reuters Foundation.

Founded in 2013, Proton reached 50 million users worldwide this year.

That is still a drop in the ocean compared to larger rivals - Google's Gmail boasts 1.5 billion active users - but Yen said it demonstrated a shift in users' priorities.

Proton is among a clutch of tech companies that have sprung up over the last decade promising to protect users' privacy - from scrapping targeted online ads to shunning personal data collection.

Some have thrown in additional perks. Germany's Ecosia, a nonprofit search engine, uses revenue from advertising revenue to plant trees, while its French peer Lilo funds social and environmental projects picked by users.

Most are experiencing a surge in their userbases.

Encrypted messaging app Signal saw "unprecedented" growth this year, after Facebook made a controversial change in the privacy terms of its WhatsApp messaging platform.

U.S. web browser DuckDuckGo, which does not track users, reported an average of almost 100 million daily searches in October, up 38% year-on-year.

European counterpart Qwant, which the French government uses as its default search engine, similarly reported a 34% increase in searches last year, while rival Brave said its users almost doubled to 36 million in the 12 months ending in August.

A 2020 survey by data privacy firm Transcend found 93% of Americans would switch to a company that prioritises privacy if given the option.

Still, privacy-oriented services face an uphill battle in challenging tech giants - one that can not be won without help from regulators, said Diego Naranjo, head of policy at advocacy group European Digital Rights (EDRI).

"(Change) will not happen at the hands of the market," he said by phone.

Big Tech critics say Apple and Google's dominance of mobile phone operating systems, app stores and web browsers makes it difficult for competitors to emerge.

'TERRIFYING' COMPETITION

Sridhar Ramaswamy used to head Google's advertising division, but after growing disillusioned with ad-laden search results, he co-founded ad-free search engine Neeva.

He said just getting in front of potential costumers was a challenge for startups.

"We feel good that we are able to create a better product (than our rivals)," Ramaswamy said in an interview.

"(But) I feel a little terrified about making sure that people have reasonable choices for being able to pick products like ours on mobile."

Yen, Ramaswamy and others are optimistic about the potential impact of regulatory initiatives that have been launched around the world.

In 2018, the European Commission levied a record 4.24- billion-euro ($5 billion) fine on Google for unfairly using Android to cement the dominance of its search engine and ordered it to ensure a level playing field for rivals.

Yet, urging EU lawmakers to act, DuckDuckGo, Ecosia, Qwant and Lilo said in October they had yet to see positive results from the ruling.

The EU is also considering whether to force phone makers to let third-party software be installed on their devices from outside official app stores - something Apple contends would make phones the target of malware or cyber-hijacking.

And in August, South Korea banned major app store operators from forcing software developers to use their payment systems, effectively stopping them from charging commissions on in-app purchases, with a similar law being discussed in the United States.

MONEY AND DATA

Not all regulatory changes are good news for the privacy-focused firms, however.

Tech companies have come under increased pressure in some countries, most notably China and Russia, to store data locally and share it with authorities, something Yen said was a "threat" to Proton's model.

"We may do less business in these countries, but it's really a matter of principle," said Yen, whose company has been banned both by Beijing and Moscow, adding that requests for user data were becoming more common elsewhere, too.

Proton recently faced criticism after police said it had provided the IP address of a user in a French investigation that led to the arrest of climate activists.

The company said it was forced to comply with the request from Swiss authorities.

While some apps are free, others ask users to pay a subscription fee, which has raised concerns that privacy could become a luxury reserved for people who can afford to pay for it.

Neeva and ProtonMail charge users about $5 a month, although the Swiss firm also offers limited-use free accounts.

But Ramaswamy rejected the notion that free online products are more egalitarian, saying they tended to serve the interests of big companies and advertisers more than users.

"Important online services like search and even social media should function like the water that comes out of our tap. They should be low-cost and they should be worry-free," he said.

"This is the decade where people will realise that they do enough things online that paying for some of these services, in exchange for the peace of mind that comes with it, is an okay thing to do."

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(Reporting by Umberto Bacchi @UmbertoBacchi; Editing by Helen Popper. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

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