The stunning $19bn Facebook paid last week for messaging service WhatsApp has made all of the headlines. But tucked away in the announcement of the deal is an interesting comment from founder Jan Koum: "You can continue to enjoy the service for a nominal fee … you can still count on absolutely no ads interrupting your communication."Facebook has built its $173bn market valuation around profiling its users and showing them targeted adverts. It has refused to allow users to subscribe with money rather than personal data. Might even Mark Zuckerberg be coming around to the value of privacy? After insisting for years that it was a sign of duplicity, he decided last month: "If you're always under the pressure of real identity, I think that is somewhat of a burden."The business models of internet giants such as Facebook and Google are crucial to the future of privacy. If these services make all of their revenues through tracking and profiling customers, their technology will be designed to gather as much personal data as possible – including websites visited, locations looked up on maps and visited with smartphones, and identities of friends and colleagues.Since 2012, Google has been battling with European data protection authorities over a change to its privacy policy that allows the company to combine user data from all of its different services. Despite a recent fine of €150,000 from the French privacy agency CNIL, it is showing no signs of reversing this.It's quite possible for social networking and messaging applications to be designed differently, to give users meaningful control over their data. Before Microsoft bought it, Skype used to route calls directly between its users, making money from calls made outside its network to standard telephones. Societies that wish to protect privacy in the internet era need to find ways to encourage technology companies to take these alternative business models and technical designs more seriously.Aren't people getting a good deal from the advertising-supported services that dominate today's internet? An industry-commissioned study estimated that this ecosystem contributed $530bn to the US economy in 2011.However, people are often unaware of how much data is being gathered about them – let alone the purposes for which it can be used. A 2008 study found that the privacy policies of the 75 most-visited websites took on average 10 minutes to read, and the average internet user visited 119 unique sites each year. Very few people are spending 20 hours every year reading privacy policies.Most privacy risks are highly probabilistic, cumulative, and difficult to calculate. A student sharing a photo of over-exuberant exam celebrations might not be thinking clearly about the risk a photo could be seen by a future interview panel. Or that the heart-rate data they share today from a fitness gadget might later reveal a higher risk of heart problems. Or that combined, this data might fit the profile of a high risk-taker – with all the implications that could have for future employment, insurance and financial services decisions.These are low-probability but high-impact risks. Four decades of behavioural economics research has shown that most people are bad at making decisions trading immediate benefits – such as polishing your reputation with your university friends or running club – against uncertain, delayed costs, like future difficulties getting a mortgage.Even individuals with strong privacy concerns have limited options when it comes to finding privacy-friendly alternative internet services. New software is expensive to write, but almost free to run. It can be difficult for users to transfer their data from one service to a competitor. And if all of your friends are on one social networking service, you probably want to be there too. These effects all tend to favour incumbents in information industries. And indeed, in Europe Google has about 90% of the search market, while 71% of online Americans use Facebook.Since the 1980s, computer scientists have been developing methods for designing privacy into new technologies and systems. One of their most important principles is data minimisation. This means very carefully limiting the collection of personal data to that needed to provide a service – rather than storing everything that can be conveniently retrieved. Access to data should be limited within organisations, ideally held by the individuals it relates to, and restricted using encryption. And once personal data is no longer needed, it should be deleted or anonymised.A simple example is the targeted adverts that lead to so much personal data being collected. With UK and Hong Kong colleagues, I designed smartphone software that selects adverts to show to users based on their browsing behaviour, without notifying advertisers of individual interests. The system works especially efficiently for location-targeted adverts – for example, offering a discount at a local shop. And when a user clicks on an advert, an anonymous report is sent to the advertising network, which can claim payment from the advertiser without identifying the user. Unlike existing behavioural advertising systems, users' profiles are kept under their control.How to encourage companies to develop these kinds of privacy-protective services? Unless Zuckerberg has had a truly Damascene conversion, it is unlikely Facebook and Google will lead the way, as their profits are so dependent on collecting user data. It is difficult for competitors to break into these markets, and most users are unwilling to become digital hermits.For societies that are serious about protecting privacy, it may be that legal pressure is also required. A proposed new EU privacy law would provide just that, and would apply to all companies providing services to European citizens. But thanks to opposition from Britain and several other governments, it has stalled. If we want online privacy to be better protected in the next decade than it has been so far, we need Europe's governments to pass this law as a matter of urgency – and put pressure on internet firms to use their engineering genius to protect our privacy, not invade it.(theguardian.com)ANN.Az