In Giveaway of 10,000 PCs, the Price Is Users’ Privacy
Personal computers have become so mainstream that it was only a matter of time before companies would offer to give them away like so many cellular phones or Thanksgiving turkeys.
That day is today.
A Pasadena firm is set to announce that it will hand out 10,000 free Compaq computers--and hopes that demand will warrant eventual distribution of up to 1 million PCs.
What’s the catch?
The recipients will be asked to pay what many would consider an unsettling price: personal privacy.
Free-PC.com is offering computers to people who are willing to share their age, income, hobbies and other personal details that advertisers covet. In exchange for the free computer, recipients must agree to let the company monitor how they use it--including what they buy and where they go on the World Wide Web.
“They’re offering a Faustian bargain here,” said Evan Hendricks, a privacy advocate and editor of the newsletter Privacy Times. “Everyone has to decide for themselves what’s more important: a free computer, or what people learn about their lives from that computer.”
If the idea catches on with other companies, more low- and middle-income people would have an opportunity to gain access to the Internet--an issue that stands in the way of making the Internet a true mass medium.
Free-PC.com’s proposition is made possible by unexpectedly rapid growth in electronic commerce combined with plunging PC prices. The company will spend $500 on each computer it gives away, but it expects to make that money back--along with a considerable profit--by selling targeted ads that will run along the side of the computer screen.
“Not everybody will put up with that,” said Bill Gross, the prolific Internet entrepreneur who came up with the idea for Free-PC.com a few weeks ago. But for many people, he said, “it’s an exchange they’re willing to make.”
Distribution on First-Come Basis
The first 10,000 PCs will be distributed on a first-come, first-served basis to adults over 18 with credit cards who sign up at the company’s Web site, https://www.free-pc.com. The application form asks for a name and address, and includes questions about marital status, children, income, hobbies and computer use. Gross said he plans to start shipping the PCs within 90 days. Recipients will be able to keep the computers as long as they use them at least 10 hours a month.
The PCs, while not top of the line, each sport a 333-megahertz processor, a 4-gigabyte hard drive, 32 megabytes of RAM, a modem that processes 56.6 kilobits of data per second, a CD-ROM drive and a 14-inch color monitor. They also come with Windows 98, a word processor, financial management software, a Web browser and free Internet access.
Unlike other PCs, these units will display a strip of ads more than an inch wide that can never be removed from the right-hand side of the computer desktop. Free-PC.com has the power to change ads when the user logs onto the Net.
Ads are tailored to customers based on the information Free-PC.com collects when they sign and as they use the computer.
Gross said Free-PC.com is most interested in customers’ responses to the ads--they can make purchases with a few simple mouse clicks. But the company will also be able to track other computer use, including Web surfing. A small activity file on the computer’s hard disk will store that information and send it to the company whenever the user logs on to the Internet. (The computer will automatically dial into Free-PC.com’s computer once a week if the user fails to log on that frequently.)
“We won’t share anyone’s personal information with anyone, period,” said Don LaVigne, Free-PC.com’s chief executive.
If people aren’t comfortable giving a company access to their personal information, they don’t have to sign up for a free computer, Gross and LaVigne said.
Still, the proposition is raising eyebrows among privacy advocates who say it is easy for companies to use new technology to keep tabs on individuals and then profit from the personal data they collect. People are generally unaware of how much a company can learn about a person by watching their computer use, they said.
“They will be able to see what Web sites you go to, what items you bid for at auction and what newsgroups you go to,” Hendricks said. “That profile says a lot about you, and they will have full control of it.”
And although Free-PC.com promises to keep the information to itself, there is no guarantee that it will stay protected forever. If the company is bought, its new owners could feel differently about sharing the information. Or it could be subpoenaed in a child custody dispute, privacy advocates said.
“You may come down with a serious medical problem and visit chat rooms and Web sites where you seek support,” said Beth Givens, director of the Privacy Rights Clearinghouse in San Diego. “Do you want that information ever getting into the hands of an insurance company or an employer?”
Privacy issues aside, the prospect of a free computer won’t appeal to everyone.
“There are still a great many consumers who wouldn’t want a PC even if you gave it to them,” said Richard Shaffer, head of Technologic Partners in New York. “It’s really not all that easy to use, and much of the content on the Internet is far from compelling.”
Other Companies Could Follow Suit
But if the prospect of a free computer appeals to enough people, other companies could follow suit, analysts said.
For example, Internet access providers such as America Online could boost business by giving away PCs and collecting revenues from ads and e-commerce, said Chris Shipley, editor of the industry newsletter Demo Letter.
Gross says he would like to target households that would like to have a computer but can’t afford to buy one. But ultimately the computers will be distributed to people in the demographic groups that advertisers want to reach, and they may be the people with so much disposable income that they can afford to buy a computer.
Today, ads on the Web are geared toward consumers with higher incomes. But LaVigne said he expects that to change once people with less money start logging on in large numbers.
“Individuals in every price range and income bracket are consumers,” Shipley said.
Even if the free-PC pioneers are right about the potential demographics change of PC users, the project still poses troubling questions for privacy advocates.
“If this turns out to be more of a draw for low-income people, it will drive home the point that privacy is viewed as a luxury that people with money can afford and not as a right that everyone deserves,” Hendricks said. “I don’t think that’s the direction we want to take our country in the Information Age.”
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