Stripe Chief Operating Officer Claire Hughes Johnson on Sunday took aim at the internet economy’s overreliance on advertising, saying that the consolidation of online power into a few hands has led to “unintended consequences.”
During a keynote address at Money20/20, a financial-technology conference in Las Vegas, Johnson told the audience that if the internet economy (excluding Amazon.com Inc. AMZN, -0.38% ) were a standalone country, 75% of its gross domestic product would be advertising.
Johnson, who formerly worked for Alphabet Inc.’s GOOGL, +0.66% advertising business, criticized the way ad-driven businesses handle user data. Many consumers aren’t aware of the privacy they give up when they use free services, she said, and the problem is especially pronounced in certain emerging markets where web access is traded for data.
Developed economies also have issues of data misuse, which have culminated in recent high-profile instances such as Facebook Inc.’s FB, -0.56% Cambridge Analytica scandal. Not enough is being done to fix these systematic problems, she said.
“Actions meant to combat the ill effects have led to a reduction in innovation overall,” Johnson said, citing the European Union’s General Data Protection Regulation, or GDPR, intended to better protect user privacy online. “Larger incumbents can weather these more effectively. It’s incredibly concerning.”
Such ad-heavy approaches “are not realizing the promise of the internet,” Johnson told MarketWatch, which was to break down information borders. She said that the companies that are going to create a “vibrant GDP of the internet” are platforms that help small- and medium-size businesses reach more customers since there’s historically been a developer “access gap.” Many small companies aren’t capable of building from scratch the sorts of sophisticated online tools needed to effectively compete on the web, according to Johnson.
Her talk came a month after privately held Stripe announced a $245 million funding round that valued the company at $20 billion. The company said at the time that it planned to use a chunk of these new funds to further its international aims, particularly in Asia.
