Personal information is more valuable than ever, with the data broker industry expected to reach $365.71 billion by 2029.1 It’s a rapidly growing and evolving sector, the inner workings of which are often mysterious. Many internet users may not know exactly who is capitalizing on their data.
TrueGuardian’s research team analyzed 623 data brokers registered in California and discovered that the data broker industry is consolidating as it begins to form networks and chains of both ownership and information trade. Digging further, we were also able to identify some interesting trends that could give us insights into the current state and future of data privacy in the US.
In business contexts, consolidation is the acquisition or merger of many smaller companies in the same or related industries into several larger ones. This enables companies to reduce costs, streamline operations, and expand their market share by acquiring or merging with other companies in the same or related industries.
The data broker industry is no exception. Besides expanding their customer base and enhancing their offerings, consolidation allows data brokers to gain access to new data sources, something that many brokers emphasized in press releases about their acquisitions as part of their main business focus. But this process raises some concerns, the first being security. The sharing of data might allow more opportunities for data breaches. In fact, two of the companies that own the most data among those we analyzed (TransUnion and Equifax, with 9 and 8 brokers owned, respectively), have each experienced at least one data breach. Unfortunately, they aren’t alone.
Consolidation could potentially have political implications as well, with some studies suggesting that consolidation can increase the political power of corporations. One study, for example, found that the consolidation of the banking industry in the United States led to increased political contributions and lobbying by banks.2
Consolidation in the data broker industry doesn’t appear to be too far along, however. According to the Harvard Business Review, there are four stages in the consolidation life cycle of an industry.3 While it’s difficult to say with certainty, based on the 623 data brokers we analyzed, the data broker industry appears to be entering stage two of this model – scale buildup. While there is still a significant amount of fragmentation in the industry, with many small players providing niche services, larger companies are starting to emerge as dominant players in the space.
With that in mind, we were able to identify some of those dominant players in the data broker industry. We found that 53 (8.5% of all) California-registered data brokers are owned by just 12 companies:
What’s more, 147 (23.6%) of the 623 data brokers we looked into are subsidiaries of other companies. A total of 95 companies own these brokers, of which:
Interestingly, we didn’t find any correlation between a data broker’s revenue and the number of subsidiaries it had.
The average acquisition price of a broker was 33% of the acquiring company’s revenue. Among the acquisition prices that were publicly disclosed, the highest, relative to revenue, was paid for Neustar by TransUnion (84% of their 2022 revenue). The second-highest ratio was paid by Moody’s Corporation (59% of their revenue). In stark contrast, Experian’s acquisition of Tapad had the lowest price-to-revenue ratio at just 0.04 (4%).
It should be noted that Epiris was excluded from the average acquisition price-to-revenue ratio calculations due to its business model as a private equity company.
For the 623 data brokers we analyzed, the consolidation process, including 24 recorded acquisitions, took place between 2006 and 2022. It’s worth noting that the data for 11 registered brokers was not available, either because no acquisitions took place or the information was not made public.
The period of greatest activity, however, occurred between 2019 and 2022, with 16 out of the 24 (66.7%) recorded data broker acquisitions taking place during that time. In fact, almost all the acquisitions, except for some made by Equifax, took place after 2017. From 2017 onward, data broker acquisitions accrued at an average of 3.5 per year.
2020 was also a notable year, with 5 out of the 6 companies we investigated or their subsidiaries acquiring at least one data broker.
The data brokers owned by the 6 companies that have acquired the most brokers operate and serve customers in a total of 8 industries.
The data brokers falling under Equifax operate in 7 of the 8 industries, the widest range we were able to observe. Moody’s Corporation and Epiris followed closely with their brokers spanning 6 industries. Meanwhile, the smallest variety of only 4 industries goes to brokers owned by DiscoverOrg and TransUnion.
The most common industry, by far, is technology. As many as 20 out of 35 (62.5%) brokers provide custom analytic tools and software to their customers, followed by 50% of brokers that provide their clients with solutions and consultations.
Taking the last spots are education, healthcare, and real estate, operated in by 1, 2 and 3 brokers, respectively. Only IXI Corporation (a subsidiary of Equifax) and Experian Health (an Experian subsidiary) operate in the healthcare industry, while the only one that operates in education is BoardEx (a subsidiary of Epiris).
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