Solved How do they make money?

From my reading, if you opt in, Microsoft uses your interests and activity patterns for advertising purposes and does not sell your private content, OneDrive files, or personal documents.

No talking particularly of backup software but generally on any kind of free software, there are quite a few income chanels possible. To name a few:

- The developer offers a free and a paid version, with the free one limited on features and heavily advertising the paid one. Chances are that the existence of the free one drives sales up.
- The developers puts one free program with a few other paid programs, specially if on the same business. Again, the free program advertises the developer and chances are if you like the free one, the other things can be more attractive.
- Put advertisments on websites, like Google ads or similar banner programs, promoting unrelated things. Those pay the site per visit and having a free offer certainly drives impressions up.
- Put advertisments on the program itself. A nastier version of the above is to embed ads within the program and display them while using it, again earning money for each use of the program. Current versions of Windows do this bad practice for example.
- As said in the thread, collecting and selling user data (with or without permissions or consent) is another possible (shady) income source, greatly helped by the fact that desktop programs have far more reach than webpages.
- Many small and open source projects ask and accept donations from users to help found their operations
- It uses the free program as a proof of concept for a bigger, paid program. Within a company it's frequent to reuse code so a free program on the wild effectively acts as a test bed for the next one, substantially lowering costs.

Tasmania Green said:

But it takes money to run the servers, buy new equipment, etc.

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Certainly, but that's not that big costs as you may think. The servers are very likely a normal webhosting (basically a rented server) that for non-massive program should be affodable with sales, and for equipment there are few things a developer may need to buy, namely a few computers, which is a one-time spending and often done very early on. Once you've got a stable product, software developers have surprisingly little costs compared to the potential revenue, while the bulk of cost is upfront.

There is also a chance that some programs are free because the developer is not interested in raising money from it, but rather get credit, being done as a hobby project or even an internal tool that becomes public. Not every piece of software out there is out to make their owners rich.

echo2446 said:

There’s nothing stopping companies from selling PAID users’ data either — take Avast (in the past) as an example.

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Yeah, it's called double dipping. What's particularly onerous is when they still show ads, just not as many of them as you would using the free version. I try to avoid dealing with sh*tbag companies that do that as much as possible.

They're about as trustworthy as lawyers and used car salesmen.

echo2446 said:

So in a sense, MANY products on your computer could potentially share or sell some kinds of user data. Privacy laws, contract law, and false‑advertising rules can deter or restrict that behavior, but some consumer agreements allow broad data uses and can be amended by companies (subject to notice requirements and legal limits in many jurisdictions).

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It's all a matter of if you're willing to live with that or not.

TraderGary said:

At least Microsoft tells you, right up front, that unless you opt out, that's exactly what they're going to do!

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And I tell Microsoft that I'm gonna try and block as much of that as possible. They may not care about it, but I do.