Jack Dorsey on his “most important contribution to the internet”
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The only way i see this perhaps working is via governmental, rather than private market forces. Though web5 may indeed be useful both in the implementation of any such law, as well as providing motivation for its enactment.
Does this have any mechanisms for safely storing sensitive data on the network?
The answer to walled-garden internet institutions isn't amalgamating all your personal data into one database so the walled-garden vendors can more easily grab that data. It's decentralisation and diversity (as in more choice) of vendor. Once again a Silicon Valley / venture capitalist darling fails to understand what data privacy means, and just bundle up their latest data grab in a shiny marketing package.
The reason people blindly say ok to every permission popup is because there's no incentive to say no. So yeah, your concern makes sense now but it might not in a "web5" world. I can guarantee any app saying "please give us all your data to use this" would get btfo'd very quickly in a world where people can use their data as leverage.
Technology influences behavior and mindset, and I think this particular idea might be a good influence. It's certainly better than what we have now where every service simply takes all your data or buys it from other companies.
My primary concern is data integrity; is storing the data on the global network good enough to disincentivize apps from scraping local user data with their own tools? What would stop an app from using the protocol and also maintaining its own database? Is that actually part of the deal? For example: Bring data from other apps to this one, and you can access a set of features. This app will now mine new data to put back into the network?