“Privacy is dead – get used to it!” This is the common wisdom you’ll hear if you spend much time hanging out near Silicon Valley, reading about the latest application of predictive analytics to improving customer loyalty, or following the most recent start-ups who are busy wiring up every corner of the world to the growing Internet of Things. I spend my time doing all those things, but I don’t accept the common wisdom – I want to explore with you why I believe that reports of the death of privacy are much exaggerated. And I want to explore how there may be viable and differentiating advantages for organizations to pursue a different path.
The Data Economy
It’s clear that we’re living in a burgeoning data economy and that this economy is driven by technology. Moore’s Law rattles on apace and in its wake new generations of devices and sensors are making more and more areas of the physical world addressable by compute. We’re experiencing a self-enforcing cycle: advances in technology extract ever increasing oceans of data from the world and its inhabitants; this data is used to tailor ever better digital products and services; these improved products in turn generate more profit which is then funneled back into R&D to drive new technological advances and so the virtuous techno-utopian cycle keeps turning.
This cycle has a secondary engine whipping it along faster and faster: as we create better products the loyalty and trust of customers grows and their willingness to share ever more data increases. The implicit bargain that modern organizations are making with their customers is: “give me your data and we will give you delightful services.” Even if customers don’t explicitly state their acceptance of this bargain, their tacit acceptance of the deal drives the conventional wisdom that privacy is, to all intents and purposes, dead. For as long as we lap up ostensibly free services such as Gmail, Facebook and Dropbox, that are funded by the data and insights they can extract and sell to advertisers, there will be no impetus to search for an alternative to the conventional wisdom. Similarly we’re seeing frenetic competition to customize recommendations (and potentially pricing) for customers of retail, travel and media products.
Noise or Signal?
Data Analytics, the darling of the modern tech economy, is all about extracting valid signals from the noise of data that’s roaring past. We look for signals in people’s buying habits, in their exercise regimes, the sentiments they share on social media and the demographic hints they give off by virtue of the postal district they live in. But I think there’s another signal that we ignore at our risk.
I recently asked an audience of technology, business and marketing executives – people who should be pretty up on this stuff – what proportion of visitors to their various sites did they think had some form of software that blocks adverts or blocks tracking bots (think AdBlock, Disconnect and friends). No one really knew, but most of them thought the number was negligible. That’s not surprising since by definition people who have software installed to stop being tracked or seeing adverts won’t show up in the pretty reports and graphs created by this tracking software.
The numbers are a little hard to measure precisely, but recent researchsuggests that between 10% – 20% of people in the US have some form of ad or tracking blocking software installed in their browsers. The percentage leaps if you drill down into the more tech savvy segments. To me that percentage isn’t just noise. Particularly when you add in the people who get vocally annoyed when Facebook changes its privacy settings and then layer on those who feel increasing discomfort as each wave of revelations rolls out about government surveillance and the cozy and complicit relationship the security services have with the major digital and telecoms players.
Maybe this is a signal worth listening to.
The Big Tech Backlash
So what is this signal telling us? While part of it is clearly a historic annoyance with intrusive pop-up ads and their ilk, a growing portion can be put down to people not wanting to have their every move tracked by default while they’re online.
In fact this signal points to a turbulent eddy disrupting the virtuous cycle of our product and data economy. This turbulence is coming from a few different directions, but it’s combining to create the beginnings of what I would term a “big-tech backlash”. The more data organizations store the more they become a target for intrusion; the more high-profile breaches the more people worry about privacy concerns. As the data giants make more money their monopoly hold on the digital economy becomes clearer, again leading to public distrust. Added to all this you throw into the mix the wild-card of the revelations about dragnet NSA surveillance and you begin to see potent fuel for a public backlash against the direction that our data-driven digital economy is heading.
So as the creators of digital products and services what are our options for responding to these signals? How can we remain commercially competitive while striking a different balance between using data to improve our services and protecting the privacy of the people using our services?
There are a few places we can look to for inspiration on what alternative models might be available: for policy changes we can look to other countries; for market-based approaches we can look to other industries; and for more radical changes we can learn from how peer-to-peer and decentralized architectures use technology to reshape the contours of the economic landscape.
Competing with free
The biggest challenge facing organizations that want to buck the trend of intrusive data-mining practices is that it’s hard to compete with free. If you want to create a privacy-respecting email service or social network then you will be competing with very polished free services. These services are free because the users of these services aren’t the real customers – they are the product. In many ways these services are basically Trojan horses – the ostensible product is email, search or a social network, but the real product is the attention of the users of these services that is being sold to advertisers. The better data the service providers have on their users the more they can charge for access to these pinpointed eyeballs.
When faced with a price war that looks like a race to the bottom, a good response is to step out of the race and look to compete on something other than price. This is the strategy of “re-segment as premium” – focus on the segment of the market that is willing to pay a premium for a valuable facet of your product. Could that value-added facet be respecting people’s privacy?
Green shoots of fair data
Go back 20 to 30 years and interest in environmentally friendly products, organic food and fair-trade products was restricted to a niche group with little apparent commercial up-side. Now however “green”, “organic” and “fair trade” are big business, they are mainstream and they carry premium rates. The same is possible for privacy-respecting services. You’ve heard of “fair trade”, get ready to meet “fair data”.
Businesses are beginning to differentiate themselves from their competitors by how they handle their customers’ data. This can be seen in Ello, the fledgling social network, in SpiderOak, a DropBox replacement, and even in how Apple are positioning their new encryption approaches.
Fair Data isn’t just a concept that I’ve made up – it’s a real thing. In the UK there is now a Fair Data kite-mark allowing organizations to verify to their customers that they are employing a raft of Fair Data practices.
We are seeing a growth in “data banks” for a variety of industries. These are organizations that you trust with a specific class of your data such as genetics, financial transactions, health data or other official records. These providers can then provide structured access to third parties of just the elements that are
So are people willing to pay a premium (as in more than zero) for services that are respectful of their privacy? The jury is still out on this one, but there are positive signs