What’s Privacy Worth?

By on October 21, 2013

The business of personal data is booming and the web giants will stoop pretty low to get hold of yours. If only they put half as much effort into showing they can be trusted with it, says Simon Caulkin.

When a mid-21st century son of 1980s oil-baron soap Dallas is made, it won’t be about oil. It probably won’t be broadcast on what we know as TV either, or indeed be broadcast at all. That’s because the next business to boom in the way that oil did looks set to be personal data and identity, and this weightless new asset class has the potential to do to broadcast media what the internet has already done to the press.

Like oil, as well as disrupting older industries, it will also fuel a whole range of new ones. And it is already throwing up a comparably colourful cast of heroes and villains – social media, Google, credit agencies, hopeful start-ups, trolls, regulators, security agencies and governments, among many other more shadowy ones that we’ve never heard of – even if it’s often hard to tell which is which. And although concerns about privacy online are almost as old as the internet itself, what’s changing is the nature and extent of the personal data that can be culled, and the increasing ease with which all and sundry can get their hands on it.

Giving up your name, address and email in return for a personalised service from a retailer or bank is one thing. But the advent of mobile phones with GPS and always-on internet access has led to a plethora of apps that can track our movements and browsing and social media habits, and powerful new analytical software can join the dots in ways that are both controversial and potentially hugely lucrative. When Google claimed that anyone who emails someone with a gmail account has ‘no reasonable expectation’ that those emails should be private, even the most laissez-faire of technophiles stopped to think about their privacy.

The revelation, made in a recent court filing connected with Google’s alleged involvement in the US National Security Agency’s online eavesdropping scandal, has sent ripples across the internet. Is a privacy backlash about to begin?

Everyone agrees that the stakes are colossal – on both up and downsides. The Boston Consulting Group suggests that the value created through digital identity could reach€1trn in Europe by 2020, equivalent to 8% of the combined GDP of the 27 EU nations.

Business and governments could benefit to the tune of EUR330bn and individuals by EUR670bn, reckons BCG, the latter largely through services such as Facebook, Google and others that they get free in return for their info. Governments would gain substantially through more efficient public services.

‘The advantages of open data (for the public sector) are so great that we mustn’t cock this up,’ says Stephan Shakespeare, head of pollster YouGov and author of a report on public sector information. More modestly, Cntrl-Shift, a UK analyst that tracks such things, puts the future value of volunteered information at EUR20bn for the UK at the same date. Look around to see the alchemy already at work. The market caps of Facebook ($92bn), Google ($288bn), Amazon ($130bn) and other major web companies are held aloft by the value placed on their hoard of private data, their most valuable asset.

As European Commissioner for Justice Viviane Reding puts it: ‘Personal data is the currency of the digital market.’ But here’s the catch. It’s not just that this rich harvest is no foregone conclusion. Personal data isn’t oil, waiting inertly to be sucked up by a drilling company and magically spewed out as cash. Handled crudely, data is more like a potent and hazardous chemical. The downside to its misuse isn’t just an information gusher that doesn’t gush, but something potentially much more toxic: a suspicion-ridden internet that at best becomes a terrain for large companies to deploy ever more sophisticated means of keeping their customers captive, and at worst an instrument of surveillance and control rather than individual empowerment, as evangelists hope.

The clue is in Commissioner Reding’s crucial rider – that ‘like any currency, (personal data) has to be stable and it has to be trustworthy’. At the moment it is neither. This is largely because of the way the web has grown up. Until relatively recently, people had little incentive to consider what they were giving away online. No one read website T&Cs; the utility and convenience of search and social media seemed well worth the price of filling in a few personal details. As a result, web companies such as Google and Facebook have been operating in a window of unchallenged dominion, when data was effectively theirs to monetise as they could.

‘We’ve had a 15-year aberration as ecommerce got going, and we’re only now catching up,’ says William Heath, chairman of social enterprise start-up Mydex, one of a new breed of personal data store providers (PDSs) that aims to help individuals manage and control their personal data. The consequences of this aberration became clear when the net company geeks figured out how to monetise their businesses. The motherlode, they found, lay not in the ‘official’ identity of volunteered names and dates of birth, but the second, shadow identity that was given away as a by-product of transactions by the first: locations, likes, preferences, activities, family and friends.

It’s the trading of this shadow identity data that’s behind the burgeoning ‘free’ app economy. The users pay nothing up front, but data from their smartphones may be logged, segmented and used by marketers to sell their wares. And, although it is ‘anonymised’, that data can be extremely personal – a recent survey of the top 20 health and wellness apps by data consultancy Evidon revealed that everything from diet and diseases to bicycle trip distances and even menstrual cycles has become fair game in the data market.

In one study, researchers found they could identify people’s sex, IQ and political, religious, sexual and behavioural orientations from Facebook likes alone. In another, so-called metadata was successfully used to establish actual identity. In other words, individuals weren’t the customer: they were the product. And we’re just at the beginning. In the forthcoming ‘internet of things’, almost anything can become a tracking and communication device. A recent news item revealed that City of London waste bins had been equipped with sensors to track footfall and potentially target ads.

Verizon has a camera-equipped set-top box that delivers targeted ads to viewers; Google has patented a means of targeting ads according to the background noise on mobile phones, and there are its (in)famous webcam-toting Google Glass specs.

Read full article here: http://www.managementtoday.co.uk/news/1212203/whats-privacy-worth/

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