Computers, Privacy & the Constitution
Market Approach to Digital Privacy

Corporation’s interests have not been aligned with consumers in the digital privacy context, but this may be changing. Corporations are incentivized to collect as much consumer data as they can, using any means available. The growth of “big data” and analytics in the business context has made the broad and deep collection of consumer data available to major corporations invaluable in shaping business strategies. The vulnerability of this valuable resource will incentivize corporations to invest in consumer protection mechanisms.

The rapidly changing technological landscape over the past 20 years, specifically the rise to prominence of the internet, has changed not only the type but the quality of data available to business enterprises, and thus has changed the value of analytics and “data mining” fundamentally. Among the notable technological advances that have made this possible are the increased availability of the personal computer (due to decreases in both size and cost), and the adoption of the mobile platform. Examining the incentives of corporations to collect and use this data is important because it can provide insight into the likely future of data collection from a consumer facing perspective, absent significant regulation. An initial survey of the data collection practices and the ways the data has been put to use provides important context for understanding corporate incentives moving forward.

Companies have realized both how valuable and bountiful the available consumer data are, and have responded by collecting whatever they can. Samsung collects data from voice commands to its smart TVs; Foursquare has begun tracking users even when the app is turned off; fitness devices, such as the FitBit? , collect and upload user data to the cloud; even taxi cab rides have become part of a large data set that “contains details about every taxi ride (yellow cabs) in New York in 2013, including the pickup and drop off times, locations, fare and tip amounts, as well as anonymized (hashed) versions of the taxi’s license and medallion numbers.” Companies are seeking to extract data from every interaction consumers have with electronics, and have gone so far as to design products in order to further this goal.

The ways that different data collectors have chosen to utilize their newfound wealth has varied. Some apps that track user location, for instance, while biking, have begun to share portions of this information with city governments, while Google stores (but does not share) user location data refreshed every second via Waze, the GPS and traffic app it purchased for $1.3 billion. Database marketing companies like Acxiom aggregate and analyze consumer data sets from a variety of sources, which they then sell to corporate clients who use the information to more effectively reach customers. In the social media context, Facebook uses the massive amount of information it collects on its’ users to design targeted ad campaigns for corporate clients. Data collection has become amply incentivized and secondary markets for data have formed, with demand coming from corporate clients and municipalities alike.

Interestingly enough, the incentive to generate competitive advantage through analytics may provide some level of protection to consumers. Since it has become abundantly clear that data is valuable, it only stands to reason that corporations want to keep the data they collect to themselves rather than allow their competitors (or anyone else) to get ahold of it. After Yahoo purchased the analytics firm Flurry, which collects data from a number of “Flurry enabled apps,” they switched from the less secure HTTP protocol to the considerably more secure HTTPS protocol for data transmission, providing consumers with a level of protection that they did not have before. While not going quite as far, Google has encouraged developers to use HTTPS in connection with its’ AdMob? program that provides advertising to apps. Further, both Apple and Google began to offer default encryption on iOS and Android, much to the chagrin of some law enforcement agents.

It is notable that we are seeing large, public tech companies begin to move towards providing more secure services for their consumers. It is possible that this reflects the recognition of value the data being protected has, or perhaps these companies are seeking to avoid the public perception pitfalls that lie ahead in the form of data breaches and hacks, like with Target and Sony, among others. While the focus among companies up to this point has been to rapidly expand their data collection capabilities and to try to capture the richest consumer data available, this move may have happened too fast. The troves of information that have been accumulated are now vulnerable, and the companies are incentivized to quickly move towards procedures that protect this information going forward.

It is important to note the shift in focus by public corporations in providing secure tech services for consumers both because they created the issue and may be responsible for shouldering the responsibility of consumer protection without a significant change in the legislative landscape. While public perception has shifted considerably on digital security issues, legislation does not appear likely in the near term – especially with the NSA providing powerful and influential opposition.


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r4 - 26 Jun 2015 - 19:49:18 - MarkDrake
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