Companies face a privacy paradox

People around the world are thrilled by the ease and convenience of their smartphones and Internet services, but they aren’t willing to trade their privacy to get more of it.

That is the top-line finding of a new study of 15,000 consumers in 15 countries.

The privacy paradox was surfaced most directly in one question: Would you be willing to trade some privacy for greater convenience and ease? Worldwide, 51 percent replied no, and 27 percent said yes.

(The remainder had no opinion or didn’t know.)

The study, conducted by Edelman Berland, a market research firm, has some other intriguing results with implications for business. Consumers worldwide seem to agree with the notion that there should be laws “to prohibit businesses from buying an selling data without my opt-in consent” — 87 percent.

When asked to name the leading threats to online privacy in the future, 51 percent of the global panel of consumers picked “businesses using, trading or selling my personal data for financial gain without my knowledge or benefit.”

That was well ahead of the 35 percent who selected “lone/crazy hackers, hacker groups or anarchist types.” The prying eyes of government — “my government spying on me” — was cited as a privacy threat by only 21 percent.

The survey seems to present a grim outlook for data-driven online businesses and marketers. But there are caveats. Like most surveys of consumer attitudes about privacy, the questions posed are in general terms. Privacy? Well, that’s a good thing, yes.

But marketplaces, online and off, are arenas of particular behaviour — transactions, which are exchanges of value between two parties.

And online, people trade their data — bits of their privacy — all the time for convenience and for products and services they value. How knowingly they make those trades is certainly open to debate, if not doubt.

Companies try to create an environment of trust around their products and brand.

When a person downloads a company’s smartphone app, he or she trusts the company, implicitly. Walk into any Starbucks, for example, and you see that environment of trust, or at least the appeal of overwhelming convenience, as people wave their smartphones over a laser-sensor to pay for drinks and redeem digital coupons.

Starbucks and other retailers’ smartphone apps collect a lot more information on those customers than the people paying in cash, or even with credit cards — personal data, buying habits and location.

But the more data a company collects, the greater the risk of misuse or doing things that will make your customers uncomfortable, said Jeremy Burton, president for products and marketing for EMC.

For example, if you are pharmacy chain, the data from online and offline sources that can be mined today can accurately identify people likely to be diabetics.

Do you market diabetic products to them? It is certainly personalised marketing, but is it creepy?

Conversations with customers, Burton said, cover not just what can be done with EMC’s data storage and analysis tools, but also what they should do.

Most companies oppose new regulations to curb data collection and use, and they may well prevail.

But if we live in a big data “Wild West,” then every company has to be the sheriff of its own brand. A company’s data practices must be guided mainly by its own business model and ethics, or not.

In an essay this year on the Harvard Business Review blog, “Big Data’s Dangerous New Era of Discrimination,” Michael Schrage, a fellow at the MIT Center for Digital Business, addressed that issue.

“Tomorrow’s Big Data challenge isn’t technical,” he  wrote. “It’s whether managements have algorithms and analytics that are both fairly transparent and transparently fair.”