Can Practicality Preserve Privacy?

The latest shot in the privacy regulation war has been fired, and it puts a whole new twist on the debate. Turns out that companies are collecting less data about shoppers than they used to, at least according to one group that opposes new privacy laws.

The idea of self-regulation has been the barrier that has successfully kept regulators at bay. And now there’s evidence that it may actually work.

But the twist is that companies aren’t collecting less data about customers because they’re nice people, or because they respect privacy. They’re less interested in data, it turns out, because they didn’t know what the heck to do with it.

The study released by the Progress and Freedom Foundation didn’t actually say that, but it’s there between the lines. The foundation did note that just 75 percent of 385 surveyed Web sites collected personal information beyond a visitor’s e-mail address and other basics. That’s still a pretty big number, but it’s well below the nearly 100 percent level of two years ago.

Unlikely Explanation

The Foundation would like us all to believe this is evidence of “market-driven” behavior changes by companies — that customers have spoken out for less invasion of privacy, and that sites have responded in kind.

If I could provide a one-word answer to that claim, it would have to be: Ha. Two words: As if.

Right On

The Foundation’s second explanation is much more accurate: “Firms may also have overestimated the economic value of collecting personal information,” they said at a press conference.

Bingo. Sites aren’t collecting as much information because they figured out that most of what they were collecting wound up in digital storage, gathering digital dust and waiting for the magical day when someone would come along and turn the languishing data into valuable market intelligence.

That day has not yet come. And companies probably are figuring out that it doesn’t pay to collect information anymore, especially when that process itself may scare away some potential customers.

I don’t doubt that consumers are more savvy. But I don’t believe for a second that they’re surfing from site to site in search of the e-tailer with the most favorable privacy policy. Or that they are using only the portal that offers the best protection of personal data.

Time Will Tell

That notion flies in the face of what the Web is all about: speed and convenience. Besides, there’s evidence that even when banks and other financial institutions were required to send mailings to all their customers offering them a chance to opt out of having their information shared, only about 20 percent seized the opportunity.

I have long argued that people are just too harried or lazy to read those policies and complete opt-out forms. And I still believe that companies will exploit that weakness to the best of their ability, pushing the envelope far enough to get what they want but not far enough to raise the suspicion of shoppers.

The fact is that behind the scenes, data gathering and analytics aren’t as sophisticated as we have been led to believe. The information isn’t as valuable as companies thought. At least, not yet.

Temporary Respite

And there’s the rub. The people who produced these statistics say they serve as evidence that government should keep its hands off the Internet privacy issue.

But it seems likely that it’s only a matter of time until the millions of dollars being poured into analytical software firms — which are among the few early-stage tech firms still being funded by venture capitalists — start to pay dividends.

Then, as before, personal data will become a sought-after commodity.

This debate will start all over again. Put it on your calendar for sometime in the future: Government regulation versus self-policing, round 2.

Take a breather, soldiers, but reload and get ready, because this battle is far from over.

What do you think? Let’s talk about it.

Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.

1 Comment

  • When you say, "They’re less interested in information because, it seems, they didn’t know what the heck to do with it," I think it depends on who you are talking about. The airlines are instituting vast data-mining and predictive behavior modeling software in an attempt to alert them to potential terrorists. This is, of course, a laudable goal. The major problem is that it means they must collect and analyze that data for all of the flying public in order to sort of figure out what terrorist activity might look like.
    CRM software being implemented by online businesses is meant to do a very different thing in tracking, analyzing and predicting buying behavior, return on investment, lifetime value of customers and other marketing and sales information. What does preferred customer behavior look like?
    Facial recognition software coupled with closed circuit television cameras videotaping our every move must collect and analyze more, very different information, and law enforcement agencies are increasingly beginning to share that information across local, state and federal boundaries.
    Now the scary issue is when someone finds a way to connect all the dots and bring those databases together and share information across all those differing lines of interest. Databases of mined information from vast data warehouses can suddenly be linked together via the web and soon everyone can be tracked across their web activity, buying habits, public travels and law enforcement connections and we have big brother happening in that linking of databases and data warehousing.
    It’s inevitable that this is coming. What we do about it and how much of this data linking we allow is going to be very important, very soon.

    Mike Banks Valentine
    I-Privacy Discussion List
    Privacy is Good for Business
    SUBSCRIBE: mailto:[email protected]

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