Marketing companies and big corporates say that personal data is a commodity that underwrites ‘free’ services on the internet – and that without the use of personal data much of the free internet will disappear; and they are not entirely wrong. And, empirically, Facebook demonstrates that whether users are or are not concerned about their privacy, they give away huge amounts on social networks; and that’s a fact.
Now the Economist Intelligence Unit (EIU), sponsored by Beazley, has attempted to plot a course through this confusion with the publication of a survey of 750 users around the world: Privacy Uncovered. It finds that users are indeed concerned about privacy, but are also willing to trade it away. The key seems to be that users want to be in control of that personal information; to be able to make an informed choice on whether the return justifies the cost.
The bottom line is that consumers do not know how their data is used, and believe that privacy protections are currently weak. Only 3% consider that data is safe with social networks, and only 11% think it is safe with online retailers. Three-quarters, however, believe that regulation protecting against mis-use is too weak.
Despite this, 84% of consumers belong to one or more social networks. And 34% of them are more willing to share personal data on social networks than they were three years ago, while only 23% are less willing. There seems to be a tension between a desire to share data with friends, and a concern that it may shared wider.
But one thing that does seem clear is that consumers will punish companies that do not protect their data. Sixty-six percent of the respondents have declined to buy a product or services because of concerns over the security and privacy of their data. Of the 23% of respondents who have suffered a data breach, reports the EIU, 46% advised family and friends to be careful when sharing information with the organization. Moreover, it adds, the most active internet shoppers are also the least forgiving of transgressions. “There appears to be a strong willingness not just to cease doing business with a company that loses your data but to tell your family and friends about it - so there's a clear multiplier effect in terms of the reputational damage that can be inflicted,” said Paul Bantick, who heads Beazley's Technology, Media and Business Services team in London.
This somewhat confused attitude towards privacy is being played out against the background of the EU’s proposed Data Protection Regulation, which places greater responsibilities on companies keeping personal data, and greater consequences if it is lost or abused. “The final shape of the regulation remains unclear,” says the EIU, “and corporations, just like consumers and regulators, are wise to fight for their own interests as the process continues.”
But it warns that business should not lose sight of the bigger picture: trust. “In an atmosphere of widespread concern, tighter regulation can help provide reassurance... Real competitive advantage comes not only from meeting regulatory obligations, but also from being recognized by customers as fully meeting their expectations regarding their privacy concerns and their relationship with the company.”