Why is privacy such an enormous headache for companies? For centuries, knowing your customer is an essential requirement for success in commerce. Each evolution in business is shaped by an improvement in the capacity of companies to better identify their customers and how to best create products and services that align to the customers’ profiles. Collecting information about a customer is how companies create new wealth—the information enables the companies to produce something that customers will value. The economics are simple: the more useful a product proves to be in meeting a customer’s needs, the more value the customer is prepared to pay. For most customers, sharing information with suppliers is part of the negotiation required to secure the best fit between the product and the customer.
But privacy, as a legal issue, did not begin as a corporate issue. Both in the United States and in Europe, privacy found its place in the rule of law among the tensions between governments and the citizens that are governed. Why has privacy become so difficult for corporate entities and their supplier networks?
The simple truth is that neither the corporate entities nor the consumers properly factored in the astounding surveillance and monitoring that 21st century technologies now enable. The technologies are gathering so much more information than was previously considered to be possible. Moreover, the technologies are enabling information about consumer conduct and behavior to be collected that has nothing to do directly with the primary vendor, but can have genuine economic value to secondary consumers of the collected information.
Case in point is the announcement by Facebook that its app can now activate the microphone in cell phones to identify tv shows, music broadcasts, or live music. The FB app is collecting information that has real value, for which real companies will pay a great deal of money in order to acquire consumer-descriptive information they could not directly acquire themselves.
But no consumer pays FB anything; rather, they do, but they do not pay with money. They pay with the consents given to allow FB to engage in data collection. Now, as the economic value of that data becomes more and more visible to the consumers, we are all waking up to the fact that the old model economics simply are not in play. Each of us is enabling access and sharing information outside the negotiations involved in directly purchasing goods or services. And that has become the sticking point.
Privacy requires a new architecture. For corporations, the winners will be the ones that understand they must be conspicuous, transparent, and ethical in describing the information they collect and how they will use it. The value of the information must be expressed in a manner that effectively induces the consumer to see the information sharing more directly connected to the real of their commercial relationships with corporate suppliers of the goods and services they purchase.
Privacy policies, as Annie Anton has so brilliantly demonstrated with her research, are simply ineffective jumbles of words that do not meaningfully enable the consumer to understand, or factor into their buying decisions, how corporations use their personal information. What is needed is a way for consumers and companies to effectively express their respective terms, and achieve agreements that are meaningful and economically balanced. Properly designed, corporate rules of the game that are clear, transparent, and enforceable may actually motivate consumers to provide greater information, which ultimately enhances and strengthens the buyer-seller relationship.
The solution, I submit, is to follow the lead of industry to develop a functional lexicon of abbreviations that enable automated expressions and negotiations. For example, one of the great successes in enabling international trade was the publication of INCOTERMS, a concise expression of terms that could be integrated into electronic ordering systems to enable more complex legal terms of sale to be abbreviated with consistent meaning. We need the same solution to enable consumers around the world to more effectively connect with their suppliers, and produce rules of the game that are precise, controlled, and meaningful to each consumer-corporate relationship. Yes it requires work to achieve, but the level of work is so much less than the endless bickering, litigation, legislating, and puffing that current defines the privacy battlefields.
I look forward to introducing next month at the Computers, Freedom, & Privacy conference three key insights that are presented in my book, and explaining how they can be used to reshape privacy as a feature of global commerce.