Is This the End of the Data-By-Stealth Model?

By Peter Matthews On Mar 15, 2019

GDPR may be an EU regulation, but its enforcement is having a global impact on privacy awareness and, in the process, exposing the business model underpinning Big Tech’s data economy.

We now know that Facebook and Google, in particular, have deployed stealth strategies to collect personal data. Until now, we’ve hardly noticed, but GDPR has shone a spotlight on this highly profitable business model.

From cookies in browsers to mapping social media behavior, trawling personal contacts, tracking where you go and even what you say, Big Tech has turned consumers into products whose profiles they sell to advertisers (and who knows who else!). Cambridge Analytica revealed just the tip of the iceberg.

Apparently, if GDPR’s consent principles were applied for each dataset it records, Google’s Nest products could require over 100 explicit consents — and that’s in your very own home.

GDPR has been an important step because, for the first time, nations, currently 28 nations, can levy significant fines individually and collectively — of up to 2% of an organization’s global annual turnover. In January, the French data protection watchdog levied a €50m fine on Google for offering inadequate information, spreading it across too many pages and failing to gain valid consent for ads personalization.

Germany’s competition regulator has now asked Facebook to substantially restrict how it collects and combines data about its users unless they give explicit consent. GDPR has marked out some boundaries that, until now, have been poorly defined and hardy ever policed, which allowed the barrier-free, fertile digital landscape for Big Tech’s personal data land-grab.

The Productizing of Consumers

Only now are we seeing how the new regulations, which also provide for ‘the right to know’ what personal data is held by any company operating in the EU and ‘the right to be forgotten,’ will curtail ‘the productizing of consumers’ by Big Tech.

Combining data from different sources, such as Facebook/Instagram/Whatsapp, could also lead to calls for Big Tech to be split up if this self-regulated approach doesn’t work. We all like the free and easy-to-use apps that Big Tech provides, but some are asking what the true cost really is going to be?

One interesting development might just be that some Big Tech companies take the side of the consumer. In February, Apple sent out a strong message when it blocked Facebook from running internal iOS apps. The restrictions came after Facebook was found tracking teenagers’ iPhone usage data. Tim Cook, Apple’s CEO, has also called for new digital privacy laws in the United States, warning that the vast scale of personal data processing is harming society.

Could Apple be building a new business model based on privacy and consent?

Where to Now for Digital Marketing?

The reality of GDPR is that once the fines scare the Big Tech platforms and the clients using their data, marketers will be forced to balance their addiction to personalized data, with compliance to the new regulations. Yet, if there is a sense that GDPR is impeding marketers’ potential to personalize (or spy), it could also be argued that instead of viewing data protection as a compliance issue, marketers should harness it as an opportunity to lead the way and demonstrate a new level of transparency and trust.

In other words, if brands truly want to meet their customers’ expectations they have to shift their approach to so-called personalization. We already live in a data economy. Behavioral data, in particular, has become a valuable commodity and it is being exploited at every opportunity in advertising.

Yet despite the masses of data about all of us, brands still barely scratch the surface of using it to improve user experiences. Currently, it is still Google and Facebook leveraging the data to sell to advertisers, rather than brands using it to improve customer experience.

If we take the banking sector as an example, fintechs and challenger banks have spotted the opportunity to use streamlined digital platforms to leverage data to segment the market in quite meaningful ways.

Big heritage banks, on the other hand, are still struggling to use their data in a way that offers users advantages in return for giving consent to use their personal data to improve their management of personal finance.

GDPR actually offers brands across every industry sector a level playing ground framework from which to rethink their approach to data and the enhanced customer relationships and experiences it has the potential to inform.

Storing data for the benefit of the customer with the customer’s full consent has to be the mantra, and organizations need to have a clear vision and a wide understanding of what benefits and customer experience improvements will result from its use, and communicate this clearly to their customers.

For some consumers, allowing a brand a 360-degree picture of their life will be too intrusive, but for others, they may value this if it helps them fine-tune their lifestyle. For instance, money management tools to help consumers improve their credit scores.

Genuine Consumer Trust

GDPR presents a real chance for marketers to re-engage with customers and educate them about the benefits of data sharing. Ultimately, harnessing personal data should improve the customer experience and allow them a share in its value. Once they experience this they are likely to feel more comfortable about granting more access to their data; as long as their needs are being met.

Showing that there are secure data governance strategies in place can go a long way towards fostering consumer trust and helping to build strong brand relationships. As a consequence, brands must strive to allay any fears individuals may have around how their data is gathered and used. And build this into their brand DNA.

Privacy Could Spawn Innovation

New services or products could be developed to guarantee customers that their personal data is safely handled and stored. Take, for example, initiatives like personal data vaults. These cloud-based apps allow individuals to store personal data and enable them to control access permission.

Once marketers shift their mindset around GDPR they will start seeing a raft of opportunities to use data without violating privacy laws.

The Competitive Advantage of Privacy

Getting privacy right should be viewed as a competitive advantage. We are all more likely to trust a service provider who values our privacy (beyond mere legal compliance) and is transparent about how our data is used. And trust = loyalty.

Brands need to acknowledge that busy, time-poor consumers are more likely to surrender their personal data once they are confident it is going to be used in an intelligent way that will make their lives easier in a trusted relationship where value is shared two ways.

With so much personal data already held by big brands, and regulators beginning to flex their muscles when consent is taken for granted, marketers need to balance the golden allure of big data with its risks and recognize the need for transparency, security and trust. Only when they do will we see personalization valued by brands and by customers. Could this be Apple’s new value-adding strategy?