Why the Private Sector, Not Just Governments, Needs to Take the Lead in ‘Cleaning up’ Europe’s Digital Economy

By Raphael Rodier On Dec 12, 2019

The technology industry has had a tumultuous year. Many organizations have come under fire for data misuse and questionable data handling practices. And some of the biggest household names in technology and business have been tarnished for the way they knowingly or unknowingly use black hat methods to obtain and use consumer data for Marketing purposes.

Only last month, Twitter admitted it inadvertently used users’ phone numbers, initially supplied to help bolster their security, to serve them ads instead. And who can forget that pivotal moment in 2018, when it was revealed that Cambridge Analytica had harvested the personal data of millions of Facebook profiles without their consent, for political advertising purposes.

Although government-enforced data protection regulations such as The General Data Protection Regulation (GDPR) and the upcoming California Consumer Privacy Act (CCPA) are a great first step in resolving this, can it be said that the private sector is doing enough to establish a healthy digital economy?

A Concerted Effort to Drive Change

In June 2019, the UK Information Commissioner’s Office (ICO) found the AdTech and real-time bidding industry to be illegally profiling internet users. But in spite of the investigation finding that rights were violated, the regulator took no action. And although there have been a handful of cases where the GDPR has been successfully enforced – the ICO fining British Airways £183.4m, and Marriott International £99m – they have not been common enough.

Without a concerted effort from private companies to lead the charge for greater privacy, and a drive for change from the inside out, it is likely that any future attempts to enforce these laws will fall short.

Why? Because businesses operate globally, and by definition, governments do not.

The European Commission has acknowledged this challenge by extending politician Margrethe Vestager’s role to cover digital and industrial policy, in addition to her previous role as the region’s competition chief. She will now be in charge of revamping how the EU regulates the digital world. But with national silos and multiple governments, Europe is a fragmented digital market.

For the region to prosper in a global digitized economy, it needs constructive collaboration between all stakeholders, and for private sector companies to contribute to shaping digital policies.

Without both, it could be difficult for the region to establish itself as a leader in technology ethics and regulation.

The Personal Data Economy

Now that the GDPR is in full force, data handling practices and enterprise responsibility have finally merged. This is obviously great news for consumers, but what about marketers? Is GDPR a burden or a blessing?

Perhaps due to the fact that the media narrative around GDPR still focuses heavily on its punitive measures, companies are overlooking its potential to bring enormous business value. Across the industry, enterprises are seeing the regulation as an ‘issue to manage’, rather than an opportunity to establish consumer trust.

However, the goal of GDPR isn’t to punish the tech industry – far from it. The regulation aims to ensure that organizational practices are ethical, and fair to the consumer. This is more than just a major step forward for the individual’s rights to data privacy, it’s a fundamental human right. Cleaning up toxic data lays the groundwork for an improved relationship between brands and consumers, allowing companies to win back valuable consumer trust, and to fix an archaic and broken AdTech ecosystem.

Explicit and Informed Consent

In order for an entire ecosystem to shift dynamics, there needs to be a joint effort from all industry players. It is the responsibility of businesses to educate their consumers on the data-value exchange, specifically on how and why their data is collected, used and stored. Interestingly, our study of consumer attitudes to mobile marketing revealed that 55% of consumers globally still don’t feel they have a better understanding of how companies use their data, indicating that the language used in consent notices is still not being written in terms that can be easily understood by the average internet user. That is unless that user happens to be a solicitor, specializing in liability law and the wording of consent notices. This isn’t an acceptable or reasonable way to educate internet users.

Asking for consent (in a much more meaningful, straightforward way) is not only the right thing to do, but it is also imperative for business. It is an essential step in restoring trust and integrity towards the tech industry, as well as to build a more mature and respectful internet. Even if it means resisting the urge to maximize short-term revenues, organizations that embrace GDPR and put consumer choice and data privacy at the center of their Digital Marketing execution, are sure to outperform their competitors in the long run.

What’s more, the study also revealed that consumers might be more willing to share their data than previously suspected. When respondents were asked how they would prefer to access content, 71% stated that they would rather share their data than pay with money.

This goes to show that, when given a basic understanding of the data-value exchange and a fair choice – in accordance with GDPR – users are willing to share their data, including mobile apps and websites used.

What Happens When You Get Data Privacy Right?

With 52% of consumers globally saying that intrusive or irrelevant Marketing messages give them a ‘poor opinion’ of the website or app that hosts them, failure to treat consumer data properly is bad news for both brands and publishers – making Marketing spend less effective overall. Further research by HubSpot similarly found that a significant majority of internet users exit a website when they encounter annoying or intrusive advertising.

By cleaning up the way consumer data is collected and processed, businesses can not only avoid unnecessary legal exposure and lasting reputational damage, they can also reap the benefits. They can maximize ROI, and improve overall relationships with consumers.

It is widely recognized that poorly sourced, third-party data leads to poor insights and less effective ad targeting. In contrast, reliable mobile user data can provide valuable insights, which help marketers design better campaigns, and lower users’ frustration with irrelevant ads.

Under current UK and EU law, a high standard of explicit consent is necessary, and consent-based marketing is the future. Advertisers can use this to their advantage.

Even with uncertainty for UK business about GDPR, post-Brexit, it’s certain that the UK regulatory landscape will become more complex, and that further fines and taxes will be levelled against businesses that don’t put consumers at the center of their policies.

Companies are running out of places to hide, especially in terms of data practices. But by adjusting outdated business models that have been based around the unethical treatment of consumer data, companies can contribute to creating a healthier digital economy, and can maintain their own competitive edge.