Privacy: The Talk of Tech Town

How is the concept of online ‘privacy’ changing and how is it impacting entrepreneurs?

By Terrance J. Mintner • January 20, 2020

Glen Carrie | Unsplash

I can’t tell you how many times I’ve heard people around me complaining about the new powers of digital intrusion.

“It was unbelievable,” a friend recently told me. “I did a quick search for strollers on my smartphone and now I’m constantly bombarded by stroller ads.”

Others suspect they are “being spied on.”

“I just mentioned ‘shoe inserts’ while talking to my mom yesterday and now on social media I see them everywhere. Our smartphones can hear us!”

That sounds conspiratorial, and perhaps it is, or perhaps we have good reason to be worried about increasingly sophisticated algorithms that can pinpoint our desires. Israeli historian Yuval Noah Harari worries that algorithms could someday “understand us better than we understand ourselves.”

In any case, many now feel tech platforms and the advertisers using them have intruded a bit too far into our lives. It’s no surprise that “privacy” has become all the rage with the big beasts – Google, Amazon, Facebook and Apple – in the public’s crosshairs.  

Statements from the head honchos themselves indicate how far the tide has turned.

Apple’s CEO Tim Cook has said that online privacy has reached “crisis” proportions. “The people who track on the internet know a lot more about you than if somebody’s looking in your window – a lot more,” he warned last May.

Just recently, his company defied the U.S. Justice Department which requested access to the iPhones of the suspect in last month’s shooting at a Florida naval base. Apple stated it had cooperated with the FBI by providing “gigabytes of information” but could not give investigators a “backdoor” to its encryption.

Cook, it seems, is taking privacy concerns to heart, and is walking the walk.

Facebook’s embattled CEO Mark Zuckerberg has also been singing the privacy tune. “The future is private,” he declared at the annual F8 conference last year. Since then, his company has been developing, as he described it, “a simpler platform that’s focused on privacy first.”

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What started this craze for online anonymity?

Analysts point to the Cambridge Analytica scandal as the spark. In early 2018, it was revealed that a British political consulting firm under the same name had been accessing personal data from millions of Facebook users without their consent. The information was then used to bolster the campaign efforts of Republican candidates including Donald Trump’s 2016 presidential bid. 

Since the scandal surfaced, Facebook and Cambridge Analytica have been under the microscope. The latter was quickly dissolved and Facebook eventually agreed to fork over $5 billion in fines to the Federal Trade Commission. It was the biggest financial slap the U.S. government has ever given to a tech company.

That decision was in line with what most Americans want: stronger legal protections for personal data. In the last few years, the Pew Research Center found that “68% of internet users believe current laws are not good enough in protecting people’s privacy online; and 64% believe the government should do more to regulate advertisers.”

Well, good news. Those in favor of tighter rules just got what they wanted. On January 1, 2020 the California Consumer Privacy Act (CCPA) went into effect. The law – similar to the E.U.’s General Data Protection Regulation (GDPR) – gives consumers a bill of rights of sorts over their personal data. They can demand that a business disclose information it has gathered about them, the reasons for why it does so, and with whom it shares data. If consumers want their data deleted or they don’t want it shared or sold, companies must comply or face hefty fines.

It’s unclear if other U.S. states will follow California’s lead. What is clear is that widespread public anger drove support for the law. 

“This industry backlash or ‘techlash’ has led many giants to rethink their vision of privacy,” Dexter Thillien, a Senior Tech Analyst at London-based Fitch Solutions, told Spectory.

“Apple was the first to try and use privacy as a competitive advantage, which it can do because its revenues come from selling devices (and increasingly services) but not through user data. The recent pivots from both Facebook and Google fall into the same category, with the former looking at encryption and the latter looking to reduce third-party cookies on its browser. Google is also doing more things in-device rather than through the cloud,” he added.

The people who track on the internet know a lot more about you than if somebody’s looking in your window – a lot more

But let’s take a step back and pose more a fundamental question: What do we mean by “privacy”? We all know what the word means in our everyday social life, but does it translate well to the digital realm?

“Amongst other things, every photo and post can tracked and stored forever, as well as the exact location of a particular user through his or her smartphone,” Thillien says.

For a while, he explains, this was not much of an issue because users were simply not aware of the amount of data that was collected about them, and they also liked the convenience of using these companies’ free products. But everything changed from 2018 onwards – in the wake of the Cambridge Analytica scandal – and the public has become much more informed about how personal data is being gathered and used.

With the GDPR and CCPA, consumers might be able to gain more control over this kind of tracking, analysts say, but it is highly unlikely tech companies will stop collecting personal data altogether – it’s just too important for their own operations.

“Facebook and Google are looking to use privacy for their own benefit, as they would still be able to use data to improve their services, while reducing the data available to third parties,” Thillien says.  

But how do the sweeping regulations change their calculus? “Tech players fear fragmentation rather than the rules themselves,” Thillien says. “They do not want to comply with very different regulations across the globe, as it is costly, so they are open to being regulated for the first time.”

The first major regulation was the GDPR in Europe (implemented in May 2018). The E.U.-wide law tried to give users control over their data through strict rules on consent, right to access, right to be forgotten and data portability. As we’ve seen, California followed suit this year with the CCPA, which could be the gold standard for the U.S.

“The key now is enforcement, and this will be crucial as more regulations are introduced in other jurisdictions,” Thillien concludes.

Despite strong public support for these laws, some have voiced concerns about the new privacy “fetish,” as one analyst calls it.

Heidi Messer, a technology entrepreneur and investor, has questioned whether “privacy” as we know it is even possible or desirable.

“We live in a networked world. The internet is built for sharing things at little to no cost. We forward our emails, capture photos on cellphones and tweet opinions, all activities that leave a trail of data that can be collected without our knowledge. Privacy – the right to be free from unwanted intrusion – no longer exists in an absolute sense,” she wrote in a New York Times op-ed.

Data-dependent tech companies create jobs, spark innovation, provide valuable free services, and streamline complicated things to make life run smoother, she explains. Cutting back on data flows out of privacy concerns is like restricting fuel to the powerful engine of global growth.

It’s a powerful insight about our hyper-connected reality. Nevertheless, perception is a stubborn thing, and businesses will have adapt to public opinion and laws in favor of anonymity.

So, entrepreneurs have their work cut out for them. They will have to figure out how not to get hurt by the new restrictions, which could quickly gobble up revenues.

On the other hand, opportunities abound. New apps and technologies can be better adjusted to “incognito” modes, giving users the option of auto-deleting sensitive data. Startups could develop privacy platforms that utilize machine-learning tools to help companies streamline or even automate compliance with the regulations.

In all this, entrepreneurs can expect businesses to spend boat loads. According to California’s attorney general, “the total cost of initial compliance with the CCPA… is approximately $55 billion.”

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