Our data is being collected and has been collected since the dawn of the internet. As the world has become increasingly more connected online, enormous troves of data are being collected on users. With this data collected, there is a growing concern for consumer data privacy online. While there is a temptation to lump all Silicon Valley companies together for their data collection practices, no two companies are alike simply because each offers different services.
The goals of a company tend to guide their data collection practices. Companies with a goal of selling products have a very different protocol than companies with a goal of raising advertising revenue. While some companies collect data and sell it to a third party to generate advertising revenue, like social media websites and search engines, others sell a physical products to consumers as their primary source of revenue, such as companies like Apple. Other companies have a more hybrid model that includes data for advertising and optimization, while also selling tangible products, like Amazon.
These differing business models in part dictate how a company collects and protects data. Apple’s products, for example, are not driven by data collection, because it generates revenue directly from consumers who buy their devices. Therefore, data is not as valuable to a company like Apple since they are not dependent on advertising revenue generated from consumer data, and is actually incentivized to minimize data collection.
They design their products with the intention of minimizing the amount of data held for business and security purposes. The company takes into account all privacy considerations including a review process of an app’s data collection processes before it is available on Apple’s App Store. Apple requires apps to tell consumers how their data is being collected and has even pulled apps from their store that do not meet Apple’s standards. Apple also minimizes its data collection and uses end-to-end encryption on iMessages. Part of what you buy with an Apple is their enhanced security and data privacy features, not just the slick design of their products.
Other companies have business models built on advertising revenue, which monetize user data. In addition to the information you give to a social media platform or search engine, companies that rely on data for a revenue stream, may also scrape additional information such as the types of ads you click on and your activity on the website. Advertisers are reliant on data and want as much data as possible to target users. It’s logical that companies that rely on advertising revenue would want to collect much more data than simply transactional business models since advertising is the main mode of revenue.
Other companies, like Amazon, rely on a more complicated business model that incorporates more moving parts than others to sell products on their platform. For example Amazon recently received a patent for their anticipatory shipping method. Through data collected on the user, the company predicts when you might purchase an item and sends it to the nearest warehouse, creating a quicker turnaround time for consumers to receive their package. Since Amazon’s focus is on fast delivery, the company uses data to meet their goal of super fast delivery.
Of course this isn’t the extent of why the exchange of data is valuable for the internet’s functioning or companies’ ability to raise revenue, data collected is also important for new innovations, including technologies utilizing artificial intelligence for tasks beyond predictive advertisements.
If an individual is truly concerned about sharing their commercial data, s/he does have options. For example, because Apple products are not subsidized by data they may cost more in terms of cash, but are cheaper in terms of privacy.
There are real concerns for data privacy. But it is clear that a one size fits all approach would not work for regulating consumer data simply because all tech companies use data for various purposes, which result in different options for consumers and a varied marketplace.
Authors: Katie McAuliffe and Demri Scott
Photo Credit: g4ll4is