Part 1: The Tradeoff

I do product management for a digital marketing company. Both are domains where leveraging user data is crucial to providing more effective experiences. But I’m also cognizant of the privacy risks of exposing too much of my own data to too many companies. In this segment (the first of a 3-part series), we will explore what this grand bargain of the digital age entails.

Personalized 1:1 experiences are a staple of modern technology companies; think of the songs, movies, and merchandise recommended by Spotify, Netflix, and Amazon, respectively. For the most part this works pretty well. By the very nature of using these products you generate much of the data their algorithms need to determine what else you may like. But what about when data created by using one product is applied elsewhere, as is often the case with marketing and advertising? For example, should the content of the conversations overheard by your smart home device (or any device) be used to personalize your experience within the device maker’s other products? What about sold to 3^rd party marketers to personalize your experience elsewhere?

As a millennial towards the high end of the age range, I have the privileged perspective of being in the last cohort to remember life before everything was online. A time when everything existed only in the “real world.” Studies have shown different attitudes towards online privacy by generation, but it is not necessarily the case that younger users are less concerned; the opposite is true for Generation Z, though like most things the truth is nuanced—it depends on what type of data is in play. There may be those who don’t worry about essentially having their whole lives on the internet and the data generated available for use anywhere else in the connected world. In fact, there may be those who expect it. Most consumers however, whether digital natives or immigrants, need to be convinced at some level. Or at least they should; every new form filled in, credit card saved, cookie enabled, and app access privilege granted means a little less privacy, and one more potential entry point for the hacks that have become all too frequent.

Europe took a regulatory approach to helping address the issue with the GDPR. This is a big deal, and its impact will be closely watched when it takes effect in mid-2018. But consumers are increasingly aware of these dangers, and there are a growing number of tools available to those who wish to obfuscate their online identity—ad blockers, VPNs, and encrypted or private alternatives are particularly in vogue. Furthermore, after the U.S. Senate’s recent vote to rollback FCC privacy regulations, it seems unlikely the current administration will follow the regulatory path. For these reasons a market-based approach may also be viable, and perhaps the only option in some countries, not to mention preferable to the companies tasked with implementing such regulation. So, what exactly does this model look like?

Look out for Part 2 on the blog to learn about the point of equilibrium: the intersection of user cost and optimal user experience.