Ovum: Big data collection colliding with privacy concerns

Changing consumer attitudes about online collection of personal data may force new business models, analyst says

A recent push in the IT industry to collect and monetize big data is headed for a clash with privacy concerns from Internet users and potential regulation from some governments, according to tech analyst firm Ovum.

Internet advertising networks and other companies that depend on the collection of personal data online should prepare for a "rebalancing" of the relationship between themselves and Web users, with Web users having more control of their data, said Mark Little, principal analyst at the U.K. tech and business analysis firm.

Web users are becoming more aware of privacy tools and appear ready to use them, Little said. "More and more consumers are deciding to effectively become invisible in data terms on the Internet," he added. "It will shake the Internet economy as more and more users decide they don't want to be tracked."

Ovum, in a recent survey of about 11,000 people across 11 countries, found that 68 percent said they would use a do-not-track feature if it was easily available on a search engine. Just 14 percent of respondents said they believe Internet companies are honest about their use of personal data.

"Unfortunately, in the gold rush that is big data, taking the supply of little data -- personal data -- for granted seems to be an accident waiting to happen," Little said in a written statement regarding the Ovum findings.

Ovum's survey results point to trouble for online business models that rely on the collection of personal data, including targeted or behavioral advertising, Little said in an interview. In addition to consumer concerns about online privacy, governments in Europe and North America are looking at new ways to protect consumer data through regulation, he noted.

"You are getting this squeeze between a hardening consumer attitude and tighter regulation," Little said.

Privacy advocates say the recent focus in the tech industry on using big data raises concerns.

"Big data is both a boon and a curse for users," Jeffrey Chester, executive director of the Center for Digital Democracy, said in an email. "Tens of thousands of data sources on individuals  can be compiled in milliseconds."

The profiles allow marketers, politicians and businesses to predict consumers' futures, he said, "whether we will be a big and low-wage lifetime earner, how we may respond to medical concerns and whom we can be persuaded to vote for."

In the long term, companies that collect personal data online may have to find new methods than the current approach of stealthily placing a cookie on a Web user's browser, a practice Little calls "data fracking."

A growing number of consumers seem to think the current model of data collection, with free Web content or services in exchange for their personal data, is out of balance, he said. Consumers are "feeling exploited," he said. "There's that feeling of, 'what am I getting out of this?'"

Data collection companies may need to establish stronger relationships with their customers or offer more incentives for customers to give up personal information, Little said. In the U.K. grocery store chain Tesco is allowing its customers to see their personal data collected by the company, he noted.

Little also sees potential for a new business model in which consumers create personal data vaults that they control, giving consumers a choice about which companies they share their personal information with. A company called Personal is one company that has begun offering personal data vaults, he said.

A move toward more consumer control of personal data won't be all bad for Internet companies, however, Little said. Personal data vaults will contain more accurate and forward-looking information than the current data collection methods can gather, he said.

The change in relationship between consumer and data collectors will change slowly, and Internet businesses shouldn't change their data collection practices immediately, Little said.

Internet companies should "keep on riding the margins of regulation and consumer acceptance in order to maximize your data set, because that is just good business," he said. "But prepare for changes where consumers start to want more of a relationship with their own data and the people who are collecting it."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags advertisinge-commerceovumregulationTescoMark LittleCenter for Digital DemocracygovernmentinternetprivacyPersonalJeffrey Chestersecurity

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