Last week, America’s House of Representatives made a landmark decision on consumer privacy. The House repealed Obama-era rules put in place by the Federal Communication Commission (FCC), rules which govern Internet Service Providers (ISPs) access to and use of consumers’ online browsing data.
Previously, ISPs had to obtain “opt-in” consent before using, sharing, or selling consumers’ data. No longer. April 3rd saw President Trump sign a new law enabling ISPs to access and use all but the most sensitive personal information, meaning that browsing histories are fair game, while health data remains protected. This could lead to personal data being monetized and sold to digital advertisers. Rather than take difficult decisions about the best form regulation, Trump has shirked responsibility and thrown the baby out with the bathwater. Consumers, once again, are getting the raw deal.
An unsustainable obsession with advertising
ISPs and their armies of lobbyists, advocates and advertisers, argue that that the new legislation levels the playing field. They argue that it opens up consumers’ digital data to players in the ISP market – Comcast, Verizon, AT&T – and challenges the dominance of companies like Google who grow their businesses through advertising. This is an argument built on shaky ground.
It is certain that ISPs will be able to generate huge sums of money – yet what value will they really create? Digital advertising is a broken model, riddled with corruption, deceit, inflated results and waste. It does little for consumers except ignite frustration, while providing questionable returns for business.
Like US officials, some businesses have adopted a myopic view that advertising is the best way to create value from data. They have fallen into the rut of thinking that this is the best or even only business model for the internet. It is this very tunnel vision which is stifling innovation and real value creation for consumers and for businesses. When, in fact, in the digital age, there is huge opportunity to be had beyond advertising. We can do better.
Advertising will, of course, still exist – but it won’t be the sole driver of the digital economy. The biggest opportunity for businesses is the Personal Information Economy (PIE) and the new data-driven services it is creating. These add value to consumers lives. Here, consent and permissioned use of consumer data is integral to creating trust. An individual’s data can be used by them or on their behalf to make life more efficient, more profitable and safer.
The real data opportunity
These new services help consumers to make better decisions, such as which car to buy, the best career path to follow and how to keep their data secure. These Personal Information Management Services, or ‘PIMS’, will be huge revenue generators and boost the economy. A study that we undertook provided a conservative estimate of a UK PIMS market worth £16.5bn in the UK alone. We now think this is an underestimate. Whatever it is it, is a market worth reaching for.
Of course, legislation is not the only factor that will drive successful digital economies, but it is certainly one of the big levers. This prompts the question: in what kind of legislative environment will PIE thrive best? Will a permissive personal data market, such as appears to be unfolding in the US, create the need for privacy-enhancing tools and services, and consequently place the USA at the forefront of the digital privacy market? Or will a consented legislative market, the EU for instance, force businesses to invest in new business models which create value from personal data in trusted ways?
The legislative landscape
In a time when Europe is experiencing an unpreceded wave of new regulations – GDPR, PSD2, Open Banking – to protect consumers’ right to privacy and drive competition in markets in a digital world, it is unsettling that quite the opposite is taking place across the pond.
Soon, UK companies will be legally obliged to observe new procedures and take greater responsibility for how they collect, share, and use consumers’ data. This is excellent news.
Some businesses will decry new regulation as burdensome and bureaucratic – they are wrong. Enlightened others, like many of our clients, will instead embrace it as an opportunity, as a competitive differentiator. Companies will have to become more creative, competitive, innovative, and, in some industries, less stagnant about how they deliver and market their products and services, even rethinking the very services which sit at their core.
When it comes to personal data regulation, it is a case of who dares wins. We believe that governments who enforce sensible, just regulation will be rewarded. Consumers will be respected and PIE will flourish. Sorry President Trump, but those who take the lazy option and ignore the need for regulation will suffer.