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The worm turns on Personal Data

Posted on: Monday 22nd of September 2014

Take a few snippets from this week’s news.

First, Apple CEO Tim Cook’s Open Letter on privacy. Here is what he said:

“Our business model is very straightforward: We sell great products. We don’t build a profile based on your email content or web browsing habits to sell to advertisers. We don’t “monetize” the information you store on your iPhone or in iCloud. And we don’t read your email or your messages to get information to market to you. Our software and services are designed to make our devices better. Plain and simple.”

With this statement he’s creating clear blue water between Apple and other Silicon Valley players such as Google and Facebook, with a very clear message. We do have a choice. The data landgrab and monetisation model currently being pursued by Google and Facebook is not the only possible business model. There are other models too, such as making and selling great products. Remember that?

Hard on the heels of Tim Cook’s Open Letter came an announcement from Fitbit. “We don’t sell your data”, it said, responding to criticisms from a US Senator who is campaigning for federal regulations on the subject.

Then there is the intervention of the German Interior Minister Thomas De Maiziere – a proposal that companies should be banned from building profiles of customers using their personal data.  This is one of the issues behind the EU’s re-opening of anti-trust investigations against Google.

Now add in a report from the Financial Times arguing that that the US tech industry “has failed to appreciate the mounting global concern over its record on online privacy and security and must act faster to prevent deeper damage to its image.” The article quotes:

  • a Facebook investor saying “Silicon Valley is quite oblivious to the degree to which this crescendo is building up in Europe.”
  • CEO Marc Benioff as saying internet companies are paying “a terrible price” for imposing their US-centric views,
  • a former Facebook board member saying “The US government and tech companies will have to step up significantly if they want to regain the world’s trust.”

An inflection point

All in all, this worm really does seem to be turning.

But what are the implications of this shift?

We can see at least three. First, Apple has made ‘privacy’ a key brand issue. A litmus test of trust. A point of differentiation. Now every other brand will be under pressure to say where they stand. Personal data is fast becoming a brand issue. A Board issue. A business model issue. Organisations that fail to ‘get’ this are going to have a hard time.

Second, there is now broad consensus amongst Governments, regulators and politicians that ‘something must be done’. More, tighter regulations are on their way. Businesses have to be ready to adapt.

The missing link

Third, there is one vital ingredient – and opportunity – that’s still missing from this debate. What is the positive, trust-building, wealth creating answer to today’s data explosion?

Currently, we’re seeing a battle between two alternative models.

Model 1 – Make great products, and use data to support this. This is the model that EU Data Protection Regulations were designed to support.

Model 2 – Make the customer the product.  Collect as much data as you can about customers and monetise this data. This model is now proving unsustainable. It undermines trust. It’s not a fair value exchange.

But is that it? Are these the only choices before us?

No. A third model is emerging.

Model 3 – Make customer data a customer product. Treat the customer’s data as the customer’s. Treat personal data as a personal asset, helping individuals collect and use it to help them pursue and achieve their own goals. By turning customer data into a customer service it’s possible to add new layers and dimensions of value while building trust – because now the customer is in control.

In a data rich age, Model 3 is the only sustainable way forward. Now the race is on to make it real.