“When everything is coming your way, you’re in the wrong lane" ― Stephen Wright, Comedian
Attention C-level executives: If you make only one New Year’s resolution for 2019, make it this: use personal data intelligently, transparently and ethically. Be aware of what customers are thinking when it comes to personal data protections (PDP) and tune your activities accordingly.
Why? Because, never in my 30-plus year career have I seen such a strong focus on business ethics — particularly when it comes to data. The focus is pervasive, covering areas as diverse as personal data collection, analytics application, marketing targeting and social media platforms. In many cases, corporate growth objectives seem to be pitted against questions around ethical behavior and data use. Which isn’t surprising because while data itself is ethically neutral, it’s use is clearly not.
Much more surprising is how fast the momentum has transitioned to an environment where we are continuously bombarded with news about data breaches, data misuse, and the intentional misleading of consumers and lawmakers about everything from privacy policies to the scope of misinformation (Dictionary.com word of 2018) spread via social platforms. And the backlash (word of 2018 runner-up) is and will continue to be significant.
Former National Security Council director Joshua Geltzer and former White House technology advisor Dipayan Ghosh made several predictions for big technology in 2019 that should have all companies, regardless of industry, paying very close attention. These include: increasing data ethics and protection expectations from consumers, an expanding focus by lawmakers, politicians and the news media on misinformation, and continued bottom line impacts for companies that skirt established and expected ethical lines.
Examining these predictions more closely reinforces the notion that the backlash from ignoring ethical use of data is something CEO’s cannot afford to face.
Related Article: Ethical Practices in a Data-Driven B2B World
Consumer Awareness and Data Ethics Expectations
A recent survey of US consumers by my company, SAS, illustrates how focused consumers are on the issue. Seventy-three percent of respondents said their concern over the privacy of personal data has increased in the past few years and 67 percent think the government should do more to protect privacy. When it comes to the type of protections consumers are asking for, the responses mirrored protections currently afforded to European citizens under the General Data Protection Regulation:
- 83 percent would like the right to tell an organization not to share or sell their personal information.
- 80 percent want the right to know where and to whom their data is being sold.
- 73 percent would like the right to ask an organization how their data is being used.
- 64 percent would like the right to have their data deleted or erased.
Even more ominous is what has happened to consumer trust as awareness has risen. When asked to identify industries where consumers were very or extremely confident regarding the ability to keep data secure, the health and banking industries scored the highest, coming in at a very poor 47 and 46 percent respectively. Government or state agencies were next at 29 percent and social media companies ranked last with a dismal 14 percent.
What’s more, consumers are not just expressing concern. They are taking action. Sixty-six percent have taken steps to secure their data, like changing privacy settings, removing a social media account or declining terms of agreement.
Facebook has been hit particularly hard in all of the areas highlighted by Geltzer and Ghosh, but the lowered trust levels and corresponding consumer actions are alarming. The latest Pew Research found that Americans are changing their relationship with the company. Seventy-four percent of respondents have adjusted their activity: 54 percent changing privacy settings, 42 percent taking a break from using the app and 26 percent deleting the app entirely. More bad news? The younger generation is taking the most extreme action. Forty-four percent of users between the ages of 18 and 29 deleted the Facebook app from their phone in the past year — nearly four times the number of users aged 65 and older (12 percent) who have done so.
Related Article: Facebook: A Case Study in Ethics
Legal and Media Attention to Data Use
Consumers are not the only ones paying attention.
Facebook is facing numerous lawsuits over data misuse and ad targeting including one brought by Washington, D.C., Attorney General Karl Racine, accusing the social media giant of wide-ranging privacy violations. The City of Los Angeles is suing the IBM subsidiary, The Weather Channel, for “covertly mining the private data of users and selling the information to third parties, including advertisers." The negative publicity for Facebook has been brutal, including a particularly inflammatory expose from the New York Times charging it with deflecting, delaying and denying knowledge of and responsibility for Russian election meddling.
Both individual states and the federal government have either passed or introduced laws aimed at data privacy and ethical use. These include a law regulating data brokers in Vermont, the California Consumer Privacy Act of 2018 — billed to be the toughest data privacy law in the country, the federal Data Care Act introduced by a group of US senators, and a competing bill introduced by a congresswoman, The Information Transparency and Personal Data Control Act.
Regardless of where we end up in terms of data privacy and ethical use regulations, one thing is clear: there will be regulation here in the US as well as in Europe. And privacy violations will be well-publicized.
Bottom Line Impacts: Ignore at Your Own Risk
Fines from regulation violations and lawsuits, eroding customer trust and negative publicity clearly take a toll on the bottom line. Cambridge Analytica was forced into bankruptcy and out of business shortly after its data misuse scandal surfaced. And investors are reacting. Facebook, Amazon, Apple, Netflix and Alphabet lost a combined $822 billion in market value in the two months from August to November, with Facebook stock price falling from a high of $214 to $145.
The writing is on the wall. Data (and business) ethics should not be an oxymoron. If you treat it as such, there will be consequences.