Data privacy is a fundamental human right often challenged in the digital age. As we use more and more online services, we share more and more personal data with various entities, such as social media platforms, e-commerce sites, search engines etc.
This brings many benefits for both companies and users. On the one hand, companies get to know their customers better, to understand their intentions, desires and needs and improve their offerings, while on the other hand users get personalized recommendations, tailored ads, special offers and so on. The downfall? This permanent exchange of data opens the door to many risks, such as identity theft, cyberattacks, data breaches, and surveillance.
In this article, we will explore the paradox of data privacy in the digital age: how we, as a society, are becoming more open, but also more vulnerable, how data trading is done for convenience, while also carrying security risks and how the perception of data privacy changes from companies to end-users.
Data privacy. A brief history
Data privacy is the right and ability of individuals and organizations to control how their personal data is collected, used, and shared. Data privacy has become more and more important over the years, as technological advancements have enabled the creation, processing, and storage of massive amounts of data.
The concept of data privacy can be traced back to the late 19th century, when two U.S. lawyers, Samuel D. Warren and Louis Brandeis, wrote an article called The Right to Privacy, arguing for the protection of the “right to be left alone” from intrusive media and technologies.
In the 20th century, data privacy became a global concern, as various international and national laws and regulations were enacted to safeguard the privacy rights of individuals and groups. Some of the milestones include the U.N. Declaration of Human Rights, which recognized the right to privacy as a fundamental human right, the EU Convention on Human Rights, which established a legal framework for data protection in Europe and the U.S. Privacy Act of 1974, which regulated the collection and use of personal data by federal agencies.
Fast forward to the 21st century, data privacy is facing new challenges and opportunities, as the emergence of the internet, social media, cloud computing, big data, artificial intelligence, and biometrics created new forms and sources of personal data.
The European Union’s General Data Protection Regulation (GDPR), which came into effect in May 2018, is one of the most comprehensive and strict privacy laws in the world. It gives users more control over their personal data and imposes hefty fines for non-compliance. As of October 2023, the total amount of GDPR fines imposed was over 1.2 billion euros.
Not to mention that the COVID-19 pandemic has also raised new challenges and opportunities for data privacy, especially with the use of contact-tracing apps and digital health passports. While these technologies can help contain the spread of the virus and facilitate travel and mobility, they also pose potential threats to users’ privacy rights and civil liberties.
The consumer’s perspective
Tim Cook, CEO of Apple said “The right to privacy is really important. You pull that brick out and another, and pretty soon the house falls.” From the consumers’ point of view, things cannot be more confusing than they are at the present time. On one hand, the consumers want to benefit entirely from sharing data and information about themselves and their needs, but on the other hand they find the entire process of sharing data time-consuming, hard to read, understand and not so truthful.
According to a survey by Cisco, 81% of respondents say that the way an organization treats personal data is “indicative of how it views and respects its customers.” The same survey also found that 84% of customers are more loyal to brands that have strong security controls, and 76% of consumers would not make purchases from a company that they did not trust with their data.
It’s easy to see that the way a company treats personal data reflects on the consumers’ opinion of the company. In one word (or three): it builds trust. And trust leads to loyalty and establishing a good reputation. Milestones that every company aims for.
One of the main benefits of data privacy is that it protects the person’s personal information from unauthorized access and misuse. Personal information can include name, address, phone number, email, social security number, bank account details, credit card information, health records, browsing history, location data, and more.
At the same time, it safeguards financial information from falling into the wrong hands. Many online transactions involve the exchange of sensitive financial information such as credit card numbers, bank account details, or payment passwords.
Another benefit of data privacy is that it shields the customers from invasive advertising tactics. Online advertising is a major source of revenue for many service providers and platforms and some of them are no strangers to bending the rules of data privacy.
Some advertisers tend to use intrusive methods to collect personal data and track online behavior to deliver targeted ads that match the consumers’ interests, preferences, or needs without notifying them. These methods may include cookies, web beacons, device fingerprinting, location tracking, cross-device tracking, and more. And what’s even worse is the fact that some companies share this data with third parties.
One of the main challenges that customers are facing is that data privacy may limit the functionality or quality of some online services and platforms. For example, some companies may rely on personal data to provide personalized recommendations, suggestions, or content that enhance the user experience or satisfaction. If one chooses not to share personal data or opt out of certain features, that person may miss out on some benefits or opportunities that these online services and platforms offer.
It’s easy to see how a pro like “getting what you want from an online visit” can turn into a con. As highlighted in the intro of this article, data privacy regulations have come a long way, but in the end it’s each company duty to offer enough evidence and generate trust amongst its customers, so they feel at ease when they browse their website, make an online purchase, share their card info or simply open a newsletter.
The companies’ perspective
Data privacy is a crucial matter, especially for companies that collect, process, and use personal data from their customers, employees, and partners. And as we’ve seen above, by respecting data privacy companies can gain trust, loyalty, and competitive advantage in the market.
However, data privacy is not easy to achieve, especially in the United States, where there is no comprehensive federal law regulating data protection. Instead, there are multiple state-level laws (such as the California Consumer Privacy Act (CCPA)), that impose different requirements and obligations on companies. This creates a complex and fragmented legal landscape that challenges companies to track and comply with various regulations and creates confusion amongst the end-users or consumers.
Moreover, data privacy is not only a legal issue, but also a technical and organizational one. Companies need to have the right tools, processes, and people to manage and protect their data assets.
This is why most companies are facing challenges like:
- embedding data privacy into the core of their business strategy and culture, rather than treating it as an afterthought or a compliance burden;
- getting visibility into all their data sources, types, and flows, and understanding the sensitivity and value of their data;
- implementing effective access control and data governance policies to ensure that only authorized users can access and use data for legitimate purposes;
- focusing on extracting insights from data, rather than collecting and storing personal identifiable information (PII) that may pose privacy risks;
- investing in data security technologies and practices to prevent data breaches and cyberattacks that may compromise data confidentiality and integrity;
- finding and retaining qualified data privacy professionals who can help design and implement data privacy programs and solutions;
- communicating clearly and transparently with customers about how their data is collected, used, shared, and protected, and providing them with choices and control over their data.
Data breaches are a serious and unfortunately common issue which companies are facing nowadays. According to IBM the global average cost of a data breach in 2023 was USD 4.45 million, a 15% increase over 3 years. The largest data breach ever recorded was by Cam, an adult streaming site, which exposed 10 billion records in April 2023.
At the same time, the education system in regard to data privacy seems to lack structure, as “two-thirds of U.S. internet users have no idea about their country’s privacy and data protection laws, and only 3 out of every 100 Americans understand the current online privacy regulations.”
It’s easy to see that the challenges that arise for companies need to be treated with the utmost of importance and need permanent investments, either financial, technological or through specialized human resources.
Data privacy is not a one-time job, but a continuous process that requires constant monitoring, evaluation, and improvement. Companies that embrace data privacy as a strategic asset and a competitive differentiator will be able to create value for themselves and their customers in the long run.
No matter which perspective we analyze, data privacy is not a zero-sum game, where one side wins and the other loses. It is a collaborative effort that requires trust, transparency, and accountability from all parties involved, either companies or customers. By respecting data rights and responsibilities, we can create a data-driven society that benefits everyone.