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This article was contributed by Daniel Barber, CEO and co-founder of DataGrail,
After years of consumers happily surfing the web and recklessly using apps, data privacy became the “thing” in 2021. Thanks in part to Apple’s efforts to provide consumers with more information about how their data is used. They received a wake-up call when their favorite apps and websites started asking them to agree to cookies or make their privacy preferences known – a reminder that companies track their online behavior.
But it wasn’t just consumers who were forced to think about data privacy. Many companies had to reconsider (or reconsider) their data privacy practices. Some had to pay because of their practice – such as a એ 92 million settlement of a class action lawsuit brought by users accusing TikTok of data misuse or a record તરફથી 886.6 million fine from Amazon for violating the GDPR.
In short, data privacy has become a concern for consumers and businesses alike. So, what will happen in 2022? A truly transformative year is on the horizon.
As consumers gain data privacy awareness, they will take action
As consumers become more educated about their data privacy rights, more people will be more interested in knowing what kind of information they have and how their data is handled. In just the first year of the California CCPA, B2C companies have received approximately 137 data subject access requests (DSARs) per million identities. At the time, California was the only state to have a privacy law on books. Virginia and Colorado added laws this year, and more states are trying to pass privacy laws. This will translate exponentially into DSARs and will not sell future requests (DNS) as customers learn about data privacy and feel empowered to determine how their information is handled.
Because companies do not yet have systems in place to handle the mess of personal data that resides in many of their systems and applications, consumers are likely to have really frustrating experiences learning how their information is used. In some cases, they may not be able to find all the data being collected – or, at the other end of the spectrum, they may be shocked to see how much companies know about them when their inquiries are completed.
Companies push the panic button because of app tracking transparency
Europe’s General Data Protection Regulation (GDPR) set the data privacy wheels in motion in 2016. This gave companies ample time to explore systems and policies (because implementation did not begin until mid-2018). Not so now, with the EU imposing more than 1.14 billion in fines in the third quarter of 2021 alone. This is about 20 times the total of Q1 and Q2, and 3 times the total amount of fines in 2020 as a whole. However, most of the news headlines, plus eye-catching dollar figures, for infringing on tech giants like Google and Amazon, are hitting a huge number of fines on one SMBs. This trend is expected to continue for the foreseeable future, causing headaches for any company that hopes to avoid breaches of consumer confidence. It is still too early to evaluate penalties for laws such as the CCPA, but expect them to comply.
With millions of users choosing not to track, as well as rejecting accessible user data, third-party data brokers are filling in the data void with digital fingerprinting practices. Digital fingerprinting methods recognize the adequate characteristics of a customer’s device so that a profile can be generated and used for ad targeting. Sometimes these profiles are more complete than can be made from customers who agree to share their data with the app and services. Interestingly, digital fingerprinting is virtually invisible, highly effective and consumers have no way to stop it.
Expect these practices to become more prevalent in 2022 as digital fingerprinting becomes more sophisticated – or in other words, companies can decide whether they will fit consumer data privacy choices. Solutions are inevitable.
Zero-party data for further personalization
Zero-party data is emerging as a potential solution that keeps customers happy, satisfies companies and exposes regulators. Zero-party data is a practice in which companies ask questions to provide customers with a highly customized, personalized experience. Think about the questions that a sales associate might ask, whether you’re shopping in person or maybe working with a stylist. Consider the data you provide from companies like Netflix or Amazon to get better recommendations on what to watch or buy. Customers voluntarily and intentionally provide even the most minute details to get the best possible experience.
With zero-party data, personal information is taken directly by the site or application to which the person is associated – and remains there until it is “anonymous” or the customer agrees to its sale. The process is more transparent and delivers something positive and desired to customers. However, the company still receives information that it wants to build relationships, better serve customers, and sell more products. But make no mistake, zero-party data does not mean less data (actually, even more data is being collected), nor does it mean that data has not been sold or shared. This means that consumers knowingly offer their information to the brand. However, this is a big difference. It gives customers direct control over the information they choose to share in exchange for a better experience (although in many cases they do not say how long their data is retained). Because of this, it will become a favorable approach to data privacy, at least in the near term as companies work on some of their data privacy management issues and new innovations begin to surface.
If only one of these predictions comes true next year, data privacy will be in a very different place than it is today. Consumers will have greater control over what companies are allowed to know and how they can use this personal information. This will inevitably change how marketing is done, but it will also enable companies to build new types of relationships with customers based on trust and transparency.
Daniel Barber is the CEO and co-founder of DataGrail.
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