Friday, April 20, 2012

Are Consumers the Real Losers of the Google Privacy Debate?

“I’m Feeling Lucky” – Google Homepage

Consumers have volunteered so much of their personal information to services like Facebook, Apple and Google that they've cloned themselves digitally. The staggering scale and depth of this data - dwarfing the U.S. Census in sophistication - has triggered privacy advocates to sound the alarm. Their concern is valid. In addition to the risk of identity theft, historically, people’s religious, political or sexual beliefs (data points that are readily available online), have been exploited for downright sinister purposes. Given this context, it’s imperative that the companies building databases full of this information are held to standards that protect the interest of their users.

Yet, overzealous privacy advocates may be doing more harm than good. Their intention is to prevent widespread identity theft but will government regulation harm digital innovation? 

No single company is more likely to deliver the next great era in digital media than Google.  With its millions of users and diverse portfolio of products, Google has created a database unrivaled in quality and scale. No surprise, Google finds itself in the center of the privacy backlash.

The most recent scandal involves Google’s decision to merge its 65 different products and services into one user-agreement. The change to Google’s privacy policy, which went into effect on March 1st, consolidated user data from Search, Gmail, Chrome, Android, YouTube, Maps (etc) into one user-profile. Google’s ambition is to transform users’ personal data into personalized utility. Yet, that did not assuage privacy advocates. On news of the announcement, 36 U.S. Attorneys sent a letter to Google CEO Larry Page to express their concern.

The main problem is that government intervention is premature. There may come a dark day when consumers’ personal information is used for nefarious ends but it will be  preceded by an era of revolutionary innovation. Google’s shift to one user-profile is an indicator we are on the precipice of such a period. 

Consumers already cherish the utility of the Google portfolio, their satisfaction stands to increase exponentially if Google can integrate data from all of its services into one harmonious experience. When the new, personalized Google hits its stride, today’s one-size-fits-all internet will seem as antiquated as a dial up connection. Even though the government intends to protect consumers, it may be depriving them of the greatest digital innovation since search. 

Still, consumer protection is paramount. For Google, compliance with privacy watchdogs should be boiled down to three basic points. One, do consumers knowingly enter into the user-service agreement? Two, do consumers have easy access to clear privacy settings where they can manage the data Google collects? Three, what does Google intend to do with their information?

For its March 1st privacy shift, Google more than satisfied the first two criteria – broadcasting the impending change on homepages for Search, Gmail and Youtube weeks before they took effect, then providing clear links to easy-to-use settings. That leaves the third point – how will Google use the data?

Everyone knows that Google’s intention is to make money. Ironically, this fact serves as the cause for concern when in reality it’s a strong incentive to keep Google honest. In order to make money from consumer data, Google must design services that leverage that data in a way that consumers find useful. Otherwise, no one will volunteer their information for access.

At the end of the day, privacy advocates must not underestimate users’ willingness to exchange personal information for utility. The web is full of businesses using data in positive ways – like the Washington Post, or Netflix, Pandora and Amazon. This is a cornerstone of today’s best online services and more importantly, the modern economy. The risks are certainly higher when you’re talking about Google’s data set, but so are the rewards. 

Disclosure: I own shares in Google stock.

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