In June 2012, The Wall Street Journal reported online travel booking company Orbitz Worldwide Inc. was steering people who used Macintosh computers to pricier hotels than Windows users. Orbitz officials said data analysis revealed Mac users were willing to pay higher nightly rates, so the company put the most expensive rooms at the top of the search results pages they saw.
Businesses, particularly those in the world of online marketing and commerce, are increasingly applying analytics to customer data in order to tailor the user experience. But questions about big data ethics are popping up that could force some companies to rethink how they're analyzing customer data and using the findings. When data analysis results in different customers being offered different products or prices, there's the possibility for problems, according to some privacy experts.
"Determining whether someone is going to be a loyal customer is fine. But then if you're changing the way you treat your customer based on that, that's where the questions come in," said Pam Dixon, founder and executive director of the World Privacy Forum, a research and policy analysis group in San Diego.
Most privacy advocates accept some amount of data gathering and analysis. Dixon, for example, said she has no problem with businesses using customer data analytics to predict churn or develop customer profiles for marketing. But when businesses start using personally identifiable customer data, such as names, addresses and Social Security numbers, to change pricing offers or the availability of services, they need to be more transparent and offer people the option to opt out, she said.
A matter of choice -- and fairness
Otherwise, issues of fairness can creep in, Dixon said. As in the Orbitz case, data analytics can be used to induce customers to spend more. Potentially, it can also be used to justify denying mortgages or insurance policies to people. When customers don't know what kind of information is being used to define their experience in the marketplace, they're at a fundamental disadvantage, Dixon said.
Unless [you] decide not to post to any of these forums, you are going to lose a lot of your privacy.
Michael Stonebrakeradjunct professor of computer science, MIT
Most companies and online services that collect and analyze customer data do require people to affirm they agree to a list of terms and conditions, which includes a privacy policy. But that approach doesn't provide customers with a meaningful choice in the matter of how their data is used, said Tim Keller, a partner in the information, technology and e-commerce practice at Minneapolis-based law firm Lindquist & Vennum.
"At some level, I just don't care what the privacy policy says because the whole idea that I have a choice is a myth," Keller said. "Who are you going to negotiate with? Have you gotten Google on the phone and said, 'I object to section 2'? You're just not able to do that."
Keller feels most online services are coercive in that users must agree to a privacy policy whole cloth, or not use a particular service at all. And while using them may be voluntary, it's becoming less so. For example, jobseekers may not be able to apply for certain positions unless they have a profile on LinkedIn. The Federal Trade Commission has said companies can first issue earnings reports and other information vital to investors via Twitter.
Making the case for less data privacy
Not everyone in the big data ethics debate thinks there's too little privacy. Jane Bambauer, a law professor at The University of Arizona, said tremendous societal benefits can come from increased analysis of data.
"The big data movement has a number of positive features, and it's not just a matter of businesses becoming more efficient," she said. "It's also things like healthcare or law enforcement being completely transformed." Bambauer said restricting the collection or use of data could limit the benefits of big data analytics by placing onerous compliance requirements on organizations.
But more than that, she argued that big data analytics is a right under the First Amendment to the U.S. Constitution. Because it involves the creation of new knowledge, it's a matter of free speech, Bambauer said. She worries that new data privacy regulations being considered by Congress and the FTC might impede the ability to develop and share such knowledge.
And she thinks privacy laws that simply require more transparency are likely to be ineffective. "If we have a general consumer right to access private data that's collected about them, I think it might just go the way of privacy agreements where nobody reads them," Bambauer said.
Money talks on big data and privacy
Then there's the economic argument against data privacy. Mike Zaneis, executive vice president of public policy at the Interactive Advertising Bureau, a trade group based in New York, said data collection and analysis has opened up new doors of economic growth in the U.S. that remain closed in places like Europe, which has much tighter data privacy rules.
"There's a reason we call it the information economy," Zaneis said. "Data is the currency of the digital age, and you can't have economic growth and innovation without access to data. Having Congress or the FTC write prescriptive rules around an industry that is changing every day is the surest way to inhibit growth."
As things stand now, though, it doesn't look like online privacy and big data ethics are major concerns for most Americans. Speaking at a big data privacy workshop held in March at MIT, Michael Stonebraker, a database pioneer who is an adjunct professor of computer science at the school, said people willingly surrender data all the time. They do so, he said, because they receive something of value in return, whether it's a free news article or access to an online platform that lets them make contact with other people around the world.
As long as people feel they're receiving adequate value for the data they give up, big data analytics and privacy practices are unlikely to change, Stonebraker added. "Unless [you] decide not to post to any of these forums," he said, "you are going to lose a lot of your privacy."
Ed Burns is site editor of SearchBusinessAnalytics. Email him at [email protected] and follow him on Twitter: @EdBurnsTT.
