What I want to say about data collection keeps growing as the Facebook controversy picks up steam. So there will now be more than two posts about this topic.
Today, I want to first bring back my other post, called "The Paradox of Data Collection." The paradox of data collection is that average consumers claim they have “nothing to hide” while businesses believe the data benefit their customers, and yet the collection and trading of data occur largely in secret.
The Facebook scandal exposes the reality that the collection and trading of private data are executed in the shadows. The buyers of the data are invisible. What they do with the data, and how the data are used to influence people’s behavior are hidden. The data collectors deploy an array of evasive tools such as opt-outs, obscure language inside terms and conditions which the vast majority is known not to read, and site usage taken to imply consent.
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One explanation for this paradox is the underlying conflict of interest between business growth and consumer needs.
Take an example of an airline search engine, like Kayak, or Expedia. Just last week, I searched for a flight to St. Louis since I am going there next week for my workshop and talk. Kayak has this price recommendation feature that tells users to wait for a better fare or buy now. Initially, it kept telling me wait; eventually, it said buy now (in this case, following their advice led me to a higher fare than if I just purchased the first time I searched.)
Kayak's story is that it provides value to users because it has past fare history and so can predict - allowing for some level of error - whether the current price is good or not. (I wrote an article about them for FiveThirtyEight.)
But that is really only one side of the story.
Websites like Kayak also collect extremely detailed information about every search I did. For example, it knows that I have pretty strict requirements for when to arrive in St. Louis and when to leave. It knows that I only want non-stop flights. It knows which times of the day I prefer. It even knows my second, third and fourth-choice flight dates. It knows my airline preferences.
What can it do with such data? It's obvious that I am a price-insensitive traveler because I am traveling on business and have such strict time constraints. Therefore, the airlines do not have to give me any deals. The airlines are happy to pay Kayak to get access to the search data for this reason.
In the user agreement with Kayak, I have most likely given them the right to sell my data to third parties, in this case, the airlines. If the data did flow out to the airlines, it could be used against my own interest.
If I knew that Kayak took my search data and sold it to United, and United realized that I was price-insensitive and jacked up the price, I'd be an unhappy camper. I'd consider that Kayak has betrayed my trust because I didn't want my search details to go to United. So United and Kayak would have traded the data in a hush-hush manner.
Could the same process benefit some users? Sure. The only ones that would benefit are those travelers who are wavering and therefore the airline may need to offer a discount to close the sale.
In short, business goals are frequently in conflict with consumer needs because businesses want consumers to spend more, while consumers want to get the benefits for less. Data reveal information about consumers that are not previously known to the businesses. If businesses are using the data to benefit consumers, then there should not be any need to hide behind evasive tools.
Definitely there are going to have to be limitations on what data can be shared but it is going to be complicated because some things need to be shared. Amazon is going to complicate things because it shares data between its business units which are effectively companies. Maybe the limitations will make the huge web companies less appealing investments.
Posted by: Ken | 03/23/2018 at 07:55 AM