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Concerned About Privacy? Pray Facebook Sees Some Real Competition

A Competitive Market Is Consumer's Best Protection From Misuse of Personal Data

By Published on .

Brian Sheehan
Brian Sheehan

An increase in the number companies who hold your personal information is the best guarantee for safeguarding that information.

Come again?

Yes, an increase in the number of companies who know what you do online is probably your best protection. It may seem counter intuitive, and perhaps a little naive, but let me tell you why it is the only answer in a world where there is already enough personal information in the cloud about all of us to make us squirm if we think about it. When we are forced to think about it, like when we are asked in a survey, 67% of people say they are not in favor of things like behavioral targeting for fear that the information is too personal and will be misused. In reality, that is just what we say in surveys. Most of us choose not to think about it.

So, how can proliferation (i.e., having more of our information on the web with more social networks, search engines and companies) safeguard our information? Because of the inherent nature of competition.

The nature of competition is to satisfy consumer needs. One of those needs is to protect certain personal information while still providing strong, relevant experiences and advertising.

The math of competition is simple. In a competitive market, those who meet the needs of the consumer gain share at the expense of those who do not. As Albert-Laszlo Barabasi, director of the Center of Network Science at Northeastern University notes, "From our e-mail providers to our mobile-phone carriers, most companies' business models are too lucrative to risk mishandling our personal information and angering the consumer."

Sony learned this lesson the hard way earlier this year when they lost over 100 million customer records to hackers and are now defending, among other lawsuits, a $1 billion class action suit in Canada.

Unfortunately, this market imperative breaks down when you are in monopoly—or very tight oligopoly—situations. We have been able to observe this starkly in the case of Facebook.

Facebook is the poster child of the monopolistic company that has no competitive market imperative to protect users' data. In fact, Mr. Zuckerberg's company has a long history of privacy skullduggery from their Beacon fiasco in the late 2000s to numerous surreptitious policy setting changes to secretive and aggressive data sharing and mining policies. It is no surprise that so many people create accounts using fake names in Facebook (i.e., pseudonyms or "pseuds") or that Facebook has been particularly aggressive in trying to weed them out.

So we have an interesting mix of events. Consumers complain about privacy concerns, but they don't opt out even when they can. Younger consumers 18-34 don't even complain much. Quasi-monopolies like Facebook only make moves to protect personal data when threatened with legislation. And as Bob Garfield has noted in these pages, the entire online industry has been feckless when charged with regulating itself because the ability to use and sell behavioral and personal data insights attracts more advertising revenue and leads to more effective online campaigns.

Is this is a quagmire worthy of a "super committee"? Luckily no, we do not need one. This is one issue where the market can sort out itself out provided there is healthy competition. The problem is that there is literally no competition in the social media or search spaces. My advice to government: treat Facebook and Google as aggressively as if they were latter-day Standard Oils or railroad trusts. My advice to consumers: try other search engines and social networks once in a while. Perhaps join LinkedIn. For you people under 25, you will need a place to go when you no longer have the time to spend hours on Facebook anyway. In other words, put more of your information out there, not less. More competition is your best hope to safeguard your personal information.

Oh, and in the process you'll get a better online experience and ads you want to see.

ABOUT THE AUTHOR
Brian Sheehan is is associate professor of Advertising at the SI Newhouse School of Public Communications at Syracuse University. He spent 25 years at Saatchi & Saatchi, the last nine years as chairman and CEO of Team One Advertising in Los Angeles.
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