Business Leaders Must Take Control of the Privacy Discussion

Data Collection Shouldn't Be Regulated by Governments, but Companies Need to Do More Than Issue Codes of Conduct

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Gunnar Brune
Gunnar Brune
Marketers want private, direct conversations with consumers and thanks to technology this is easier to do. We are all GPSed, Googled and Facebooked, put in matrices, files, rankings, etc. The digital environment not only collects more and more private data, but it also offers marketing many tools for evaluation and promotion online and offline. But it raises concerns whether privacy needs more protection.

The conflict of private data protection and targeted promotional techniques is a new confrontation of Montagues and Capulets in the ancient love affair between brands and consumers. But this time we hope for a less violent end. Targeting means two things: First it means more relevance, less waste and, possibly, less unwanted advertising. But just possibly. Second, it means less privacy. Modern targeting tools allow for deep intrusions into people's lives. The more the marketer knows the more personally relevant the message will be designed -- content-wise, media-wise and time-wise. This can actually mean more unwanted advertising for many people.

Nobody wants to turn back the clock. But most of us working in the marketing and communications business stand on both sides of the discussion. We too are consumers who get spammed and cold-called by machines. But the problem is that the privacy debate is driven by the actions of the black sheep of the business. And these actions already have had dramatic effects in many countries. In Germany, the original draft of new data-protection laws could have put out of business a great number of the direct-marketing companies. It was only due to a six-month period of intensive lobbying that softened the regulation to its final version, which passed the in parliament and federal council in July.

Business leaders have to take the lead in discussing privacy protection, because as long as those phishing black sheep control things, regulations will grow. The public opinion in the U.S. as well as the EU and Germany is in favor of raising the fences for private data. And just as global business and the internet care little about borders, the data discussion doesn't either. Many initiatives already have European or even transcontinental scope. The heat of the discussion started at the beginning of 2009 is far from cooling down. But business leaders have to take the lead because they stand to lose the most. Fortunately the first steps have been taken to prevent too tight legislation.

An initiative of leading digital companies such as AOL, Facebook, Microsoft, Vodafone, Google, Fox, Studivz, Yahoo and many more issued "Safer Social Networking Principles for the EU" in February. These principles concentrate onprotecting children and young people, mainly. The same is true of of an initiative of three of the biggest German social networks companies (studiVZ Ltd., Lokalisten Media GmbH, and GmbH, which represent altogether 20 million accounts). They signed a joint code of conduct to protect users and especially minors on March 11. But the protection of minors is far from addressing the real problem.

This becomes evident when we take a look at the other side: As a reaction to the international nature of consumer protection, the Trans-Atlantic Consumer Dialogue acts as a joint effort of American and European consumer-rights organizations with the goal to develop and submit consumer policy recommendations to the U.S. government and the EU. In May the TACD issued a resolution on social networking. The resolution criticizes the status quo of one-sided agreements for the insufficient user control over their own data. It also points out that "Social Networking Principles for the EU" is a mere declaration of intent rather than clear standards. The resolution furthermore recommends actions and standards for governments and network operators.

Privacy matters are definitely not just a matter for industry groups and NGOs. Real legislative action takes place these days. In July, the new German legislation on the protection of private data passed. As a result the German protection standards have been updated to the reality of today. A key element is the end of the "Listenprivileg," which allowed basic private data to be used in lists for marketing measures. Use of data now basically needs the opt-in of the individual for the use of private data. But a number of back doors allows current practice to be sustained for quite a while. In certain cases where opt-in is not needed, the source of data has to be communicated. (A quite insightful overview in German over the new regulation can be found on the site of the law firm TaylorWessing.)

Just a few days later the Federation of German Consumer Organizations, a non-governmental but partly state-funded organization acting as an umbrella for 41 German consumer associations, filed a suit against the general terms of use of Facebook, MySpace, Xing and other social networks. The suit filed caused quite some attention in the social network scene. Only one day later Xing agreed to the requirements in the suit.

Where the discussion is going is clear. Just as in the old tale of Romeo and Juliet, the two families are in open conflict. We talk new laws and regulations, lawsuits and transcontinental coalitions. Politicians on both sides of the Atlantic have taken their positions. And the current happenings in China and Iran will add to the understanding of the matter. And while the public addresses a broad list of privacy issues, the main industry initiatives only focus on child and youth protection. What we need is a way broader business initiative that covers the whole spectrum of private data generation and use in networks, maps (a number of people filed suits because they can be seen in Google maps), address lists and so forth.

Digital business leaders like Google, Facebook and the bigger networks should rethink their role and take it as a chance to take back the initiative of the business to participate in the design of a new marketplace. Otherwise the end will be bloodier. Legislation and regulation might take direct marketing back into the stone age of untargeted, broadly irrelevant and therefore inefficient and obtrusive spam. And nobody wants that.

Gunnar Brune is managing director of Lowe Deutschland in Hamburg.
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