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The concept of data privacy in the age of big data may seem somewhat antithetical to most commercial data-gathering operations, but organizations that don't respect their users' privacy may soon have big problems on their hands.
"People don't like this Big Brother thing," said Ingo Mierswa, CEO at RapidMiner, a data mining software vendor. "People freak out fast if you use data too easily."
He spoke at the RapidMiner World user conference in Boston, where a major topic of discussion was how to use consumer data to drive things like targeted marketing and customer segmentation without leaving individuals feeling like their privacy has been abused.
Many companies today use sophisticated data gathering to track potential customers' Web history, social media presence and demographics. Often, this data is collected without users being aware. Mierswa said this lack of control is one of the main problems that can drive consumers to reject commercial data gathering operations.
He said people are generally supportive of data-driven marketing. They want to see advertisements for products they are actually interested in. But when a company starts viewing their Facebook data and Web clickstream data in order to target them in ways that feel invasive, that's when they start getting creeped out. For Mierswa, giving consumers more control over what data is collected and how it's used is an effective way to avoid potential problems.
Giving customers the right incentives to surrender their data is another effective approach. Usama Fayyad, chief data officer at Barclays Group, said consumers don't like it when their data is taken without their knowledge or consent. But if they give it willingly through some kind of reward program, they are more likely to support the idea. He gave airline miles programs, cellphone carriers and navigation apps as examples of programs that effectively induce users to give up their data willingly.
"When you give the consumer the right to say 'yes,' the equation is healthy and no one can get in the way," Fayyad said. "Otherwise there is a lot of trouble brewing."
That trouble may come to fruition for companies that are not careful. Fayyad, who formerly held the position of chief data officer at Yahoo, said privacy was becoming less of a priority at that company around the time he left. This is a trend happening across industries and among most Web companies.
Businesses typically feel that if their terms-of-use agreements include a clause about data use, they are free to use consumer data as they please. However, recent NSA revelations have raised the profile of data privacy in the U.S. Even though those events revolved around government snooping, they had the effect of alerting average Americans to the fact that their data is a hot commodity and that those who seek it may not always have their best interests at heart.
"[Consumers] are starting to see how it can affect them," said Cathy Wissink, director of technology community management at Microsoft. "We're getting to a point where people are losing their [ability] for functioning in society effectively."
She said the products of data collection and analysis today often extend beyond simple targeted ads. Some insurance companies are applying sophisticated analytics to deep user data, sometimes collected without the consumer's consent or knowledge, to base policy underwriting decisions. Lenders are doing the same to determine a customer's credit risk. Vital decisions are being based on consumer data that the consumer has no control over.
For John Myers, research director at Enterprise Management Associates, issues of privacy in the age of big data call for more public debate. The situation may eventually demand federal regulatory action, but in the meantime, businesses that gather and analyze customer data need to do a better job of explaining how and why they are using it.
"I think we have to be better at explaining that," he said. "We need to be able to have that discussion. We need to work on those policies and procedures."
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