South by Southwest (“SXSW”) Interactive kicked off last week, and Covington was there to cover privacy and big data’s big buzz, a topic which dominated much of the conference.  Among the events that took place last Friday were “Big Data Inverted: The Best Candy from Strangers?” and “Privacy Under the Covers: The Naked Truth.”  The big-data panel included Chris Colborn, R/GA Global Chief Experience Officer; Dinkar Jain, Google Product Manager; and Maria Bezaitis, Principal Engineer at Intel.  The privacy event was a “Core Conversation” that featured MeMe Jacobs Rasmussen, Adobe’s Chief Privacy Officer, VP, and Associate General Counsel; and Shaina Boone, SVP of Marketing Science at Critical Mass.

Big Data Inverted started with the premise that, as big data transforms relationships and information sharing, “people are beginning to unintentionally ‘barricade’ themselves from new experiences.”  While much of the discussion focused on how businesses can structure their models to leverage big data so that it is useful and relevant, better connected, and more available, privacy and consumer trust necessarily came up throughout the discussion.  In particular, many focused on the two sides of the big data coin:  potential and privacy.  Businesses stand to benefit if they can tame and harness big data, but not if they ignore privacy concerns inherent in amassing huge quantities of sensitive information.  Many are suggesting, however, that businesses can profit from privacy too — that is, because privacy has become so important to consumers, it can be used competitively.

Mr. Jain opened the panel by dispelling the notion that big data is a recent revolution.  Acknowledging the widely-held perception that lots of data is now concentrated in the hands of only a few big companies, Mr. Jain noted that to the extent this phenomenon is true, big data is not a new trend.  Rather, he asserted that big data is nothing more than a conveniently termed buzzword, and that telephone companies and financial institutions, for example, have long held mass quantities of sensitive consumer information.  The big difference now, according to Mr. Jain, is that Silicon Valley has bred a culture that encourages companies to focus on collecting data as a source of competition.  Indeed, last year IBM CEO Virginia Rometty proclaimed that “data will be the basis of competitive advantage for any organization,” and she encouraged companies to “think of data as the next natural resource” — big data is the new oil.  Moreover, in posing the question, “What will decide the winners and the losers?” Ms. Rometty distinguished merely having access to data from actually doing something with it, the latter of which could make a company a “powerhouse.”

As companies launch more services contingent on accessing and using more data, the need for user consent will continue to raise privacy implications.  On this issue, and specifically, whether it is possible to balance consumer privacy with opportunities for innovation, Mr. Colborn stated that the critical factor for any business is consumer trust.  While companies shouldn’t over restrict good uses of data, Mr. Colborn suggested that high levels of consumer fear require that companies be accountable for how they hold and share data.

Mr. Jain also highlighted the need for accountability, and he suggested that a “soft revolution” is already occurring, where companies realize that transparency and privacy protection are not just smart, but are profitable too.  Mr. Jain described his observation that big data and privacy, often viewed by technologists as opposing elements, are morphing into mutually beneficial counterparts.  Therefore, when companies communicate to consumers exactly how data is used, and perhaps more critically, how consumers in turn benefit from that use, consumers become more comfortable sharing more information.  The dating-hookup app Tinder, for example, requires members to give up sensitive data, but Tinder is also explicit about how and for what purpose Tinder uses that data.  A recent study conducted by SDL on marketing data and consumer privacy confirmed the benefits of investing in consumer trust, finding that 79% of global consumers are “more likely to provide  personal information to a trusted brand.”

Privacy Under the Covers echoed these principles, which Ms. Rasmussen synthesized into, “Say what you do, do what you say, and don’t surprise the consumer.”  Ms. Rasmussen first advocated providing more transparency in privacy policies, to which she applies the “McDonald’s Test” — a privacy policy must be comprehensible to the average person eating at a McDonald’s.  When Ms. Rasmussen revised Adobe’s privacy policy, she removed legalese like “agent” and “third party,” and she broke apart complex sentences.  Transparent language is fundamental to appeasing consumers, however, Ms. Rasmussen noted that the reality that most consumers do not actually read privacy policies requires companies to go further.  She challenged businesses to do what Mr. Jain described:  invest in privacy as a competitive advantage.  In other words, if big data is the new oil, then privacy can be the new green.

The most significant obstacle to wide-scale adoption of this approach is that businesses have generally been unwilling to show what data is collected and how it is used for fear that, once consumers have access to this information, they will choose to opt out wholesale.  In response to this concern, Ms. Rasmussen encouraged companies to incentivize consumer trust by doubling down on transparency, whereby companies confer additional consumer benefits while making data accessible.  Ms. Rasmussen noted that Google provides access to its interest-based advertising profiles through Google Ads Settings, but she found the site difficult to reach and discovered that her online behavior demonstrating an interest in sports led Google to erroneously profile her as a 35-40 year-old man.  While Google allows its users to edit this information, perhaps making consumers less paranoid and discouraging opt out or deletion, it is not a meaningful improvement because Google still doesn’t provide access to detailed market segmentation.  Ms. Rasmussen urged companies to give consumers access to market segments along with an added benefit, such as the immediate delivery of a coupon, in order to encourage the correction of misinformation.  For example, if a retailer showed Ms. Rasmussen that she was segmented as liking Wrangler jeans based on her 35-40 year-old male profile, and allowed her to correct that data to indicate that she’s in fact a petite woman who prefers leggings, and gave her a leggings coupon for doing so, Ms. Rasmussen would be more likely to correct her information and also to use the coupon.

Although creating an open dialogue with consumers is critical to a company’s ability to obtain and effectively use big data, the big-data panel noted that internal discussions about product privacy are still perceived to stymie innovation.  In particular, Ms. Bezaitis suggested that when privacy is discussed with technologists in the abstract, product-development conversations halt, and product ends up with a traditional model that “locks down data and restricts movement.”   Ms. Bezaitis recommended that companies re-frame the conversation so that the topic of privacy “follows a thread that starts from somewhere else” other than generalizations.  A way to do this is to build privacy and transparency into a product’s design and to incorporate it as a core operational element with competitive value.  Covington recently discussed this approach when it participated in a workshop on Privacy by Design (“PbD”) last week at the IAPP annual summit.  In line with Ms. Bezaitis’s suggestion that companies avoid talking about privacy in abstractions, Covington discussed building privacy into a product up front, when a product idea is conceived, by thinking through the full scope of how data will be used at all stages of product development.

The bottom line seems to be that, as data-centered technologies continue to evolve, companies will have to look towards mutually beneficial business models that promote innovation alongside consumer trust and loyalty.  Taken together, these internal and external dialogues that redefine privacy as “the new green” encourage companies to focus on privacy, and not just big data, as a basis for competitive advantage, rather than as a source of disruption.