The Battle For Your Precious Data - The Khuram Dhanani Blog
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The Battle For Your Precious Data

The privacy of consumers will be a major corporate focus in 2022, potentially giving big tech an even greater competitive advantage. Amazon, Facebook (aka Meta), Google, and Apple have gathered unimaginable amounts of consumer data over the last 20 years. In recent years, the growth and collection of consumer data has fueled innovation, but it has also raised security concerns and led to waves of consumer privacy legislation (such as the EU’s General Data Protection Regulation, or GDPR).

In recent years, consumers have become more aware of how their data is handled, and they have raised their demands for increased control over its collection, storage, and usage. For example, three days after the GDPR came into effect, the non-profit La Quadrature du Net filed a formal privacy complaint against Google, Apple, Facebook, Amazon, and Microsoft on behalf of 12,000 individual customers. As a result, Amazon was hit with an $887 million fine in July 2021, the biggest GDPR penalty issued to date. As executive interest in privacy and compliance management continues to grow, it is clear that the protection of consumer data has become a top priority for businesses across all sectors.

The Start-Up Landscape

Investors have taken notice, and in recent years have been increasingly supporting consumer privacy startups:

Accepting The Challenge

Some companies have adapted to the challenges. Google, for instance, has announced that by 2023, it will phase out third-party cookies and develop a Privacy Sandbox to enable targeted ad delivery while maintaining user privacy.

In April 2021, Apple released their iOS 14.5 update, which included an App Tracking Transparency feature that allowed users to turn off ad tracking for specific apps. Due to this change, developers are now not only allowing users to opt-out of monitoring, as they used to be able to do, but also showing the option in a pop-up window before the app is even used.

Speaking about this change, Tim Cook said: “At Apple, we believe privacy is a fundamental human right. We work relentlessly to build it into everything we make. It’s fundamental to how we design and engineer everything we put into the world. While others are focused on collecting ever growing amounts of personal information, we’ve kept the lens focused on how technology can work for people. And that’s meant introducing countless features that give users transparency and choice over how their data is collected, used, and shared.” 

Against The Grain

Other large tech companies, such as Facebook, have gone against the grain, bringing investigations and sanctions as a result of privacy problems. The FTC fined the corporation $5 billion in July 2019 for breaking consumer privacy standards, making it the highest fine imposed by a regulatory body at that time.

Additionally, Mark Zuckerberg has slammed Apple’s new iOS 14.5 privacy update and Tim Cook’s call to stop collecting user data outside of Facebook’s main apps following the Cambridge Analytica scandal.

The Future of Consumer Privacy

In the past, organizations that rely heavily on consumer data have been able to maintain a relaxed attitude towards the matter. Consumer privacy awareness, on the other hand, is at an all-time high, and regulatory pressure will only increase as a flurry of new privacy legislation takes effect this year. As we enter the year 2022, these factors will require consumer data-dependent firms – both large and small – to modify their strategies and to prioritize the protection of consumer privacy.

Due to both Apple’s upgrade to iOS and Google’s phase-out of cookies, a significant repercussion of this transition will be the speed at which third-party data collection is abandoned. Advertising and marketing businesses, which are already enslaved by big tech, will suffer the most, but any B2B or B2C business that heavily relies on third-party advertising will need to adapt quickly or suffer severe losses. According to Google, publishers who do not adopt mitigation steps risk losing 50% or more of their total ad revenue.

A great deal of effort will be put into capturing first-party data (information provided directly by customers to a company) so that third-party ads can be targeted accordingly. While huge businesses will benefit from the use of data in a significant manner, smaller businesses will be at a disadvantage because they lack either the data or the means to collect it, therefore placing them at a disadvantage.

Therefore, contextual advertising is set to make a comeback this year since it provides businesses with a way to deliver relevant and profitable ads without relying on third-party or first-party data. The contextual intelligence startup GumGum uses computer vision and natural language processing technology to analyze web pages, videos, photos, and other digital content in order to help advertisers place ads in the most relevant places without relying on first-party data available to them.

As a result, big tech companies will certainly benefit the most from this frenzy about consumer privacy. Although some companies presently employ third-party data to power their advertising tools, their first-party data stockpiles — which they have acquired over two decades of high-profile acquisitions — will provide them with a competitive advantage in the long term. Meanwhile, smaller businesses will rush to implement new solutions in order to restructure their advertising operations and adapt to a cookie-free environment.

Khuram Dhanani
Khuram Dhanani
Khuram Dhanani
khuramdhanani@gmail.com