Post-GDPR Privacy Will Become The New Premium As The Privacy Battle Rages On
EU residents over the last month have been bombarded with increasingly desperate calls online for acknowledgement of convoluted and reluctantly drafted privacy agreements from digital platforms. The sudden-found interest in articulating privacy issues for users has been brought about by the impeding legal threat looming from the EU. The General Data Protection Regulation (GDPR) (EU) 2016/679 is a regulation in EU law on data protection and privacy rights for all individuals within the European Union (EU) and the European Economic Area (EEA). It also addresses the export of personal data outside the EU and EEA. The GDPR compliance date was set for Friday May 25th; tomorrow marks seven days since its deployment.
In the above clause, Instagram has clearly stated that it will read private correspondence with other Instagram users and log that data in a way that it sees fit. In the offline world, not only would this policy be open to being legally challenged, it would also cause public outrage if a communications service explicitly started opening letters or logging private phone calls. The brazenness of placing this provision deep within the terms and conditions reveals two behavioural trends that are starting to unravel for the tech majors:
- Respecting user privacy has been reduced to an optional extra for the tech majors
- Users of free services are happy to go along with privacy intrusions while they are benefiting from the digital service
If it’s free then you are the product
The Cambridge Analytica affair and the subsequent US congressional and EU Parliament inquiry revealed for the first time to many – including several senior US law makers, that Facebook makes money out its users’ activity by selling advertising inventory around its user data. The two defining monetisation trends of the digital economy thus far have been to either charge users directly for access to services either through paywalls, subscriptions or hardware sales, or to generate revenue by serving ads either directly or indirectly. Hence the statement “If you are not paying then you are the product” was coined to in the dotcom era to reflect this model.
A strong organic position on privacy will reap dividends for the brave few
Although Facebook’s record 50% year-on-year increase in advertising revenue for Q1 2018 would suggest that general consumers are still happy with Facebook’s existing modus operandi recently tweaked for GDPR compliance, change is afoot.
Firstly, the consumer impact for Facebook will only be felt in Q2 due the Cambridge Analytica story breaking at the end of Q1. Secondly, the privacy intrusions keep on coming in: last week, Amazon’s digital assistant Alexa recorded a private conversationand sent it to a third party. Like a cancerous tumour, the repeated failure of the tech industry to grasp that privacy is not an optional add-on means that it will never go away and, slowly but surely, the general public will start to apply the same scrutiny to their digital privacy as they do to their off-line interactions with businesses.
Secondly, the Cambridge Analytica data-mining scandal follows on from the surge in support from ad-blocking apps over the past four years and reveals growing public dissatisfaction with ad-based services. Historically, print and TV squared this negativity loop by offering a Faustian bargain to consumers: put up with intrusive advertising and receive premium content as a consequence. The digital successors to print and TV are instead offering user generated content which means the public feels disadvantaged by the bargain and are increasingly looking to subscription models, which guarantee premium content at a competitive price point.
Only tech majors that do not rely upon advertising are truly immune to the reawakening of the importance of privacy in the current zeitgeist. These are led by streaming subscription services such as Netflix and Spotify and services businesses such as Apple’s subscriber ecosystem built up around hardware sales.
Fast forward to the first year post GDPR, and privacy will have become synonymous with a premium digital experience.