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Eric Gertler

Eric Gertler

Posted: June 21, 2010 08:24 AM

Privacy Does Matter

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The backlash that Facebook recently confronted from users over changes to policies that restricted the privacy of users' information and that Google faced for unwittingly collecting data over unsecured Wi-Fi networks in Europe has reignited the debate on privacy and the extent to which personal information may be collected, stored, used and shared.

In the face of such criticism, both companies astutely bowed to the pressure and changed course. Facebook announced new privacy controls for its users to better control their personal information; Google agreed to work with authorities to prevent similar incidents in the future.

The change in course made rational business sense on several levels. In the case of Facebook, various government legislators had joined the fracas. A group of United States Senators pressured Facebook to reverse its policies, and the Federal Trade Commission received complaints from privacy advocates, compelling it to consider action.

Beyond the worry of governmental intervention, companies like Facebook and Google need to understand that consumers fundamentally care about their privacy. Indeed, a 1999 Wall Street Journal/NBC survey revealed that privacy was the greatest concern in the minds of Americans at the turn of the 21st century -- more important, ironically, than terrorist attacks on American soil, overpopulation, or global warming. (In the immediate aftermath of the September 11 terrorist attacks, national security issues trumped concern for individual privacy.)

Still, many dismiss such surveys and argue that consumers willingly part with their information with little thought or concern. Downplaying the importance of privacy, Sun Microsystems' CEO Scott McNealy fueled the debate years ago when he said "you have zero privacy. Get over it." The current privacy debate centers on the beliefs of Facebook's CEO Mark Zuckerberg that "people have really gotten comfortable not only sharing more information and different kinds but more openly and with more people."

These perspectives miss the point. Consumers have little choice today but to share their information. The diminishment of privacy -- or the forfeiting of personal information -- is a necessary evil for the conveniences of modern day technologies. Consider the Internet (including social networking sites and search engines), smart phones and other wireless devices (complete with GPS locaters), credit and ATM cards, EZ toll passes to reduce time on highways, or even access cards required to enter your workplace. All of these advancements in technology and our growing reliance on them mean that our everyday lives can be constantly tracked and monitored given the trail of personal information we reveal with these applications. Such devices both conflict with and open the door into our personal privacy.

The case of Facebook is no different. The popularity of the social network does not reinforce that consumers view privacy differently or that they have made a conscious decision to trade their personal information. Rather, Facebook mirrors the technologically driven world in which we live. Being a member of a network consisting of almost 500 million people, or over 35% of the American population and almost 33% of global Internet users, means you are simply taking part in today's interconnected world as opposed to leading a life detached from others.

Companies would be shortsighted to believe that consumers do not care about their privacy when they release personal information to join a service. One survey conducted by The Privacy Council indicated that a company's commitment to privacy was as important to maintaining product satisfaction, offering customer discounts, or having an 800 number for consumer feedback. Other surveys such as one by Unisys reveal that consumers will consider a company's competitor when their current company does not meet expectations on privacy protections. No wonder competitor Myspace immediately announced greater consumer privacy controls in the wake of Facebook's consumer backlash.

Of course, consumers still have a responsibility to manage their personal information and to take greater control of their privacy. With Facebook's release of new controls, users have little excuse for not managing their personal information on the network.

Other companies, especially banks and marketers, must learn from the public reaction to the policies of Facebook and Google. Before the government takes a stronger regulatory position or a company faces the inevitable backlash of its customers, it would be wise to accept that protecting clients' personal information is not only essential but also good business. Privacy does matter today.