Americans’ Privacy Concerns Growing, Threatens New Business Models

The consumer research firm GfK has released very interesting data from a survey of American adults regarding attitudes toward data privacy and trust. Conducted between March 7th and March 9th, 2014, one of the most striking things about the data is that it shows that 59% of Americans say their concerns around personal data privacy have risen over the last year. An interesting subnote is that the age range reporting the highest numbers of people who say their data privacy concerns have increased significantly is those born between 1990 to 1995, 28%. This is just the generation which is supposed to be the least concerned about data privacy. If this trend continues and organizations don’t get in front of privacy concerns, there are wide implications for many of business models being invested in right now as well as policy.

One piece of data from the GfK survey seems to give a very understandable answer behind this increase in concern; 33% say they were personally affected either once or several times by misuse of their personal data over the last year. This increasing concern about and experience with data privacy violations is being translated into a call for regulatory action. Over 50% of those surveyed called for increased regulation of personal of data for social networks, credit card companies, marketers and advertisers, government authorities and online search engines.

The GfK survey also points to some of the effects on online businesses privacy concerns are driving. Amongst activities Americans avoid because of privacy concerns, online auctions tops the list at 18%, closely followed by online banking (17%), social networks (16%) and online competition (14%). Interestingly, 22% of people born between 1990 to 1995 and 1965 to 1979 avoid online auctions and 21% of both groups avoid online banking as well. Amongst a variety of types of organizations surveyed regarding data trustworthiness, marketers and advertisers, international businesses, social networks, online communications platforms and government authorities came out in the bottom five with only 25% of Americans trusting marketers.

The US market is often seen as the leading test market for many new business innovations. Currently in the era of big data, we continue to see billions of dollars being poured into companies whose business models seem to be based on a continued belief that their raw material of personal data will continue to be both plentiful and cheap. These assumptions may not work out if authorities continue to move towards tighter regulation of personal data in response to increased popular concerns.

There are policy implications as well. The US (along with other developed countries) is facing a large increase in the number of seniors who will need to be supported in their retirement years. One of solutions to reduce costs is to keep the elderly in their homes as long as possible using Internet connected sensors to monitor their health. Yet the GfK data shows consistently that people who were born in 1964 or before have the highest concerns around data privacy. It’s doubtful seniors will allow this sort of monitoring if they don’t believe the privacy of their data will be respected. Another worrisome area is in increasing energy efficiency to help fight climate change. There are many ways in-home sensors and appliances can be connected to data analytics to increase the energy efficiency of American homes, but again, consumers will need to trust that their data privacy is being protected for these to succeed.

It’s clear that the time is now for American businesses and other institutions to get in front of and show leadership in addressing consumer data privacy concerns.

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