These days, data is becoming incredibly powerful. As consumers increase their online presence, they are generating more and more of it, which companies are utilizing or selling, usually for customer engagement and marketing purposes.
About the author
Sridhar Iyengar is Managing Director at Zoho Europe.
Consumer data usage has progressed to the point where it is transforming businesses and contributing invaluable insight into business strategy and marketing decisions, and this practice has now bled over from B2C companies to B2B. Data-driven companies such as social media networks and search engines are now being used by many businesses, without thought around what the true pay-off is.
Unfortunately, not all data usage is contained to harmless marketing practices or business strategy insight. Many of these companies lack transparency between them and the end user regarding how their data is being used by third parties through B2B websites. They may consent to B2B websites using their data, but the practice of third-party trackers being present, taking that data and selling it on without consent is the real concern.
Some businesses may not truly understand the implications of using third party applications with trackers on their own properties, but ignorance can no longer be an excuse. We are dismayed and discouraged about how pervasive these practices are becoming.
The problem with advertising-first business models
Through advertising-first business models, some ‘Big Tech’ is increasingly putting user and business data at risk. The more tech companies know about their users, the more they can direct them to goods and services that they are most likely to buy and, in turn, create more competition in the market.
Bespoke capitalism is what has turned some of the world’s best known tech giants into the wealthiest companies in the world. This motivation for profit has pushed some Big Tech to compete in data collection on a large scale. The better the data, the higher the profits.
Another way that information is being mishandled, involves direct partnerships between technology companies and software vendors. Most software vendors monitor customers, users, and prospective customers through cookies, or ‘trackers’ placed using simple embedded code. Some software companies invest heavily in online advertising and want to generate metrics to review their return on investment, for example whether the spend is translating to increased traffic and revenue. These companies rely on free services such as analytics or tag management or usage stats provided by Big Tech companies and in turn pay by exposing user data. Unrecognized by users, SaaS vendors will run trackers to watch user behavior, check their click-through rates, and then share that information with third-party ‘surveillance’ companies.
Consumers tend to gravitate towards to Big Tech surveillance companies because they offer free services to them – knowing on some level that they are paying with their data, but are they really fully aware of just how much gain is being made here? Businesses can be paying for commercial advantage with user data as capital without the user’s real knowledge. Both consumers and businesses are putting themselves at risk because the services they or their companies prefer are available for free, or because they are easy to implement, shortening go-to-market time.
Consumers must remain vigilant
We are now in a time of digital-dependence and information is constantly being sold on the dark web. Now, data is the new currency. While the ethical and moral responsibilities that come with this fact tend to belong to governments and the corporate world, the end-user must begin to share this responsibility.
We must all consider how much of our personal information is publicly available, no matter which website, platform, or service we are using.
Online users need to control their privacy and digital footprint. They must fully understand the effects of a data breach and take the appropriate measures, from regularly adapting passwords to strong security questions as well as checking other accounts where you might have used the same credentials.
What can businesses do?
When we created Zoho we wanted to deliver what was best for our customers, not just in terms of functionality but also ensuring that their privacy is always kept safe and secure. Everything we offer on the market was built with privacy by design. However, we realized we had to take further steps to ensure customer protection. In 2019 we removed all tracking software from third parties on our websites and applications and closed loopholes to achieve enhanced privacy for our customers. Other businesses, however, are still exploiting these aspects to generate revenue from third-party ad trackers.
We urge every business to audit their models carefully and ask the following questions:
- How much customer data do you need in order to serve your customers better without compromising their privacy?
- How much customer data is exposed to other third parties through your business operations, and is any potential financial gain worth risking the compromise of customer privacy? How transparent are you to your customers on this – has the data been collected with customer consent?
- What is morally correct in your treatment of customer data, rather than what provides the most immediate commercial gain?
- What new steps can you take to ensure customer data privacy?
We urge SaaS companies to not just focus on their own policy and practices however ensure they can keep their customer data privacy promises through taking note of the practices of any third-party applications used on their web properties and ensuring compliance with their policy. Moreover, as per data privacy laws all customer information exposed to any third party must be done only with the consent of the customer.
Data privacy strategy
The safest strategy businesses can implement concerning software to use is carefully research before continuing to operate. Larger companies may decide to build certain tools that help to ensure that employee data stays safe, but the cost and sophistication of this can be prohibitive for small and midsize companies. Not surprisingly, this option is the least common model of the three.
Educating employees would also benefit business owners, by attracting talent and building trust with their workforce. Employers and employees must work together to fight against surveillance and technology that compromise data security and privacy. Without the necessary tools, businesses may face risks, such as losing key employees or damaging their company’s reputation.
The future of data privacy
The problem of data collection by online companies is that information can so easily fall into the hands of parties whose motives are much less benign.
Recently, automated data privacy software has been growing in popularity, from handling privacy requests to consent and preference management. In 2021, it is expected that the trend of data privacy automation to continue.
Businesses should keep privacy in mind in during 2021 and beyond. In the future, business decision makers will be faced with a choice: to change their model or continue to be involved with Big Tech’s spying and data collection. Regulation may be what is needed to check on the data being used by Big Tech. When it comes to Data Privacy, we are making a call to the industry to completely reconfigure business models to ensure customers and their data are protected and are kept truly private.