Privacy megatrend: Persistence of the privacy paradox

Why will it happen?

The privacy paradox is the persistent gap between the value consumers say they place on privacy and what their behavior reflects, uncovered in consumer surveys and behavioral experiments over the past two decades. People say that they’re disturbed by threats to their privacy, and yet they continue giving away unlimited personal data on social media platforms and engaging in other types of risky online behavior. 

The gap exists, in part, because:

• Consumers don’t realize how much data they’re giving away, and how much it’s worth. 
  
• Valuation models that assign a price to the value-add of different players in the data-value chain are immature.
  
• Consumers aren’t aware of the extent of the potential damage caused by misuse of their information.
  
• There are no equivalent substitutes for some tech platforms, particularly social media portals like Facebook and Instagram.

The gap is large and growing in Western countries but smaller in Eastern countries and among older demographic groups. With AI and government and workplace surveillance on the rise, and revelations spurred by automated privacy enforcement, this could change. Some will be more concerned about privacy protections while others will embrace growing opportunities to share personal data for socially beneficial purposes.

What’s driving the pace of this trend?

• Data-intensive technology innovation and new data-use impact.
  
• Public concerns over personal and societal harms of technology and new data use.
  
• Social unrest and increased calls for equity.
  

How will it impact business? 

Speedier consumer adoption of new technologies and market techniques will be needed to justify corporate investments in accelerating digital strategies. Companies bringing traditional paradigms into a new age or geographical demographic will face lower returns unless they adapt to the continually evolving privacy and value expectations of those new demographics. Consumer-facing companies that can outrun competitors through a better mix of price, quality of product and service, and flexibility of privacy controls stand to gain the most. 

A potential goldmine awaits companies that break the paradox and offer privacy options catering to a wide array of context-specific privacy buying attitudes among their end consumers. Without a robust consumer privacy experience — one that offers simple, easy choices throughout the customer life cycle, from acquisition through purchase and renewal — companies are leaving money on the table. Abandoned shopping carts and loyalty program sign-ups are telltale signs of consumers who are not just price shopping but giving up because of privacy concerns related to overcollection, overuse or oversharing.  

What should CEOs do?

• Take a global position on consumer privacy rights to data access, portability, correction, use restriction and erasure.
• Assign the CMO a project to develop customer-experience journeys that align with the cultural and legal expectations of the three privacy poles and align with company positions on data and technology ethics.        
• Direct the CIO, CMO, CISO and CPO to develop a consumer identity management capability that delivers privacy rights and customer experience journeys.