BIG TECH’S BATTLE FOR OUR DIGITAL DNA: HOW DIGITAL REGULATIONS AND CUSTOMER EXPECTATIONS ARE CHANGING THE CONVERSATION ABOUT DATA PRIVACY

By Cally Salter

Have you ever accepted cookies from a website and wondered what exactly you have agreed to? Do you consent to terms and conditions without reading them? Do you truly know what personal data you are sharing in return for access to a website or app? If so, you are among a minority of just 1%, according to research in 2020 by ProPrivacy. But awareness of our digital identities is growing fast, and just as consumers are becoming more informed about how their data is being used, brands are increasingly using their privacy values to increase sales and levels of customer trust.

An age of hyper-personalisation

Cookies temporarily store unique identifiers, personal data and information about our browsing behaviour: this is how, for example, conducting an online search for trainers will see you being inundated with adverts for running products. Targeted ads are just one element of online personalisation – a strategy used by companies of all sizes to provide a more curated experience for their customers. Whenever you purchase something from Amazon, you will be shown recommendations for similar products; and when you listen to a song on Spotify, you will see suggestions of similar artists and bands. By collecting and analysing your data and responding to your online activity, companies can personalise sales and advertising in the digital age more than ever before.

A recent McKinsey study reported that personalisation at scale has the potential to create up to $3 trillion in new value[1], as increasingly advanced ways of collecting and analysing data lead us towards an age of hyper-personalisation. Deloitte describes this as “the most advanced way brands can tailor their marketing to individual customers… by creating custom and targeted experiences through the use of data, analytics, AI, and automation.”[2] By employing tools to make data-driven decisions, companies can maximise revenue, reduce costs, increase customer retention and expand into new markets. For customers, the reward is an enhanced and more personalised online experience, with content and suggestions that match their interests.

A new dawn of data democratisation?

But there is a flip side. Many customers are now asking if sharing their data is too high a price to pay for the benefits of a personalised online experience. There is a growing feeling that Big Tech has its eyes constantly focused on us – tracking what we say, where we eat, and where we shop, and putting our digital DNA under the microscope. Big Tech rarely strays from the news due to concerns over its presence, its control, and the people at the top with enormous power over our lives. In response, customers are increasingly demanding the choice to restrict access to their data and keep it private.

Regulatory restrictions are also evolving, and as awareness about digital privacy increases, governments around the world are investigating the potential abuse and manipulation of customer data. Recently, the Competition and Markets Authority (CMA) started laying the groundwork for an antitrust investigation into Facebook. Added to recent investigations into Google and Apple earlier this year, Britain’s competitions regulator is holding true to its pledge to crack down on Big Tech.

Further afield, a European Commission antitrust probe is investigating Facebook’s actions around distorting classified advertising. And in December 2020, the EU’s Digital Markets Act (DMA) and Digital Services Act (DSA) were launched to regulate the behaviour of gatekeeper platforms, with the hope of fostering growth, innovation and competiti as a result. Such actions can be seen together as signs we could be heading towards greater data democratisation, in which we will have better access to and control over our own data.

These twin drivers of customer demand and regulatory restrictions are powerful, and their effects can be seen in Google’s recent revelation that it plans to phase out its personalised ad tracking. The tech giant has announced its decision to eliminate third party tracking cookies, which enable third parties to follow users from site to site, by 2022. Google has stated that it “does not believe these solutions meet rising consumer expectations for privacy, nor will they stand up to rapidly evolving regulatory restrictions”.

Apple versus Facebook: conflicting approaches to data privacy

With regulations tightening, Apple is emerging as the biggest advocate for data privacy. Its next software update will include the option to use its tracking service apps as standard, giving customers a simple way to switch cookies off and opt out of data collection entirely. Not only does this break from conventional data policy, it also pits the major Big Tech players against each other. Over the past decade, these digital empires have largely maintained a policy of avoiding direct competition, but Apple’s new data privacy controls have ripped up the playbook. Facebook has fired back, arguing that the opt-in function is essential for it to provide a tailored experience for its users. But it’s not just Big Tech giants like Facebook who will lose vital access to data following Apple’s move – smaller companies also use data to tailor their offering, and they too will feel the effects.

Facebook’s concerns are not limited to Apple – it is also uneasy about elements of Google’s business strategy. In December 2020, more than 30 US states filed complaints in their ongoing antitrust lawsuit against Google with allegations of anti-competitive search practices, following previous allegations about advertising practices built to protect Google’s search monopolies and stifle competition. The crux of the argument is that Google and Apple are less concerned with privacy than creating what the Financial Times described as a “corporate walled garden”, virtually impossible for anyone else to climb. Facebook argues that Apple’s push for privacy is self-serving, driven not by a desire to benefit users, but rather to strengthen its hold as a digital gatekeeper to personalised data.

The future of data privacy

For too long, the tech industry has felt like the Wild West, lacking in regulation and oversight. The crackdown on Big Tech marks a potentially seismic turning point in the landscape, and now the biggest companies are choosing sides: greater personalisation or greater privacy. Apple’s privacy controls may appeal to many internet users, but businesses reliant on digital advertising and personalised content will have concerns. As Facebook and Apple square off, smaller companies will get caught in the crossfire. Finding a middle ground that can enable customer privacy without stifling competition will be imperative. Otherwise, the gains made by regulators will be quickly passed to the tech titans who have reigned supreme for so long – at a cost to growth, innovation and competition from smaller players.