On Saturday, March 10, Jasmin Melvin published the story “Web Giants Face Battle Over ‘Do Not Track’, Other Consumer Privacy Legislation.” The U.S. government, and governments around the world, have their eyes set on Google, Apple, and Facebook and their current and future policies in regards to internet privacy laws. SOPA, or the Stop Online Piracy Act, was the legislature’s first major attempt at regulating the Internet, and web giants like Google and Wikipedia responded with a day of blackouts, generating “3.9 million tweets, 2,000 people a second trying to call their elected representatives, and more than 5,000 people a minute signing petitions opposing the legislation.” SOPA may have failed, but you can be sure it won’t be the last attempt at regulation. This week, the Federal Communications Commission (FCC), plans to issue new recommendations for Internet privacy and data management policy.
You might think, “What’s the big deal, sure I want my privacy protected from Google, Facebook and the like, this is the United States of America.” Well, it’s not quite that simple. I agree, Google and Facebook can’t afford to get this one wrong: they would risk losing massive numbers of users who opt out, or choose new options that don’t track data or new features such as a “do not track” button. But decisions like this have massive consequences that go beyond personal privacy and data management.
Google for example generates 96 percent of its US$37.9 billion in revenue from advertisements. Facebook revealed in its recent IPO details that 85 percent of its US$3.7 billion dollars of revenue could be attributed to advertisements. Marketers and advertisers spend large portions of their marketing budgets on targeted web ads through Google and Facebook because these vehicles have significantly higher ROI than non-targeted or traditional advertising. In addition, marketing can be customized and very specific to the individual users, something that’s taken years to perfect. Remember the olden days when web ads were about as relevant to you as late-night infomercials on cable television?
If the government, Facebook, or Google get this wrong, they risk more than losing a few users. If they get this wrong, they are risking more than 96 percent of Google’s and 85 percent of Facebook’s revenue. Think about this: Would we have any of Google’s current and future innovations without Google Ads? Would we have Android smartphones, Google Goggles, self-driving robot cars, Google Earth, and many more transformative innovations that have come out of Google but had little or nothing to do with their primary revenue stream, advertisements?
Beyond Google and Facebook, what could happen to the countless number of content-driven websites that depend on advertisements to sustain their business models? How would Mashable, Huffington Post, and Perez Hilton pay their writers or even their rent for that matter?
The economic impacts of getting this one wrong are vast and for the most part unpredictable. But getting this one right could truly transform the Internet, the economy, and online commerce.
One proposed idea came from Jeremiah Owyang of Altimeter Group a few years ago, suggesting the future of social media to be a profile and data exchange. A world where I own my personal data and information, and I choose who to give it to, and potentially only in return for something of value to me. That could be something as simple as discounts, coupons, early purchase options for new products, or something we traditional marketers haven’t even thought of yet. Google and Facebook need to take into account the third, and most important, person in this relationship: the user. They will need to develop new models that create this personal data and information exchange or marketplace, to create value for the advertisers, value for the users, and new revenue streams for their businesses.
This one is too important to get wrong, so before you have the natural and very American reaction to protect your personal privacy, think about the consequences strick internet privacy laws could have. Are you willing to give up the innovation engine behind the Internet and all things digital because you don’t want a marketer to know where you’re from, how old you are, or what pages you’ve liked on Facebook? If you do care, take the time to review Google and Facebook’s privacy policies, and manage your privacy settings appropriately. Start to think of your data as your digital currency and maybe Google and Facebook will, too.
Reply to this post with your thoughts, your fears, and your better ideas. It’s time for a global conversation about internet privacy laws.