The NSA’s PRISM Revelations and Hyperlocal Targeting

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privacyA week after Edward Snowden and The Guardian exposed the National Security Agency’s data surveillance program, PRISM, an initial wave of shock has settled into surprising acceptance of the policy. But for technology companies building a business around hyperlocal information and targeting, the episode highlights some of the trickier issues around the implicit bargain most people make with their digital data. Hyperlocal companies rely on the data that consumers knowingly share in order to build profiles and serve them with the most relevant information — but would consumers still assent to this sharing if they truly understood everything that is being done with their digital data?

The challenge with privacy is only going to become more acute. With mobile technologies improving, the market is shifting from a check-in era, in which users shared curated moments of their offline lives, to a set of technologies aimed at quantifying and analyzing the minutiae of our day-to-day travels. The complexity and scale implicit in passive data collection means that the gap between the value an application provides (say, sharing your location with your friends) and the information a service collects (what you’ve shared with your friends) widens.

For better or worse, that era began earlier this week when Google, which was named as a participant in the NSA’s program, snapped up Waze, a navigation application that taps users’ smartphones to generate remarkably accurate traffic information. The Israeli-based company, which publicly entertained acquisition offers from both Apple and Facebook in the lead-up to the sale, now provides Google with 40 million mobile users who have willingly allowed the company to monitor and analyze their location in a persistent manner.

During a panel at Street Fight Summit West in San Francisco last week, Andy Ellwood, Waze’s business development chief and a former Gowalla employee, framed the privacy concerns in terms of an exchange of value: “What we saw with Gowalla and what we’re seeing with Waze, the more value you provide, the more someone understands why you need someone’s information,” he said. “ If there’s a specific use case — this is why it’s valuable to you for me to access your current location — that’s fine. Where it goes, there’s some education that will happen, but I still think it’s fundamental that people understand why they’re sharing information.”

The introduction of marketers however, complicates the equation. Waze was in the early days of developing its advertising product, and the bulk of the advertising on the platform were clever native integrations sponsored by a handful of companies. But the acquisition will likely accelerate that process, bringing up serious questions about the extent to which Waze’s user data can be used across Google’s array of services.

At the heart of the issue is whether location data collected for one reason (say, for crowdsourcing traffic) can be used for another purpose altogether (maybe targeting radio ads on Google Play). Euclid, for instance, came under federal scrutiny in May because the startup uses a bi-product of wifi connections to measure in store traffic. The firm merely organized information, which was being passed to retailers for one purpose to extract insights on something else. But it ignored the basic tenet of privacy: trust.

The use of big data to personalize offline experiences has the potential to dramatically improve consumer’s lives, but companies need to think deeply about how their product will help demonstrate its value or risk stymying innovation for the industry as a whole.

“Sharing one’s location information with an application or publisher is an act of trust, a relationship controlled by the individual, not the organization,” Tyler Bell, director of product at Factual, a location data company, told Street Fight over email. The company does not plan to change its road map, but Bell said the news “served as diamond-point reminder that trust, transparency, and user-centric-benefit is critical to any personalization initiative.”

Steven Jacobs is Street Fight’s deputy editor.