In-Store Tracking — Privacy Intrusion or Communications Problem?

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privacyMore than a decade and a half ago, James Gleick penned an essay in the New York Times titled “Big Brother Is Us,” in which the columnist suggested that the “annihilation of privacy,” to borrow from Orwell, was as much a return to a pre-modern way of life, as it was a departure from it.  Anonymity, he suggested, was a product of a modernity, not a victim of it.

“Changing personas like clothing — is that what the demand for privacy will come to mean?” he asked. “Something has been lost after all, in the rush to modernity: the chance to mingle freely and thoughtlessly in our communities, exposing our faces and brushing hands with neighbors who know what we had for breakfast and will remember if we lie about it.”

Revelations of wide-ranging government surveillance programs and breakthroughs in data processing technology have rekindled Orwellian fears, pushing many to question the limits of technology in our culture. Most of all, the world seems to struggle with the ways that the mobile web continues to expand, infusing itself into the parts of our lives which we’ve traditionally viewed as offline and out of reach. The question for the technology community is whether those fears represent a material resistance by a weary market, or natural lag between user’s concern and recognition of the value which these services will eventually  produce.

When Offline Comes Online
Michael Becker, North American market development and strategic advisor at Somo, says concerns over the intersection of our private, offline lives, and the public domain have woven in and out of public discourse since the advent of the camera — when some grew concerned that photographer could snap a picture of a stranger and publish it in a newspaper the next day.

“We started having a discussion about the boundaries of self and whether we have a right to be left alone,” said Becker. “Over the last century, we have continued to struggle with that concept — and in the last five years the discussion has gotten more heightened due to the level of adoption of digital and personal technology like the mobile phone.”

The introduction of indoor location technology over the past few years has raised concerns among consumers and privacy advocates, particularly as a number of larger retailers have began to test the technology. Last year, the Federal Trade Commission released a report calling for businesses using the technology to incorporate privacy by design, and implement “A Do Not Track” (DNT) mechanism, giving consumers more options to opt-out.

In the fall, Senator Charles E. Schumer teamed up with consumer advocacy group The Future of Privacy Forum, and a number of analytics firms to release a new code of conduct for location analytics technology that sets guidelines for how business using location analytics should alert consumers.

“Our [Future of Privacy Forum] goal is for companies and stores to say to consumers, ‘We’re using new technology to make shopping smarter, easier, and better for you,’” Jules Polonetsky, executive director at Future of Privacy Forum told Street Fight. “We think if you tell people what you’re doing, you tell them how you’re trying to help them and you give them some control over it, then they don’t have concerns.”

Bridging the Communications Gap
Christina Ellwood, VP of marketing at location analytics firm Brickstream, attributes part of the concern over offline analytics to a lack of education amongst consumers on what information is being tracked and subsequent concern of over their lack of control with how they are being monitored.

“There is a dialogue that has not yet occurred between a cell phone user and the world that has access to the information about the use of their cell phone,” said Ellwood. “Consumers don’t understand at one level what is possible. At the over level, they’re not sure they have any way to stop it — and maybe they don’t want to stop it, but they want to know they can.”

The widespread adoption of mobile phones has arguably far exceeded the evolution of the cultural norms that regulate the way consumers use technology. According to a study by Annalect, 48 percent of consumers feel that they do not know how information is collected and used. In a separate study, researchers found that over two-thirds of smartphone users said they did not like the idea of being tracked on a mobile device, compared to a little less than half for desktop users.

Other research suggests that the growing gap between consumer perception and reality may be smaller. While people want more control over their data, it is unlikely that they will be able to control the way companies use their personal information — or if they can, few will understand how to exercise control, suggested a study by MEF. This means there is a gap between perception and reality, creating a dissonance that could further impact trust.

For Ellwood, bridging that gap is as much an education issue as it is a product problem: “They know the benefits of location service for GPS in their car, but they don’t get what the good of it is in the grocery store,” she said. “Until they experience the benefits of it, they don’t know how to weigh in. They think it sounds scary.”

Is Opt-Out the Endgame?
So what is the best way forward? Polonetsky argues it is to tackle consumer uncertainty: “I would like the retail and physical world to learn from the lessons of the web where we haven’t done a great job. Things have succeeded in the end but there’s still too much consumer uncertainty,” said Polonetsky. “If physical, mobile and location want to do better, we need to work out the ways that make the value equation clear to consumers so that they feel in control of the experience.”

With consumers’ concerns on privacy, Polonetsky suggests there will be more regulatory activity at the state level. A few months ago, California passed three privacy bills which included mandates that websites and mobile applications have a privacy policy, and required law enforcement to obtain a warrant to get emails on a provider’s server.

Even with the Obama administration calling for a consumer bill of rights, Polonetsky thinks it is still unlikely that there will be privacy legislation out of Washington covering the private sector. “We are already seeing states rushing in and advancing bills, and that’s going to be the center of focus,” he said.

Meanwhile, Becker, the executive at Somo, calls for regulation and new practices, as well as focus on transparency. “It is really critical that we as an industry build a layer of software, regulation, policies and practices that consumers themselves can be a viable economic factor alongside and with industry,” he said. “There is not going to be a solution over night, so it’s key to recognize that and to iterate, develop, and test. That’s why transparency is so critically important in the early stages of development.”

As for consumers still concerned about their privacy and hesitant about the adoption of location technology, Ellwood said the ultimate control is to opt-out of the world of location. “Simply don’t use the technology, don’t download the app, and don’t turn on location services.”

But if opting-out of the world of location entirely is not appealing to consumers, then finding a place where they feel comfortable with the way the technology is being used and location analytics companies and retailers focusing on ways to remain transparent seems promising.

“The reality is that we are, in some respect, on day one of a really long journey,” said Becker, “and as long as we are going to be using the technology with the intention of serving each other in a positive and effective way, we can create a really bright and fruitful society and economy for everyone.”

Myriah Towner is an intern at Street Fight.