The Evolution of “Privacy-Tech”: Emerging Use-cases
This is the third of a four-part series on “Privacy-tech”. You can read the introductory section here.
Advertising and omni-channel marketing
The ad-industry survives on being able to triangulate your identity between your device, your browser and other first-party data sources. The past few years have seen a line of actions that have made ad campaign measurement difficult — Apple ATT making it difficult to track user identifiers; Facebook not allowing user-data to be sent back to advertisers but only MMPs (Mobile Measurement Partners such as AppsFlyer, Branch, etc), Google’s announcement to eliminate 3DP cookies by 2023 and lastly regulation such as GDPR in EU and CCPA in California.
Data clean-rooms are being utilized by advertising platforms, mobile measurement platforms (MMPs) and brands to collaborate and collectively make sense of their marketing efforts.
- By collaborating on your ad campaign data, outbound marketing data (emails, messaging), and first-party user data, you could more meaningfully measure performance, build better audiences and perform deeper campaign analysis
- By collaborating on data between your offline partners and online D2C data, you could provide an improved omni-channel experience for users. For example, a D2C brand could share data with a offline retail chain such as Target to triangulate which customers have been buying products, and how to advertise to them better
- These use-cases make clean-rooms a viable investment for brands with large marketing budgets, with Gartner predicting over 80% of those with $1bn in marketing budgets adopting one by 2023¹.
Facebook, Google and Amazon have their own data clean-rooms. These clean-rooms allow you to add your own first-party data on top of the event streams, in a fairly rigid environment. Some other players have diversified into building data clean rooms tailored for marketing applications, such as attribution players or marketing cloud providers.
DeFi and the digital asset economy
Currently, transactions made on the blockchain are public. You could trace back all transactions related to a wallet and know the account’s trade history². In a world where digital assets gain higher proliferation, we need mechanisms to keep data related to our transactions private. As much as 42% of institutional investors in the US own digital assets, with 74% expressing interest in digital assets in the future³. Financial institutions are also experimenting with tokenizing Real-World Assets, to create a world where securities such as bonds and stocks are tokenized and operate on a blockchain.
In volatile developing economies, where Bitcoin Lightning and other cryptocurrencies fuel peer-to-peer transactions, privacy is a necessity. If people were to get paid their salary on-chain (say in stablecoin) one day, you wouldn’t want that to be public either.
Privacy on-chain is also important for Defi because of MEV (Miner Extractable Value) that is lost in trades because of transaction data being public. This allows sequencers or block producers to read transactions before they are validated, and allows them to frontrun, backrun or change the order of transactions to derive monetary benefit.
Many startups are utilizing zero-knowledge proofs and multi-party computation techniques to allow private data to be stored on chain, while still complying with security regulations. When regulations around crypto-currencies become clearer, these technologies will become more wide-spread.
Healthcare
The US Healthcare system is moving to a Value-based care system, where insurance payments are linked to outcomes rather than services provided. This change requires better data collaboration both between providers, and between providers and payers. HIPAA requirements have historically made this data collaboration difficult.
Improved data collaboration between providers can provide physicians with detailed patient history and risk-factors, affording better care for patients. Startups such as PatientPing, HealthGorilla and Zus Health improve care coordination between providers by sharing data with each other and establishing data standards. Data clean-rooms can support Accountable Care Organizations (ACOs or provider groups) to collaborate on medical records better.
Payers benefit from being able to look at patient data across the entire care continuum. By collaborating with providers, they can assess risk scores of patients proactively. If patients have Remote Patient Monitoring devices such as wearables, such data can be overlaid with existing medical records to proactively assess risk. Patients at risk can be brought in before there is an emergency.
Lastly, these technologies can help improve data collaboration between providers and research organizations such as academia or pharmaceutical companies. By allowing research organizations to run simulations on real-world data in a clean-room, providers don’t necessarily have to worry about data getting taken out of the system. Organizations such as Nference obtain data from medical providers and allow research organizations to access them in a privacy-preserving manner.
Finance
In the financial industry, data collaboration between financial institutions can help create a holistic financial account of individuals and companies. This helps build better credit scores, identify money laundering and other insights into spending and earning habits.
Most financial institutions today own a copy of all your personal documents and store a copy in their servers. This poses a risk, and data breaches can make your private information public. Verifiable Credentials can potentially change this framework and allow financial institutions to accept a token of “credit-worthiness” or “KYC” instead of storing a copy of personal identity documents.
Companies such as SkyFlow have made it easier to store sensitive payment information, thereby allowing e-commerce players to work with multiple payment gateways instead of being locked to one, such as Stripe.
In the next section we will talk about the current state of these technologies and investments made.
