Web 3.0 with GDPR is coming to restore trust in online consumer transactions
In his keynote at Web Summit 2018 in Lisbon, Web pioneer Sir Tim Berners-Lee expressed alarm about the issues plaguing the Internet today. Among other things, he asserted that the fundamental issues of the Web today are the problems associated with privacy, the misuse of personal data, people being manipulated by fake communities, fake people and fake ideas.
Evolutionary impact of the Internet and the Web on businesses
Since the creation of the Web, the business processes and procedures have gone through significant changes. During its early years, businesses used the Web merely to showcase their products and service offerings. The Web was then a passive ‘push’ broadcasting system with very little interaction with consumers to the extent that they could influence their consumption.
Web 2.0 saw the emergence of digital companies using data as their fundamental currency. These companies integrated data to make their business decisions and structured their revenues as a direct function of their cost drivers. The resultant businesses like eBay, Airbnb and Amazon made their choices and business decisions with the use of data. Typical positive use of data included user profiling, where consumers were given advanced services based on their behaviour, location, and a variety of personal choices.
A major disruption to business fundamentals came with the rise of companies like Google and Facebook for which users were considered as “products” and their data repackaged and sold to advertisers. Users consumed the “services” provided under the impression that they were free. The unregulated nature of the Internet gave these companies an unfair advantage, compared to heavily regulated industries, of being able to freely exploit their users’ data. In this case, users still were in charge to certain extent, where they could simply opt out of using Google, Facebook and others should they not be content with their free “lunch”.
Then the negative use cases began to emerge whereby user data was sold to third party businesses without the knowledge of the user, often resulting in unsolicited calls, spams and emails. Things then got even murkier with fake news and all kinds of personalisation purposefully manipulating and misleading an entire society as came to light recently in the revelations about the workings of Cambridge Analytica.
Privacy achieving legislative support
Empowering and creating an environment for citizens to live and flourish in a data economy should be a fundamental duty of governments. Privacy is one of the oldest constitutional rights for citizens in many countries, yet until recently data privacy has lacked co-ordinated legislative support. The EU’s GDPR introduction in 2018 dramatically changed the situation for the better. Under the GDPR, EU residents are empowered (2) to demand that organisations declare what personal information they collect, store and manage; and, if so requested, are under an obligation to delete it. It applies to all organisations involved in processing data about individuals in the context of selling goods and services to any EU citizen, regardless of whether the organisation is geographically located. Apart from the GDPR, similar legislation is shaping up in California, Brazil, India, Singapore and Canada.
The digitisation paradox
Digitised companies are heavily reliant on data in their their day-to-day decision-making. With an increasing number of organisations misusing personal data, consumer trust is at an all time low. A recent Boston Consulting Group report states that over 75% of consumers do not trust organisations with their data and that, given the choice, they will simply opt out of sharing their personal data. This challenges the sustainability of a fully-functioning digital economy.
Data regulations: a renewed Web of opportunities with consumers in the driving seat
While the first 25 years of the Web-based business saw the emergence of data as a currency, today there is an increased focus on governance. Despite the negative trends and perceptions, the enforceable data protection and privacy legislations provide a golden opportunity for companies to embrace the principles of data protection regulation and earn the trust of their customers. With the emerging regulations, Internet is undergoing a massive change. A change from data misuse and low transparency, to one where citizens can feel more confident and be in charge of their own data (1, 3). Apple Inc. is a good example of a company taking a proactive approach to going beyond compliance, towards transparency and trust towards their consumers.
As Web 3.0 rears into action, new tools and platforms are emerging, promising a Web where the focus is on users and their engagement with businesses.
The unprecedented levels of choice and access to vast amounts of information are putting consumers in the driving seat, moving away from being products to becoming equal partners with businesses they transact with. A perfect solution in this scenario is one that enables organisations to both be regulatory compliant in a cost effective manner and at the same time help them monetise data. Successful organisations have to re-engage with customers, providing transparent and unambiguous policies on how personal data is collected, for what purpose and how it is processed, taking explicit consent for sharing personal data between applications or when data is shared with other entities. The Web is clearly getting fixed!
References:
- Data sharing and consent management: Making consumer choice a business opportunity, iGrant.io white paper, June 2018
- A simplified guide to personal data and GDPR: iGrant.io consumer guide, Dec 2018
- A strong privacy policy can save your company millions, Harvard Business Review, Feb 2018
