Nearly 90 percent of consumers care about data privacy, yet only about 30 percent worldwide have actually switched providers over data policies, suggesting there’s a market for privacy.
To understand how marketers can increase their share of the market, eMarketer’s latest report about privacy as a competitive advantage unpacks case studies on how Apple, Amazon’s Alexa, WhatsApp and Facebook’s Reality Lab are creating, maintaining and in some cases, losing consumers’ trust with their strategic data practices and privacy-centric approach to product development.
In 2018, Europe enacted its General Data Protection Regulation (GDPR). Shortly thereafter, the US adopted the California Consumer Privacy Act (CCPA) and the subsequent California Privacy Rights Act (CPRA), which was signed in 2020.
Though helpful frameworks, this patchwork approach to data privacy rules is a leading privacy compliance challenge, according to 37 percent of US marketers, as Treasure Data found. Consumers, on the other hand, are struggling to feel empowered when it comes to controlling their data. As Cisco’s June 2020 worldwide survey found, just under half of consumers didn’t feel they were able to effectively protect their personal data, primarily because it’s too difficult to figure out what companies are actually doing with it.
At the same time, consumer trust in technology is waning. Edelman’s 2021 Trust Barometer found that trust in the technology industry declined 6 percentage points between 2020 and 2021.
In response to these shifts in consumer opinion on privacy, tech giants like Facebook are exploring product designs that gather and process data on the device rather than in the cloud. With 50 percent of executives worldwide saying that cybersecurity and privacy are now baked into every business decision or plan, it’s safe to say that privacy and trust are evolving beyond a compliance concern and into a strategic initiative.
Despite rapid adoption rates, voice assistants and smart speakers still suffer from trust issues. Most US internet users who don’t own a smart speaker are wary of devices that are always listening and stated that they don’t trust companies to keep information secure, according to a 2020 NPR and Edison survey.
According to eMarketer’s forecasts, 27.2 percent of the US population will have smart speakers in their homes this year, and about 67 percent of smart speakers will be Amazon devices. Gaining the trust of its users required a steep learning curve for Alexa. To maintain consumer privacy and trust, Alexa has launched several commands that help provide users with transparency. For example, a user can ask Alexa to repeat back what it has heard, or ask “Alexa, why did you do that?”
In addition, Amazon recently added the ability to ask Alexa to “delete everything I’ve ever said,” which wipes out the audio history of processed interactions. To maintain consumer trust in Alexa, Amazon also has an entire team called Alexa Trust dedicated to consumer perceptions of its smart assistant.
As eMarketer suggests, Alexa could do more to guide new users through privacy preferences from the get-go as well as be transparent about how Alexa is using transaction data to customize and target experiences.
Apple has established itself as a privacy-friendly company, but the company is poised to set the privacy protection bar even higher as Apple CEO Tim Cook said that “business built on data exploitation without consumer choice deserves reform.”
To this aim, Apple has implemented a multi-faceted strategy that includes privacy-focused ad campaigns, allowing users to easily opt-out of location tracking by apps in iOS 13, privacy “nutrition labels” and App Tracking Transparency requisites in iOS14.5.
Apple’s privacy nutrition labels translate policies into layman’s terms, requiring that app publishers detail what data is being collected and for what purpose. This tool has already seen success as 72 percent of US iPhone and iPad owners were aware of the labels’ introduction, according to a January 2021 SunCell survey. The labels can also function as a comparison tool as users compare one app to another in hopes of choosing the more privacy-centered one.
App Tracking Transparency, on the other hand, mandates that apps ask users for permission to track activities across other apps and websites. This tool is the platform’s inceptive attempt at preempting shifts in policy by deploying a tangible, opt-in consent option for advertisers utilizing Apple’s Identifier for Advertisers (IDFA).
It seems Apple’s efforts around privacy are paying off. Of those who switched to an iPhone from Android in the last five years, 24 percent believed Apple was safer, 18 percent did so for better privacy protections and 15 percent did so for apps that have been vetted for privacy and security, according to Consumer Reports’ research.
While 31 percent of US smartphone owners would allow app-tracking to avoid paying a subscription for them—according to an AppsFlyer/MMA global survey—Apple’s IDFA changes have had a devastating impact. Last month, Venture Beat reported that iOS advertisers are experiencing a 15 percent to 20 percent revenue drop and inflation in unattributed organic traffic.
In light of Apple’s new policies and tools, Google has announced that it will require app developers in the Google Play app marketplace to offer details on data collection and use. Contrarily, Facebook has opposed Apple’s measures by indicating that such changes would “severely impact” social media’s ad business. WhatsApp has similarly denounced the new privacy requirements as unfairly advancing the iOS iMessage app only.
Despite Apple’s shifts being scrutinized as gatekeeping, the company has led the way on privacy. As eMarketer notes, its first-party data experiments may cause users to question how Apple intends on using personal data, forcing the tech giant to proceed with caution in order to preserve the trust it has garnered over the last couple of years.
After WhatsApp users received a push notification requiring that they must accept new terms and privacy policies to continue using the app, their data began to be shared with Facebook, and the messaging app’s reputation for “privacy as a priority” was tarnished.
Shortly after purchasing the privacy-friendly messaging app for $19 billion, Facebook prioritized a monetization strategy and began sharing data for personalization and ad-targeting features, sparking an EU investigation, fine and data integration “EU pause” pending GDPR compliance.
Given that the ultimatum to accept the new terms or stop using the app wasn’t explicit about what data would be collected, shared and with whom, WhatsApp users interpreted the new terms to mean that Facebook could access encrypted messages. WhatsApp sent countless clarifying messages educating users on the terms, which delayed the rollout almost three months. The app went on to announce that rejection of the new terms would result in a gradual loss of functionality.
As a result, Signal and Telegram downloads soared with 7.5 million downloads and 5.6 million downloads, respectively, between January 6 and January 10, according to Apptopia.
Facebook’s acquisition of WhatsApp diminished the trust that had been built throughout roughly five years of service. The rollout was further hindered by misinformation and a sense of betrayal. As eMarketer notes, when a company builds its reputation on trust and privacy, it must continue to meet and exceed user expectations of those principles.
Facebook Reality Labs
Facebook Reality Labs is on a mission to help people feel connected anytime, anywhere, which is why roughly one-fifth of the company’s workforce is working in Reality Labs.
The challenge here is winning back users’ trust in order to harness the full potential it envisions for Reality Labs given that trust and privacy are indispensable for introducing a new computing interface. In eMarketer’s June 2020 Digital Trust ranking of the largest social media platforms, Facebook came in dead last, as only 3.4 percent of US adults trust the tech giant with personal information, according to a June 2020 eMarketer/Bizrate survey.
Dubbed “The Big Shift,” Facebook’s new approach stresses data minimization and bakes privacy into its entire design process. According to Andrew Bosworth, head of Reality Labs, Facebook will be starting with the assumption that they cannot “collect, use, or store any data” and that they will maintain the burden of informing why certain data is required to produce a workable product.
Reality Lab’s integral principles for responsible innovation include 1) never surprise people, 2) provide controls that matter, 3) consider everyone and 4) put people first. These principles, along with internal teams focused on privacy, trust, responsible innovation and a privacy review process, aim to redeem Facebook in the eyes of consumers.
It’s still too early in Facebook’s roll-out of new privacy changes to determine how they will manifest in augmented reality (AR) and virtual reality (VR) experiences. Although only 8.5 percent of Americans own a VR headset, in 2020 Facebook’s Oculus accounted for 53.5 percent of global headset shipments, according to Counterpoint Technology Market Research.
Bosworth, with his optimistic and privacy-centric approach to Reality Labs, has said that he will focus on technology development and product experience before worrying about the business model. Unfortunately, Facebook’s history has shown that developing the tech before the business model has manifested with, as eMarketer puts it, “significant risk and potentially perverse incentives.” Additionally, Bosworth’s own history running Facebook’s News Feed has shown that despite his contentions, his remarks don’t set policy. In short, the company’s data minimization stance is long overdue.