Friday, February 23, 2024

Time to unlock the future of data privacy protection?

By N Jayalakshmi | January 09, 2023

The recent EU ruling pertaining to data privacy and its impact on Meta’s European business could possibly affect the way brands process and leverage data across their touch points. 

The brand, which for years nearly defined how people interact socially in their digital space, finally comes under the scanner. Facebook faces a major challenge as its parent company Meta has been fined to the tune of €390 million for breach of the EU’s privacy law. Most international media publications and industry watchers call the decision “one of the most consequential issued under the E.U.’s landmark data-protection law.”

For one, this severely impacts the social media giant’s advertising business in Europe. Meta reportedly relies on advertising for 98% of its $118bn (£98bn) turnover in 2021 and we all know that Facebook and Instagram’s business model is driven by data - compiling profiles of users from their online activity, which in turn helps advertisers do targeted advertising.

The issue essentially stems from the fact that the social media giant had illegally forced users to accept personalized ads. In other words, the legal permission that Meta sought from users to collect their data for personalised advertising as part of its lengthy ‘Terms-of-Service’ agreement, was, in effect, tantamount to forcing them to accept personalised ads. This was obviously in violation of EU’s General Data Protection Regulation.

While this applies to a non-product brand, and is related to the way the company sought (or didn’t as it turns out) permission from users to use their data, the development could have far reaching consequences for other markets and for other brands and businesses too, even if not all of them rely on targeted advertising as their business model.

In India, data privacy regulations are in their infant stage; and so is awareness regarding protection of data privacy, according to data science experts. Data is commonly shared without a blink of the eye - whether at the billing counter of a store or while registering for an app. We have no control over how the brand in question uses our data. It may be argued that, unlike in the case of Facebook, we are willingly giving out our information - phone number, which in today’s times is akin to sharing all our information.

But the question remains that we rarely question the need to share our phone number, and more importantly, an explanation is almost never offered as to why our phone number is being sought. Sometimes we are given a vague explanation that it’s for billing purposes or for communicating product discounts and offers. We can choose to opt out of that,  but we rarely do.  But then customer awareness and choice regarding their data protection is only one part of the story. For brands, on the other side, it may increasingly become crucial to take stock of how they process and transact with their data, especially since trust is one of the most critical factors in establishing brand loyalty today. Also, the time is not far off when compliance with data privacy regulations becomes a part and parcel of doing business.

Today when omnichannel is getting to be a near way of doing business for most retail brands, data is the centre piece.  It defines almost every aspect of the retail business spectrum - from merchandise planning, assortment and stocking to merchandise presentation, store design and placement of digital signage, touchscreen kiosks and other customer interface tools. While data in a majority of these cases is anonymous and involves one-to-many communication,  the line dividing one to many and one to one is rather thin, given the pace with which AI tools are evolving. May be it’s prudent for brands to have a well-defined structure in place - an in-house data policing unit if you must - led by a Chief Data Officer? This might not only ensure compliance with data privacy regulation, but also reiterate their standing as a brand, may be?



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