Regulators take on tech companies, but will consumers wise up?
If your company is not already aware of how and why regulators are cracking down on tech companies, and what this might mean for your company, then several FT articles and opinions should become essential reading.
The FT analyses why Facebook’s Mark Zuckerberg has been under fire over the use of Facebook data; why Uber has halted its self-driving cars following a pedestrian death, and new EU taxes on tech giants. Perhaps most important for HR and marketing are the new EU privacy rules due to come into force on May 25th.
Even before the Facebook-Cambridge Analytica revelations, the EU had been drafting its tough General Data Protection Regulation (GDPR) that will affect marketing, HR and other business functions, and even business models. The new rules will mean that any breaches of EU citizens’ data can result in fines of up to €20m, or 4 per cent of a company’s annual turnover (whichever is highest). This compares with the maximum fines imposed for privacy breaches in the UK of £500,000.
Any company collecting or processing personal information will have to gain clear consent from consumers on what it is doing with their information. When it comes to using data for political purposes, as the Cambridge Analytica issue has highlighted, personal information can only be used for limited purposes, for example, by political parties or campaign groups compiling newsletters or electoral lists. Despite the EU lead on the issues, privacy advocates still fear that Europe’s authorities will lack the resources to enforce them properly.
Real change will probably require more than just regulatory intervention. Consumers also need to understand what’s at stake. FT columnist Merryn Somerset Webb urges social media and internet searchers to value their data as highly as their pension assets. The difference between Facebook and Google on the one hand and financial services on the other, she writes, is that the assets held by the former are not stocks and bonds but personal data. Yet ‘if customers actually knew how much they were paying for their ‘free’ online services, they might be less enthusiastic about signing up for them.’ This realisation may be one big reason why Facebook, Google and Amazon shares all fell hard this week, she says. As Apple’s chief executive Tim Cook recently noted in relation to Facebook: ‘If our customer was our product, we could make a ton of money.’