If the Internet Titans Don’t Extinguish the Data Vacuum, Who Will?


By President Ryan Paterson Unplugged

It’s been nearly half a decade since the Cambridge Analytica scandal showed the damage that tech companies can do by misusing user data. While the controversy sparked public concern about internet data privacy, what progress has been made since then?

Some legislation to strengthen user data, such as the EU’s GDPR regulations, has come into effect around the world, but these sweeping changes have proven difficult to implement. Encouraging irresponsible data collectors to behave more closely with their practices may even backfire, causing companies to adopt more covert collection practices to circumvent regulations.

But protecting user data is critical to protecting the integrity of the Internet and its users, especially as it moves toward immersive, immersive experiences like Web3 and connected devices. As we head into 2023, companies that find creative ways to do so will undoubtedly expand their investor pools. This is especially true as retail investors—those who care more about data privacy than institutions—have become a larger share of the broader investor pool thanks to Robinhood and the rise of cryptocurrency.

The vicious circle of data collection

Everyday internet users cite data privacy as a top concern, but those concerns are not matched by the unimaginable rise of repeated major privacy violators like TikTok. This is not to say that there is a cognitive dissonance between the desire for privacy and internet trends, but data privacy and control can feel like too big problems to solve on an individual level.

In a sense, the websites and companies that collect our data have become bound by a kind of unspoken Rousseau-esque social and technological contract to how we use the internet.

Data collection is usually considered pleasant or normal for most people because there is no particular danger in getting targeted ads for the new toaster. Thus, this mediocrity allows data collection to become more embedded in all aspects of online transactions. But anyone well aware of data privacy can see the slippery slope of data tracking at worst. And it’s not something that can stop you from opting out of cookies.

Data harvesting scandals continue to mount, so it seems pointless to blame one source for mishandling user privacy. This is especially true when you consider that data privacy breaches are not limited to the private sector, but also to governments. Data collection is incredibly useful for business and surveillance, but the benefits are obscured by the violation of privacy rights.

Sale of information to the highest bidder

User data doesn’t just sit in a tamper-proof safe. For private and public entities, many of these data components offer multiple insights for monetization or tracking. Although many consumers are aware that data is being used for commercial purposes and do not necessarily object, the lack of transparency of what aspects of data are being taken is a real concern.

For example, location tracking is of great value to both private companies and government agencies. However, having such a high level of control over private citizens’ locations often causes backlash and controversy when abuse is discovered. The controversy only escalates when law enforcement gets involved.

Aside from confusing permission pop-ups, it’s hard to track what aspects outsiders are buying because information sales aren’t properly communicated to everyday users.

This exchange of information certainly raised alarm bells among larger regulators and commissions around the world, including the United States Federal Trade Commission. But even as regulators commit to combating the illegal sale and use of classified information, enforcement of these rules has proven difficult. This is especially true in countries where government authorities stand to gain something from accessing user data.

Be proactively protective

While legislation is being drafted and debated globally, there is already a market for those who are proactively moving to strengthen data privacy. The data protection market is expected to exceed $25 billion by 2029, opening a wide window of opportunity for developers and companies to step up while regulators mature.

This number has the potential to grow when accounting for Web3 developments and the major players involved. Internet usage is only rising, and its next phase is already being supported by tech giants interested in collecting more data. As usage increases, the web’s ecosystems become more attractive.

Metaverse development is a crucial aspect of Web3, although it is still in development and the platforms are far from fully operational. But the vision of a Metaverse-centric internet aims to digitize all aspects of human life—from work to commerce to entertainment. An immersive presence like this sounds enticing, and it’s easy to see how a free-to-use Web3 environment could easily scale to siphon more user data without consent.

Developers at the forefront of creating Web3 and Metaverse experiences can be proactive in protecting data while the market is still in its infancy. By addressing data protection, projects can be at the forefront of technological developments to create fairer and more transparent connected environments.

Data privacy remains a central issue in our collective Internet experience, and its sheer scale makes it difficult to combat. As developments in new connected experiences continue, now is the time for creators of new and valuable platforms to consider cutting the data vacuum cord. Although systemic change towards the right to data privacy is slow, innovative projects can lead by example.

About the author

Ryan Paterson is the president of Unplugged. Prior to taking the helm at Unplugged, Ryan served as Founder, President and CEO of IST Research from 2008-2020, supporting clients worldwide. He successfully exited IST Research in September 2020 with the sale of the company. Ryan also served two tours with the Defense Advanced Research Agency (DARPA) and 12 years in the United States Marine Corps (USMC).

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.



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