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How Big Data Is Like Big Tobacco - Part 2

SAP

By Tim Walsh, Global Vice President, Customer Engagement and Commerce, SAP

(Part 1 of this series is hereBad news for Big Data. We are accelerating through the litigation step and going straight to government intervention. If you thought the EU ruling on 'The Right to be Forgotten' was crazy, you would be shocked to know that the U.S. Federal Trade Commission recently recommended far more radical legislation in the U.S.The FTC's somewhat unheralded publication "Data Brokers - A Call for Transparency and Accountability" is a landmark document that should be a bright, flashing red light to the entire industry of Big Data. It's the result of a multi-year investigation into the practices of Data Brokers (e.g. Axciom) but it applies equally well to titans Google, Yahoo, Amazon, Facebook and others that live off user data. Here's a summary in the NYTimes.

Photo: Shutterstock

The fact that Google and other Big Data players are not called out in the FTC report is incidental. They have fundamentally the same model as the Data Brokers, although they execute it far more effectively and have considerably more influence in Washington. The report speaks to Big Data's billions of users (i.e. data providers), as well as their customers who buy data about the billions. In the document, the FTC condemns deceptive practices of Data Brokers, primarily for their failure to disclose the information they are collecting on consumers or allowing them to control it.

Yes, it might surprise a user to know that their frequent history of browsing sites on motorcycles could identify them in a high-risk category for an insurance company considering coverage. Oh, did you assume all data collected about you was a current and accurate depiction? Oops. No, no, no. Who knows if it's accurate? It's just out there to be bought and sold.

Among other things, the FTC recommends legislation that would allow users to "opt out" of having data collected about them. That would be interesting, to say the least. Imagine if everyone opted out. Suddenly the services for data for advertisement continuum screeches to a halt.

The Obama Administration has also called for a "Privacy Bill of Rights" to protect on-line consumers. That seemed to have lost some momentum until recently. In May, the president's commission on the topic cited big data's threat to civil rights. All these recommendations walk the fine line of positioning the Big Data co's as a potential threat on a discrimination basis, while largely ignoring dubious industry practices. Again, this follows the Big Tobacco path: Lobbying will sway government policy for a period of time. Ultimately, public sentiment will determine when and to what degree Government will step in.

Do we have an Insider? Oh yeah. However you view Edward Snowden, the great irony of his revelations is that he actually exposed the guys late to the party: federal governments. Phone tapping strikes a chord with everyone because the tactic is so well established in the folklore of our society. That's how they catch gangsters! But wait, don't many of us reveal as much or more in email and social networks, which are richly mined by Big Data for their benefit? Meanwhile, Google's outrage over NSA spying on their data centers is rich. Hey, no fair! Only we should be able to look into the intimate details of our users! Quite true, when that is the core of your business model.

What is Big Data's equivalent of the "nicotine delivery business"? Simple. They are a data monetization business. Yes the Big Data oligopoly sells advertising. That is one, but far from the only, strategy for data monetization.

So while Big Tobacco spent billions in R&D to deliver nicotine to as many bodies as possible, as efficiently as possible, Big Data's mission is to extract as much data as possible from as many people (or "things") as possible, as intrusively as possible. They are finding incredible ways to extract and monetize data, well beyond advertising. Search was the killer app to find out what mattered to us in exchange for organizing the web. Then it was/is social networks, which kept people connected with each other, businesses, causes, you name it (as long as we can listen in). Need more? There's an app for that.

In fact, there are millions of apps for that, most of them 'free'. As long as you don't mind telling us precisely where you are, who you are and what you are doing every waking second. The new strategy is to get smaller and closer. Enter the next big thing: Wearables. We'll stop messing around with games and just extract info directly from your body. (Did you really think this was about fitness?)

There's also an open spot on the wallin the skyon the road... If you're not going to oblige us by walking around with our mobile device, we'll just build something around you to watch. Awesome investment follows. We recently saw a glimpse of where Big Data wants to take this and it goes well beyond advertising to mood control, which has dizzying possibilities.

There is a fundamental shift occurring in the marketplace and it is much bigger than Big Data.  The digital era is in full swing.  Among its defining features is the empowerment of the individual.  Data Monetization is an effort to retain centralized control in the face of the rising power of the individual.  Although it seems to be working now -- as the titans of the early digital age continue to dominate by concentrating data -- it is actually inevitable that this model will break.  Big Tobacco is just one highly relevant precursor.  Next, we will look at the lesson to be drawn and a viable path forward.

This story also appeared on SAP Business Trends.