Big Data is everywhere, and it’s starting to raise some concern among consumers.
On a daily basis, companies are collecting our personal data whenever we sign up for services, make online purchases or simply log-on to our devices. This immense collection and collation of information is known as Big Data. A simple definition of the term is “extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations, especially relating to human behaviour and interactionsi.” You may not realise it yet – but Big Data is everywhere, and it’s starting to raise some concern among consumers.
“Consumer data is being used in more inventive ways, driving value for companies but reducing privacy for individuals. Are we reaching an inflection point in consumers' willingness to passively hand over their data?”
– Morgan Stanley Researchii.
In the age of Big Data a new dynamic has developed between business and consumers – with companies reaching for more and more access to consumer data, and consumers starting to show signs of resistance.
A wealth of information exists to support the popular view that technology is evolving faster by the day. The simple fact that just 10% of families had a cell phone in 1990iii contrasts tellingly against our current reality, where mobile phones are ubiquitous. Similarly, 40% of the world's population now has an internet connection, compared to just 1% in 1995.
One theory for why things appear to be speeding up is the increasingly popular idea that technology is advancing exponentially, rather than along a linear trajectoryiv.
An example of the theory would be the exponential increase of computer memory, whereby a hard disk from 1956 had 5MB of storage space, compared to a cheap modern Micro SD Card that stores as much as 12,800 of the old IBM drive.
The theory also corresponds with the exponential power capacity of Quantum Computers and the rate of development witnessed across a broad range of technological advancements.
BREACHES BURN CONSUMER TRUST
Technology has advanced so quickly in recent times that issues around privacy, and even the secure storage of data, have been ripe for controversy. In some cases, policy and support structures have been depicted as struggling to keep pace with rapid innovation.
The current prevalence of Big Data brings an increased risk of personal information being accessed by nefarious actors, particularly if a company holding that data is targeted by hackersv. Also of concern are the doubts many consumers hold regarding the ability of companies to act in an ethical manner when dealing with private, and sometimes sensitive, information.
Consumers are starting to be more wary of access to the data that they are producing. And when it comes to choosing a company, data security is becoming increasingly important.
- Morgan Stanley Research
Over the course of the past decade, many high profile companies have made headlines due to security breaches involving hackers.
One of the breaches exposed the social security numbers of thousands of people, while others compromised the personal data of millions, and led to the online theft of email addresses and credit card numbersvi.
Companies are pushing the boundaries in terms of using more personal and potentially sensitive data to drive incremental revenue streams. Yet at the same time, consumer awareness on data privacy is increasing as the number of data breaches continues to grow.
- Morgan Stanley Researchvii
While safety and security of dataviii is an emerging point of contention, so is the undeclared use of devices to impinge on consumer privacy.
Examples include a number of ‘smart’ televisions which, when voice activation was switched on, were found to be transmitting conversations in the same room to 3rd parties. The company responsible was compelled to create a software update that corrected the issue, in the wake of a powerful consumer backlash.
More recently, Facebook has announced that companies are no longer permitted to use its social networks to track and monitor users.
Both these examples could be a sign that companies are starting to take notice of consumer views on personal data privacy and the need for increased corporate transparency. Companies who rush to implement new technologies to gain a competitive edge might overlook the need to formulate adaptive risk mitigation practises relevant to new technologies, or fail to introduce appropriate new processes and policies. By doing so, they court the possibility of reputational risk, which could lead to a crisis in consumer confidence.
It’s a trust that would be difficult and time-consuming to rebuild.
As consumers' awareness on data privacy grows, questions are raised for all sectors on their use of consumer data: If consumers become more focused on data privacy, how could this impact business models?
- Morgan Stanley Researchix
A recent report by Morgan Stanley includes the following observation: “It is a challenge to make the most of personal data without consumers feeling like "Big Brother" is watching them.” It’s a well-worn comparison, but an apt one: George Orwell’s seminal 20th century novel Nineteen Eighty-Four as a parallel to modern society.
A key presence in Orwell’s dystopian classic is the all-seeing, all-knowing Big Brother – who is now a recurring spectre in the realm of popular culture, and a favourite reference for those who fear excessive government oversight and involvement in our everyday lives.
For some people, new rapid-fire advancements in technology are viewed as a hothouse for the development of an Orwellian-style dystopia, while data breaches and analysis of consumer data represent the tentacles of corporations who are intent on stealing away our civil freedoms and individuality.
Orwell’s book is a powerful one, and it’s no surprise that it still resonates so strongly. It is, however, a work of fiction. It’s important to remember that connectivity and data sharing does have a positive side that will potentially impact society for the better. It already enhances our lives through the likes of fitness trackers and connected sensors in our homes and cars using increasingly sophisticated software. 8.71 million new technologically-enabled ‘things’ are being connected every day, providing companies with the opportunity to analyse much richer data sets on their customers. This allows them to deliver better, more intuitive products and services.
We should also remember that it’s in the best interests of every company to keep their clientele feeling secure and confident enough to participate in a mutually beneficial relationship.
The biggest challenge to achieving an enhanced standard of living beyond our wildest dreams could actually be our own fears and mistrust of the new. It’s a cultural anxiety that, if left unchecked, could become a barrier to us entering a brave, and ultimately wonderful, new world.
For information on investment opportunities in new technology and innovation, please contact your Morgan Stanley Financial Adviser.
iDictionary.com
ii‘Big Data & Consumer Trust – How Much Do You Value Your Privacy?’ Victoria Chapelow, Faty Dembele, Jessica Alsford and Eva Zlotnicka. Morgan Stanley Research. March 2017.
iii‘The 100-Year March of Technology in 1 Graph.’ Derek Thompson. The Atlantic. April 2012.
iv‘Technological Progress.’ Max Roser and Hannah Ritchie. OurWorldInData.org. 2018.
vAccording to the Ponemon Institute, there is a 26% probability of a company having a material data breach involving lost or stolen records within the next 24 months (Ponemon Institute, 2016)
vi‘Target Now Says 70 Million People Hit in Data Breach.’ Paul Ziobro and Danny Yadron. Wall Street Journal. January 10, 2014. ‘Charges Announced in JP Morgan Hacking Case.’ Nicole Hong. Wall Street Journal. November 10, 2015. ‘Sony Hack Exposed Personal Data of Hollywood Stars.’ Ben Fritz and Danny Yadron. Wall Street Journal, December 5, 2014.
vii‘Big Data & Consumer Trust – How Much Do You Value Your Privacy?’ Victoria Chapelow, Faty Dembele, Jessica Alsford and Eva Zlotnicka. Morgan Stanley Research. March 2017.
viiOver a third of Europeans are concerned that too many people have access to their personal details.” - Symantec, 2015 State of Privacy Report.
ix‘Big Data & Consumer Trust – How Much Do You Value Your Privacy?’ Victoria Chapelow, Faty Dembele, Jessica Alsford and Eva Zlotnicka. Morgan Stanley Research. March 2017.
