Facebook and Google decide how to build our newsfeeds. The financial industry designs personalized loans which fit our spending patterns. Insurance companies offer personalized quotes based on intimate details of our lives including our medical histories. Companies increasingly harness our personal data in order to sell to us products and services at the right time and at the right price. Recent years have seen an emergence of data-driven revenue management. A third way to reduce the harm: rethinking revenue management In the case of Cambridge Analytica, the breach was massive, so the company should have to pay a substantial fine.īoth these instruments can help in restoring efficiency in these kinds of markets and help a regulator like the United States’ FTC to push companies to collect only the exact amount of data that customers are willing to share. Whenever a company agrees to pay a certain amount of money to the regulator after a data breach, this amount of money should be proportional to the damage to consumers from the data breach. The more data a company collects about its customers the higher the financial costs of these data to the company.Īnother type of instrument is the liability fine. One is a tax proportional to the amount of data that a company collects. In our work, we propose two key types of instruments for discouraging companies from collecting more data than is strictly necessary. Two solutions to reduce data collection: taxes and fines So more creative methods are needed to minimize the risks from data collection. Irrespective of the data protection levels you're implementing, data will always be such a business asset so companies will still be collecting more data than their customers wish. We show in our research that this is simply not enough. Thus, the FTC’s major efforts right now, in terms of regulating these kinds of markets, are essentially directed at asking companies to enforce their data protection policies and at ensuring that at least a minimal data protection level is delivered. In the end, these data are at the core of the companies’ business model and asking not to collect these data is akin to asking companies to commit business suicide.
Not surprisingly, the FTC cannot ask companies not to collect data at all. After the Cambridge Analytica scandal erupted, the FTC fined Facebook $5 billion. In the United States the key data regulator is the Federal Trade Commission (FTC). Our work, thus, highlights the need for regulation of such markets. Our findings indicate that the claims of industry leaders that companies collect the exact amount (or even less data than) their consumers wish, are not necessarily true. We find that, in general, when companies choose data policies in their self-interest, more data are collected than what would be optimal for consumers. Our research question is: how does a company’s data policy (essentially, company’s decisions of how much data to collect and how to protect data) influence the interaction between these three parties?
In order to answer this question, we study interaction between three parties who are concerned with our data, us – the consumer, the company we are interacting with (for example, Facebook and advertisers using its services), and malicious third parties, who may be other businesses (for example, ill intent advertisers or companies similar to Cambridge Analytica) or even governments. HEC Paris Assistant Professor of Operations Management Ruslan Momot explains how his recent research in collaboration with co-authors from the United States, the United Kingdom, and Canada sheds light on digital privacy. What measures can governments and regulators take to prevent such incidents? How should companies and digital businesses, for whom a large part of their business models are our data, change their practices and policies so that our data are safe?Ĭambridge Analytica is an extreme example, but similar data leakage and misuse incidents occur on a daily basis.
This is an extreme example, but similar (just on a smaller scale) data leakage and misuse incidents occur on a daily basis. A notorious example of a consulting firm, Cambridge Analytica, exploiting the Facebook data of 50 million Americans to sway the 2016 US Presidential elections provides a cautionary tale. With these data, companies personalize their products and services to fit our preferences and needs.Īt the same time, such ubiquitous availability of data increasingly presents risks. Indeed, we consumers benefit from such abundance of data being in the hands of companies. Every time we take an Uber ride we actually want the platform to know our geographical location to match us to the closest driver.
0 kommentar(er)
