Right now, mobile is the Wild West of the technology industry. Mobile usage is expanding at a rate that's too fast for the business world to keep up with; mobile technology and the measurement and marketing strategies around it are changing daily. Many analysts can’t even agree whether tablets belong in the mobile category.
The mobile industry is not effectively regulated yet, so there’s room for companies to exploit consumers and brands on the mobile side with virtually no consequence. However, as the industry matures, the days of no privacy regulations and companies selling or abusing consumer data are coming to a close.
Consumers are becoming savvier and more cognizant of online tracking and security threats. Government and industry players are thus being forced to question the lawless ways of the mobile space.
A Privacy Crisis Is Expensive When Consumers Get Smart
In 2011, Sony was the victim of a series of hacks including a PlayStation Network data breach, which compromised personal data from more than 100 million accounts. Customers across the web were furious, and the situation rapidly grew into a full-blown crisis for the Tokyo-based company. According to an AP article, Sony estimated that the hacks would cost $173 million in increased customer support costs, freebie packages to welcome back customers, legal fees, lower sales, and measures to strengthen security.
One of the important lessons here for all brands is that customer backlash and activism against Sony is arguably what was behind a large chunk of that $173 million sum. Sony’s customers were knowledgeable enough to take matters into their own hands by engaging and punishing the brand as well as spreading the news. Kristopher Johns from Alabama, for example, filed the first-class action lawsuit against Sony on behalf of all PSN users because he knew his Internet rights were violated.
Though the average smartphone user may not fully understand their privacy rights, how tracking works, or what UDID or MAC Address tracking are, all it takes is one breach to shine the light on the numerous privacy issues that exist. When that happens, those folks in charge of handling data should be confident that the identity or personal information of users isn’t at risk in any way.
Washington Is Watching
The mobile industry should have created self-regulation systems years ago by implementing standardized privacy controls that dictate how data is collected and stored. When regulation vacuums occur, Uncle Sam steps in---and this is what is beginning to happen now. Regulation development has been center stage in Europe for some time, but now with the Mobile Device Privacy Act, which was introduced to the House of Representatives on September 12, mobile privacy has bubbled up to become a concern at the federal level.
Companies putting consumers at risk by using unsafe identification methods, not protecting user data or, worse, selling that data, are risking exposure and could become the eye of a privacy storm just as Carrier IQ was late last year. While it’s easy to see how the FTC investigation affected the software company itself, remember that it wasn’t the only company affected. Every major mobile carrier and hardware company---AT&T, Sprint, Samsung, HTC, RIM, T-Mobile---that used or partnered with Carrier IQ was also forced to deal with the crisis and found themselves answering to consumers, the media, and the government. They were guilty by association until they could prove otherwise.
Brands who want to retain the consumer confidence they have built up over the years and avoid getting tangled up in privacy investigations need to be sure that every company they do business with---including large enterprises and small startups---has sound privacy policies and practices in place.
Mobile Devices Are Personal, Which Means More Backlash
Mobile devices are inherently more personal than other technology, including desktops and laptops. Mobile phones are always on and accompany a user at all times, providing people the means to do research, shop, browse, and interact with others socially, all while on the move.
Because of that personal connection and the amount of data available when a user’s mobile privacy is comprised, there’s a greater sense of violation, which results in a bigger backlash for companies that end up in a privacy crisis.
So, what does this all mean for companies that are in the middle of the mobile Wild West? It means that they must focus on the protection of their users’ privacy and any data that they are collecting, while also giving those same users the ability to control how they are tracked. With growing consumer and government concern over mobile privacy, companies need to take the initiative now. If they fail to value the integrity of their technology partners and don’t adopt best practices for data and customer security, while continuing to play fast and loose with personal information, they could find themselves in deep trouble when the new mobile sheriffs come to town.
And, make no mistake, they are indeed coming.