How Will Consumers React to the Removal of Data Protections? - eMarketer

• Updated on: 2017-04-01
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The vote by the US Congress to repeal internet privacy protections is a victory for internet providers, particularly telecoms. For their customers, however, it is quite the opposite.

Under rules adopted by the Federal Communications Commission (FCC) last fall, which have not yet gone into effect, internet providers would need to get consumer consent before using information—such as their location or web browsing history.

If the president signs the bill, as he is expected to do, ISPs won’t need consumers’ permission anymore.

eMarketer reached out to several telecom companies to discuss how the ruling would affect their relationship with customers. They declined comment, referring us to the statement by CTIA, the telecom trade group.

“CTIA and the wireless industry applaud Senator Flake and the 24 resolution co-sponsors for their leadership in seeking a commonsense and harmonized approach to protecting Americans’ privacy,” said Meredith Attwell Baker, president and CEO of CTIA, in the statement. “Wireless carriers are committed to safeguarding consumer privacy, and we support regulatory clarity and uniformity across our digital economy.”

Consumers are not likely to agree with that, according to advocates such as Michelle De Mooy, director of privacy and data at the Center for Democracy & Technology (CDT).

“I think the relationship between ISPs and their customers will suffer after the repeal of the FCC’s broadband privacy rules,” De Mooy said. “People care deeply about their privacy and they have clearly expressed time and again that they want control over who collects and shares their personal information.”

“Regulations or not, ISPs are going to have to face this reality or potentially lose the trust of their customers,” she said.

One reaction to the law might be that people start using more protective measures, like ad blockers or VPNs, and ISPs may become more opaque about their data targeting practices. Providers may find a way to work around disruptive technologies like ad blockers.

“[Or] perhaps consumers will begin migrating toward smaller ISPs that promise to retain good privacy and security protections,” De Mooy added.

Consumers are notoriously laissez-faire about privacy when it comes to their own behavior, such as taking advantage of public Wi-Fi. And in spite of a spate of hacking scandals involving Yahoo, banks and retailers over the last couple of years, more consumers than ever are purchasing and banking online.

But when it comes to how a company handles a customer’s personal information, research shows people say they care very much.

A survey conducted in September 2016 by Regina Corso Consulting for Arbor Networks found that 85% of US internet users expressed concern about their security, and almost as many were worried about their privacy.

Another study mirrored those findings. Accenture polled US internet users in August 2016 about what factors influence their loyalty to brands. More than eight in 10 respondents said their loyalty was influenced by a brand “being trustworthy with regard to safeguarding and respecting the privacy of my personal information.” This factor was named by a larger proportion of respondents than any other.

“Stakes get higher when data is breached—when someone’s privacy is violated,” De Mooy said. “We’re not talking about someone losing a bit of information, we’re talking about companies getting [people’s] full online history.”

eMarketer principal analyst Victoria Petrock said: “There may be a high-profile court case or another situation that draws this problem to the forefront. This could be similar to the Target goof, where they were targeting the pregnant teen with ads for baby stuff before she told her parents she was expecting.”

“If something like this goes viral, we might see some companies apologizing and working to put better privacy policies into place,” she added.

Yet data is a valuable tool for targeting customers, particularly for platforms competing for ad dollars.

And Congress is likely trying to level the data playing field.

For some time now, internet providers have opposed the FCC’s privacy rules, mainly because tech companies like Facebook and Google—who have access to a treasure trove of personal user information—weren’t subjected to it.

But experts point out that the difference between ISPs and platforms like Google and Facebook is that some consumers do not have a choice of what ISP they use, while their use of Google or Facebook is voluntary.

What’s more, people using Google and Facebook generally know that their data will be collected and used for marketing.

“This is going to be tough for the ISPs to sell to consumers—though it remains to be seen how much consumers can really do if they don’t have a lot of choice,” Petrock said. “In areas where there is no competition, an ISP will likely do what they want because they have a monopoly. There will be no incentive to change if they have no competition.”

In markets where there is competition, companies may use certain data collection policies to get a competitive edge.

“There actually may be a few companies out there that ask for permission from their consumers—even if they don’t have to—and use that as their competitive differentiator,” Petrock said.

When it comes to consumers, they may hold back and be more careful about what they post and where they shop. “When people stop trusting the internet, that’s when we not only lose trust, but dollars as well,” De Mooy said.