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Posted at 4:27 PM ET, 01/23/2011

Davos dispatch: The coming privacy economy

By Michael Fertik

We all know digital privacy is under grave threat. This important subject gets global treatment this week as business leaders and policymakers convene at the World Economic Forum in Davos, Switzerland. The WEF has identified this emerging topic early and is promising to help set the worldwide agenda for new solutions to the rapidly advancing problem by convening a number of events specifically addressing the subject. I shall be moderating one such session and a panel member of another.

Social networking, Wikileaks, and the cloud are all turning up the heat on the urgency of protecting private information. To date, however, the law has been slow to foster deep security for personal data, while business has failed to develop novel ways of monetizing information without resorting to proven advertising models that necessarily exist in tension with the interests of privacy.

In the past year alone, privacy has been thrust into the public's awareness by Google Street View, Facebook, social networking apps, iPhone and Droid apps, the I Can Stalk U app, Wikileaks, and even Julian Assange's OKCupid profile. Cohesive responses to growing threats to personal data have remained elusive, however. Some of the elusiveness derives from deep disagreements as to how to proceed. From a policy perspective, the EU and US appear to be gearing up for a fight, given strongly dissonant views on how best to treat privacy.

The EU has traditionally viewed privacy as a human right, while American law has historically treated it as a matter of consumer protection. The tension between these two underlying legal frameworks has even started to put pressure on provisions such as the EU Safe Harbor, which for years has shielded American companies that receive European citizen data so long as they meet certain minimum standards which are measurably less restrictive than the Europeans' own internal guidelines. European countries want to see evidence of more vigilant protection by American regulators, while Americans believe they are more creatively accommodating the imperatives of both commerce and privacy. The FTC and Commerce Department are right now inviting commentary on their latest proposals on web activity tracking, and Europeans are considering even more robust measures to beef up privacy protections.

Nonetheless, policymakers on both sides of the Atlantic readily acknowledge that they can't keep up with Internet speed. They are clamoring--perhaps as much as the public is--for innovative business models that directly serve consumer privacy interests. A number of multinational companies, including giant Telcos, ISPs, banks, and software companies, have all publicly declared interest in developing applications that can help end users control and even profit from their personal data. These companies possess stores of private information that rival those of the largest web data businesses; however, unlike advertising businesses, they believe the commercial upside is not in traditional data mining but rather in the creation of tools that can power digital health and commerce. These companies believe that they can generate revenue for themselves and their end users at the same time.

Creating these new business models will be hard. The infrastructure of the Internet is stacked entirely the other way. Setting aside hardware companies and ISPs, 90 percent of the trillion dollars of wealth created by the Internet to date has been in advertising. That means that Silicon Valley companies are exceptionally good at getting people to use stuff free so that they can collect and sell their data. An entire ecosystem of collectors, buyers and sellers of data has blossomed to full maturity. To match the power of this status quo, entrepreneurs, corporate leaders and lawmakers will need to accelerate the growth of a privacy economy that can come to the rescue of end users.

One solution sure to receive huge attention at Davos this year is the Data Privacy Vault. Imagine if you could put all of your private information in one basket and then move around the web enjoying the benefits of commerce and health without ever revealing any actual information about yourself. All the vendors with whom you transacted would simply query your Vault, and they'd never know who you are.

The companies showing up at Davos could make this happen in a New York minute.

Stay tuned. This conversation is just starting.

Michael Fertik is a repeat Internet entrepreneur and CEO with experience in technology and law. He founded Reputation.com in 2006 with the belief that citizens have the right to control and protect their online reputation and privacy. He is a member of the World Economic Forum Agenda Council on Internet Security, a post secured after leading Reputation.com in the award as World Economic Forum Technology Pioneer 2011.

By Michael Fertik  | January 23, 2011; 4:27 PM ET
Categories:  Michael Fertik  
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Comments

Great post Michael and I look forward to hearing what discussions come out of Davos around Data Privacy.

The Data Privacy Vault is a very interesting idea. The problem, as I see it, is that if someone doesn't own it (company, govt, org) and there are no regulations around the DPV being a legitimate technology, then there are no incentives for this concept to work.

More to come !

Shaun Dakin - @ShaunDakin

Founder of Privacy Camp, a global series of un conferences on Privacy - @PrivacyCamp

Fellow, the Future of Privacy Forum, Application Privacy Project - @AppPrivacy

Posted by: shimane1 | January 24, 2011 12:21 PM | Report abuse

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