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Redefining Privacy: The Origins of Data Privacy

Annie Greenley-Giudici

Over the past two decades, few concepts have evolved as swiftly or have become as important as data privacy. While the concept itself is not new – data privacy began to come into focus in the mid-1900s when governments and large companies began to store information on their early data processors – public awareness of it has skyrocketed in the internet era.

And the issue has become particularly salient in recent years due to prominent cases of data mismanagement. The result? Establishment of regulations and laws protecting individual data privacy, and giving citizens greater transparency and more agency to consent.

These regulations and laws come with clear implications for businesses operating in the digital space and holding personal data.

What is Data Privacy?

In today’s business environment, data is one of the most valuable assets a company can possess. Customer data fuels insights, product/service development, personalized experiences, and relevant go-to-market strategies. Properly analyzed, the right data gives companies a competitive edge in efficiency and, thus, profitability.

Websites, apps, social media platforms… these are all data wells, collecting and storing personal information about consumers to provide and customize services. This sensitive data covers many fields. It can be a consumer’s name, location, contact information, medical records… and so much more. And it can relate to online or real-world interactions.

One particularly sensitive type of data is Personal Identifiable Information (PII), defined by the US Department of Labor as “Any representation of information that permits the identity of an individual to whom the information applies to be reasonably inferred by either direct or indirect means.”  This sort of data includes social security numbers, full names, and even birthdays – data that opens an individual to identity theft when placed in the wrong hands.

Data privacy addresses the proper handling, storage, access, retention, changeability, and security of sensitive data, PII or otherwise.

Data privacy becomes problematic when websites, apps, and social media platforms exceed users’ expectations for data and PII collection and usage. In short: when your customers don’t know what data they are giving you or how it is used.

The result? A breach in user privacy.

Data Privacy Versus Data Management

It’s important to recognize that data privacy is just one aspect of data protection (aka data security). In short, it’s a subset of a company’s overall data practices and data management program. The complete data management program is how a company’s data is collected, used, and distributed.

What this means is that beyond providing consumer privacy notifications, it is increasingly critical for businesses to address their broader data practices, including privacy risks. It’s one reason large companies have added a new executive position – Chief Data Officer (CDO). And one important aspect of the CDO’s role is to establish and oversee data management policies and procedures to ensure data security and privacy.

Why is Data Privacy Important to Individuals?

At its core, data privacy is all about trust. After all, for consumers to feel safe and be willing to engage online, they want to trust that their personal data is being handled with care.

They want to be assured that their personal information isn’t vulnerable to being misused by hackers or unscrupulous companies to track and monitor them, defraud and harass, or spam users with unwanted marketing and advertising.

Why is Data Privacy Important for Businesses?

For individuals, any of the above outcomes can be harmful. For a business, these outcomes can irreparably harm its reputation and incur fines, sanctions, and high scrutiny from regulators.

Few things are as vital to a company’s success and growth as its brand reputation. And more often than not, reputation depends on the trust between a consumer and a brand. When a brand makes a genuine, truthful connection with a consumer, it creates brand loyalty.

This is the basis of a consumer-brand relationship, giving an organization a competitive advantage by creating a propensity among consumers to prefer the brand’s new offerings. But a brand damaged by a data privacy breach can flip that propensity on its head.

Proactively addressing consumer privacy issues through enhanced notices, icons, and opt-outs will help reduce risk and keep a business out of hot water. On the positive side, demonstrating good data privacy can also help win new clients and grow a business.

The takeaway? Organizations today should see data protection and privacy less as a compliance exercise and more as an opportunity for trust-earning potential for their brand. As well as positioning them with a competitive edge in the market.

Who Else do I have to Worry About?

One of the most powerful aspects of the internet is its ability to fuse information for the consumer across the globe. Online marketplaces can place an item being sold from America on the virtual shelf next to one sold out of Bangladesh.

Companies, too, have developed global supply chains among themselves and their partners. Ensuring product consistency end-to-end across the supply chain is known as “supply chain integrity,” which, in turn, has come to include data privacy.

That same technology that makes your customers blissfully unaware of the countless partnerships occurring behind your brand can also ruin your brand if one of your partners misuses information entrusted to your company.

What Laws Protect Data Privacy?

As the concept of data privacy has become more prominent, an increasing number of regulations and laws around its protection have been passed.

Privacy laws such as Europe’s General Data Protection Regulation (GDPR) regulate data storage, sharing, and disclosure practices for consumer data in today’s digital economy. Implemented in May 2019, the GDPR claims to be the “toughest privacy and security law in the world.”

And a company doesn’t have to be based in Europe to be impacted by it. As long as your organization targets or collects data related to individuals in the EU, you must abide by GDPR regulations. Otherwise, you can expect penalties reaching into the tens of millions of euros – up to 4% of the offending company’s annual turnover.

The GDPR is large and far-reaching and has implications that may impact many areas of your company, including your marketing strategies. It’s disrupting traditional business models and the way data value transfer works.

Since the GDPR, other privacy laws have bloomed around the world. There’s the Brazilian General Data Protection Law (LGPD) and the Chinese Personal Information Protection Law (PIPL). And there are also a number of individualized laws around US states, like the 2019 California Consumer Privacy Act (CCPA). Colorado, Connecticut, Virginia, and Utah have all created legislation similar to CCPA, and 11 other states have privacy bills in consideration.

All of them aim to unify the multiple local privacy laws that regulate the processing of personal data.

How do I protect data?

This increasing number of laws can make it difficult for companies to keep up and stay compliant. What differentiates one law from another? Are they all applicable simultaneously? Do they take different approaches in enforcement?

Most importantly, how can a business build good data privacy procedures as a brand asset and competitive advantage rather than lose sight of the goal amidst compliance stressors?

As a first step to good data privacy, online operations professionals have access to marketplace tools that can help them audit their own or their partners’ web-facing technologies to prevent better unhappy surprises from lurking in the code.


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