Media Money with Julia Boorstin

Tangled Web: The Corporate Privacy Battle


Tech and media giants face a delicate balance between privacy and profits. They rely on consumers' personal information to grow revenue, but if consumers don't feel safe — or if their data is stolen — that's a major problem. Personal information is incredibly valuable for targeting ads, so the stakes are certainly high. The question is how companies can manage and access that data without violating privacy.

A full 88 percent of companies polled by Forrester say that data protection is their top priority. And privacy — a key component of overall security spending — is growing annually. Forrester analyst Khalid Kark estimates that tech companies spend about half of one percent of their revenue on security, and about half of that on privacy-related technologies and practices. Based on these estimates, Google should spend roughly $50 million spend on privacy each year, though the company doesn't break out that spending.

Google says it's doing more than legally required to protect privacy as it faces fire for its controversial "Street View" cameras. The latest criticism comes from Germany, where Google will introduce mapping for 20 cities before the end of the year. Google is working hard to making this work — it introduced an online tool for Germans to remove their homes from "Street View" maps.

Tangled Web//Profits & Privacy - See Complete Coverage

Google began targeting ads based on behavior last year, which helped grow Google's Ad Sense platform 23 percent in the second quarter from a year earlier. But Google, careful not to use consumers data against their will, at the same time launched new tools for consumers. "Ad Preferences Manager" and "Google Dashboard" allow users to dictate exactly how Google can use search history and the like. "Data Liberation Front" literally "liberates" your data from Google to your computer hard drive.

The problem? Critics say Google's choices are confusing, the same criticism lobbed at Facebook, when a new 'Like' button prompted many to share with the whole web, not just a circle of friends. CEO Mark Zuckerberg responded to growing outrage by overhauling privacy settings in May. Facebook says it devotes hundreds of millions of dollars in infrastructure and manpower to addressing privacy concerns. Clear privacy settings are more important than ever as Facebook moves to introduce a location-component.

The fact that Apple can track where you're using your iPhone or iPad also puts Apple in the spotlight.  Congressmen Markey and Barton raised red flags when Apple updated its privacy policy to say "partners and licensees may collect, use and share precise location data" of devices. Apple stresses that consumers must opt in for apps to access their location.

Opt-in seems to be the strategy for companies to manage privacy concerns around location. Twitter has always been an open platform-- just a tiny percent of users ask that their Tweets remain private. But when it added location tagging in March, Twitter asked users to opt in from each of their devices. And even if consumers are asked to think twice before agreeing to disclose their location, people don't always realize the potential danger of all those personal disclosures. Tagging a tweet about leaving home on vacation has even invited robberies.

Companies have their hands full, but at the end of the day a lot of responsibility lies with consumers. The question is whether they have the education and tools to protect themselves.

Look for reports from Julia Boostin, Jon Fortt, and Hampton Pearson, Wednesday August 18 through Friday August 20—part of CNBC's special series "Tangled Web: Profits & Privacy."

Questions?  Comments?