Six major internet companies and internet-service providers, including AT&T, Twitter and Alphabet's Google, Amazon and Charter Communications will detail their consumer data privacy practices to a U.S. Senate panel Wednesday.
Despite the optics of Big Tech vs. Big Government, the data privacy regulatory trend is more likely to result in "divide and conquer" of technology companies into winners and losers.
More specifically, the fault line appears if you split "Big Tech" into two types:
- Corporations using your personal data to improve and sell products and services directly to you.
- Corporations using your personal data to increase their revenues via selling to advertisers or third parties.
Sixty-four percent of Americans favor more regulation on data privacy. But we also like cool, personalized gadgets and services that use our data to make the experience better. We don't, however, like discovering that our emails are being monitored or our buying/watching/fitness habits are being sold to marketing agents. As you read Senator John Thune's comments or California's new privacy law, it appears the key impact of regulation enactment will be defining privacy in terms of a business model. In other words, "what is a company allowed to do with my personal data?"
The past 50 years have shown that the cycle of regulation and deregulation creates winners and losers in shareholder value terms, and the same will be true this time around. This may take some time to play out among the titans testifying, but divergence could be significant.
Facebook, Twitter and Apple provide instructive studies in contrast. Facebook, though not present Wednesday, Twitter and Google are data brokers with advertising revenue driving growth today and will continue to be unless they radically change their business model (i.e. you pay them an annual fee to not sell your data). Apple, on the other hand, sells products directly to us. Unlike Facebook or Twitter, Apple's business model is incentivized to protect our data — after all, we pay Apple directly for its products and services, and the company uses our data to design better, more personally customizable products.
Data privacy is only one wave of a rising "data regulatory" tide. As of 2018, Big Tech seems to realize that if they don't get the customer data story right, they risk future growth under an increasingly blinding spotlight. For Facebook, Twitter and increasingly Google, this is about restoring trust in the platform so they can continue to monetize your personal data through ad sales. For Apple, it's about designing products that move the company into new, more regulated sectors altogether, like healthcare. For AT&T, and Charter Communications it's also ultimately about ad sales but not directly tied to selling your data.