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Trust issue looms large for tech companies capitalizing on personal data

Privacy issues may cause a stumbling block for companies capitalizing on a growing stream of user data

By Marc Ferranti
March 6, 2014 05:06 PM ET

IDG News Service - As tech companies increasingly rely on analyzing and selling user data to boost revenue, trust is emerging as one of the defining issues of the year for the IT sector.

Tech vendors say that by collecting user data, they can offer better, personalized services. However, user wariness about exposing personal data may throw a wrench in plans for such new services, which are fueling growth not only for tech companies but, industry insiders say, the larger global economy as well.

"The transition to the digital world raises a new awareness of security and privacy issues," said Michel Combes, CEO of Alcatel-Lucent, in an interview at last week's Mobile World Congress in Barcelona. "We all know that if we don't solve these issues we'll face a trust issue in the usage of digital networks, which will be of major concern, because the whole economy is moving toward digital."

Well-publicized data breaches over the past year and the revelations of former U.S. government contractor Edward Snowden about U.S. National Security Agency snooping have exacerbated growing unease about the amount of personal data that is being collected by Internet companies such as Google and Facebook, telecom companies and retailers, tech industry leaders said.

"With the discussion around the NSA and the Snowden affair I think consumers are getting sensitized," said Deutsche Telekom CEO Tim Hottges, at an MWC keynote address.

Just about every tech executive at MWC in private interviews, keynotes and panel discussions touched on the issue of trust. U.S. executives in particular faced pointed questions about how the Snowden revelations may affect how their businesses are perceived.

"The government kinda blew it on us," said Facebook CEO Mark Zuckerberg in a question-and-answer session at MWC. "The NSA issues, I think, are a real issue especially for American Internet companies," Zuckerberg said. "Trust is just such an important thing when you're thinking about using any service where you're gonna share important and personal information, and we continue to work to just make sure that we can share everything that the government is asking from us."

Recently the NSA has allowed tech companies to share the number of government requests they receive, so the public realizes that such requests amount to thousands, not millions, Zuckerberg stressed.

Even so, "there has been an underestimation of how big all these revelations are and as they've piled up on top of one another, how disappointed consumers feel," said Ovum analyst Mark Little.

Concerns about the collection of personal data have been growing for years, Little noted. For example, news broke years ago that Google's Street View program picked up Wi-Fi data including passwords and email, causing legal issues for the search giant in various countries, Little said. Google's Street View cars roamed streets in locations around the world in order to aid the company's mapping software.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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