Markets are good for privacy

It sure ain’t easy to find a silver lining in the NSA snooping scandal, but maybe this was just what was needed to make the big Internet players like Google, Yahoo and Facebook think twice about data security. As Nicole Perlroth and Vindu Goel write in den New York Times, some of the biggest names in Silicon Valley are finally waking up to the fact that it isn’t enough to focus on the newest app or a cooler messaging system. If the giants of the industry want to keep meeting their ambitious business targets (and keep their stock prices up), they need to make their systems safe – because that’s what customers are demanding!

Insiders are already calling this the “Snowdon effect”: Security has suddenly become top priority! Internet companies are entering an arms race with the NSA to see who can make their platforms  more snoop-proof. Bradford L. Smith, Microsoft’s general counsel, is quoted as saying an interview “We want to ensure that governments use legal process rather than technological brute force to obtain customer data — it’s as simple as that.” Word has it that both Google and Facebook have finally started to encrypt all their internal data streams. And when Marissa Mayer of Yahoo recently announced at a press conference that her users were going to be offered industry standard Transport Layer Security as an option staring next January, the echo among experts was devastating: “too little, too late!”

In my keynotes on Big Data I have been saying for years that markets provide the best kind of data security, and I am regularly labeled a loony for my pains. I see it this way: companies should protect their customers’ data for totally self-serving reasons. To do otherwise is suicidal. The minute I find out that my  business partners are playing fast and loose with the information I give them, I the customer can hit them where it hurts most — by taking my custom elsewhere.

Unfortunately, the major Internet players have failed in the past to grasp this simple logic. Instead of taking the concerns of their users seriousy and doing something about data security, they have willingly neglected to install the necessary technology, mainly because it costs them money and slows down their systems. Now they are reaping what they sowed, as Forrester Research claims in a recent study about Cloud Computing. In his blog, Forrester analyst James Staten predicts that customer distrust will shave at least a quarter off current revenue projections and will eventually cost the industry up to $180 billion!

Security makes good business sense, and it has taken Internet companies far too long to figure that out. But better late than never… Now all we users need to do is increase not only the economic but the political pressure in order to reign in the crooks and cretins in our government agencies like NSA who haven’t gotten the memo yet. That kind of language doesn’t need any deciphering!