Data Privacy - A Market Expectation?

Data Privacy Is Becoming A Market Expectation

Entrepreneurs have amazing ideas. They usually revolve around data, collecting data, and using data in a variety of ways. The goal of an entrepreneur is to solve a problem. But sometimes, the answer to one problem creates another. Take AI for example. AI solutions have improved our lives in so many ways in the last few months, but have also posed important ethical and privacy concerns.

Why is privacy becoming a market expectation?

Many founders have gotten so excited about their product and idea, and when asked about how they protect the privacy of their customers or users, they started mumbling. While many treat it as a legal burden that you shouldn’t worry about and just leave it to the lawyers, it is often a requirement coming from investors, executives, or even users. There are several reasons for this.

1. Investors don’t want their money to go to pay fines-
   The fines for privacy violations aren’t small. In fact, in the EU under the General Data Protection Regulation (GDPR), it can get up to 4% of the global annual turnover or 20m euros, whichever is higher. And no, it is not reserved only to big tech companies. The GDPR has extraterritorial scope, which means it could apply to your company even if you are not based in the EU but are tracking or collecting data of EU citizens. Many countries have already followed the GDPR as a global benchmark.
   And yes, publicly available data is also considered personal data. It’s shocking, I know. But if you train your models or build your products upon data that you have found or bought online, it’s very very risky.

2. Investors and C-level know that it’s almost impossible to recover from brand damage -
   While you might not get a fine for each privacy violation, your customers and users will notice that their data is being used for other purposes that they have agreed to or that you are selling their data to third parties. Also, if their access or deletion rights are not being treated as required by law.
   People remember. And once you lose one, that one will tell the other. Negative Word-To-Mouth flies much better than a positive one.

3. Trust leads to sales -
   It’s not easy to sell online. If you have a product that requires demos and implementation time, it’s even more challenging. If you’d be known for good privacy practices and show transparency, you can cut down the approval time by at least 37%. Each day saved is a lot of resources, time and money that stays in your pocket.

And if you are selling directly to consumers (B2C), you should know that according to a recent survey conducted by PwC, 79% of consumers view protecting their data as an important part of building trust.

4. It’s a competitive advantage -
   You can look at privacy as a mere legal burden, but that’s plainly wrong. A recent academic study showed that privacy can be a strong competitive advantage - “𝘥𝘪𝘧𝘧𝘦𝘳𝘦𝘯𝘵𝘪𝘢𝘵𝘪𝘰𝘯 𝘭𝘰𝘸𝘦𝘳𝘴 𝘤𝘰𝘮𝘱𝘦𝘵𝘪𝘵𝘪𝘰𝘯 𝘢𝘯𝘥 𝘤𝘢𝘯 𝘭𝘦𝘢𝘥 𝘵𝘰 𝘮𝘢𝘳𝘬𝘦𝘵𝘴 𝘸𝘪𝘵𝘩 𝘭𝘢𝘳𝘨𝘦𝘳 𝘴𝘶𝘳𝘱𝘭𝘶𝘴𝘦𝘴 𝘢𝘮𝘰𝘯𝘨 𝘤𝘰𝘮𝘱𝘦𝘵𝘪𝘵𝘰𝘳𝘴 𝘸𝘩𝘪𝘭𝘦 𝘢𝘭𝘴𝘰 𝘣𝘦𝘪𝘯𝘨 𝘣𝘦𝘯𝘦𝘧𝘪𝘤𝘪𝘢𝘭 𝘧𝘰𝘳 𝘤𝘰𝘯𝘴𝘶𝘮𝘦𝘳𝘴.” And with the rise in consumer awareness, it might be the key to surpassing your competitors and increasing market share.

If you think about it, Apple and Google adopt strict privacy practices even though they are not required by law, and it's not because they're altruistic. Why are they doing that? Because they recognize market trends. They know that they’re users are getting more sensitive and aware about their right to privacy, so they changed their marketing approach accordingly.

Of course, it shouldn’t be just for marketing purposes. You have to actually adopt ethical data practices. Otherwise, we’ll be back at point #2 - it’s hard to recover from brand damage!

In conclusion, privacy is becoming a market expectation for several reasons. Investors want to avoid fines for privacy violations and understand that brand damage is difficult to recover from. Building trust through good privacy practices can lead to increased sales and provide a competitive advantage. Big tech companies already recognize the importance of privacy in today's market and treat it as a competitive advantage, and so should you.