Will Social Business be Crippled by Consumer Privacy Rules?

by francine Hardaway on February 28, 2012

If businesses had already been social in 2008, would the financial crisis have been less severe and crippling? And will looming changes in privacy rules interfere with the changes that might keep that kind of disconnect between businesses and their customers from happening again?

I was starting to write about Obama’s Consumer Privacy Bill of Rights when it occurred to me that perhaps it might have the unintended consequence of disconnecting people further from businesses that might want to break down barriers.

One of the toxic and unnerving aspects of the recent foreclosure crisis was the impersonality of its customer interactions, From the shredding of mortgages into small sub-atomic particles to the disappearance of bank employees who should have been tasked to help consumers negotiate mortgage modifications and short sales, the entire process of keeping or losing one’s home became one in which the customer (the homeowner) lost control, and the resulting anxiety rose to cataclysmic levels. A side effect of the crisis was that thousands of small businesses had credit lines lowered and pulled at the same time, even though their owners were not in default, in trouble, or late in paying them.

One the foreclosures began, one size fits all solutions based on too little personal information shut down the economy across the country and rippled out across the world. In theory, the concept of social business, in which objectives are more closely aligned with customers and silos give way to transparency, should prevent something like that from ever happening again.

As the enterprise slowly transforms itself from a hierarchy to a network,and the customer becomes a node on the network, things should get better, right?

I don’t know. In the past few weeks, it seems as if the nascent social business initiative might get snuffed out before it even takes hold. It’s difficult not to ask how all the recent discussions about privacy — spurred by the White House’s Consumer Personal Information Act and the EU’s new privacy rules–are going to affect the fledgling effort toward making businesses, their vendors and suppliers, and their customers more aligned in objectives and more closely connected. Won’t the hesitancy of consumers to have their comings and goings on the internet tracked limit what businesses can do to help customers they’re not free to get to know?

I know, I know, the act is aimed more at advertisers and marketers, spammers and retargeters. BUT… To some degree, the discussion is a sign of the maturity and scale of online communities. When early adopters came online, they considered privacy a given, even to the point of adopting handles and avatars rather than real names. How you identified yourself on the internet was a choice, almost from Day One. It was in the hands of the user.

But Google and Facebook changed all that, encouraging millions of people to put their real names and actual personal information online in exchange for “free” services. Business models have been built around the use of consumer personal information: advertising technologies, market research, direct marketing, polling, and political campaigns have all used the information consumers innocently put online. An entire generation has forgotten or never learned that if you want to keep your information private, you should probably not put it online in the first place.

I just wonder whether the gathering of information, and the resulting insights the could come from mining it, could not also be a help rather than just an annoyance.


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