Privacy and Ethics in IoT and Consumer Analytics

“The choice for mankind lies between freedom and happiness and for the great bulk of mankind, happiness is better.” – George Orwell, 1984

On the surface, the Internet of Things brings with it an enormous potential to improve our quality of life. For one, IoT can bring simple luxuries, like being able to see who’s at the door from your smartphone or sending you a notification when your refrigerator detects that you are low on milk. For another, IoT can help those who truly need it, with smart pacemakers helping regulate heartbeats and smart pill bottles that monitor medication usage. While these advancements are only the beginning of what IoT can bring, there are those who claim that we buy into these advances at the hefty cost of our personal privacy.

Consider the brick-and-mortar fashion retailer Nordstrom. They recently experimented with customer tracking and image processing software, which they used to track customers as they walked around their stores. By triangulating cell phone Wi-Fi signals, Nordstrom was able to uniquely identify customers and track where they walked, what they looked at, and how long they looked. Additionally, they utilized image processing software to identify things like customers’ gender and mood. Several other retailers have also begun investing in similar technology.

This level of tracking may sound scary, but brick-and-mortar stores are actually late to the data mining scene. It of course sounds like a violation of privacy when you hear of a retailer tracking your physical movement, but consider what an eCommerce company like Amazon is capable of in comparison. Amazon can track you as you click around their website, in the same way Nordstrom was tracking customers walking around their stores. Amazon can create a profile on you, deducing your age, gender, interests, and other information. Using that information, they can launch targeted marketing campaigns, encouraging you to purchase an item you looked at but didn’t buy on your last visit, for example. How else could a company like Nordstrom compete, other than tracking you physically in the same way eCommerce sites like Amazon already do electronically?

In the case of Nordstrom, Amazon, and other companies, the big question is how much privacy we are willing to give up for the benefit that these technologies bring? Or, taking from the George Orwell quote, do we always want to prefer happiness over our freedom? It would seem that in general, Orwell is right, but only to a certain point. When considering investing in these data-rich technologies, there are three critical components for making sure customers are as comfortable and willing to engage as possible.

• Be transparent. Notify your customers if they are being tracked, and be clear about what that data is being used for.
• Anonymize Customer Data. Know where to draw the line. Storing generalized demographic data may be acceptable, but linking it identifiable information is not.
• Offer an opt-out option. Making data sharing mandatory can make customers feel as though they’re under forced surveillance. Knowing they can opt out at any time will put minds at ease.