FOLLOW

FOLLOW

SHARE

Companies Merging For Data Should Beware Privacy Concerns

When companies join or are purchased, data needs to be considered carefully

7Nov

The importance of data has long been recognized by organizations of all hues, particularly those in the tech sector, for whom it is often their lifeblood. This value is now being reflected in a number of recent mergers and acquisitions, with the decisions of AT&T and Time Warner, Verizon and Yahoo, and Microsoft and LinkedIn motivated largely by monetization of users’ personal information, providing additional data with which they can target consumers with content and advertising.

AT&T’s purchase of Time Warner for $85 billion is the latest such merger, should regulators allow it to go through. Randall Stephenson, AT&T’s chief executive, has publicly stated his belief that the benefits of the merger lay in the additional data AT&T can provide to both Time Warner and advertisers about consumer viewing habits, which they can use to tailor specialized, interactive programming for AT&T’s mobile customers.

Stephenson noted that: ‘We'll develop content that's better tailored to what specific audience segments want to watch, when, where and on which device, and we'll use the insights to expand the market for addressable advertising. Addressable advertising is far more effective and more valuable both to the advertisers and to our customer.’

Time Warner’s decision to buy AT&T for the data follows an emerging pattern in M&A, with Microsoft’s purchase of LinkedIn for $26.2 billion earlier this year also said to have been driven primarily by access to data. LinkedIn’s 450 million users are, arguably, Microsoft’s core demographic, and the enormous amounts of data they generate could yield insights and products Microsoft could use to monetize its investment in LinkedIn. For example, Microsoft’s digital assistant Cortana could search your LinkedIn network to find out who is going to be at your next meeting and brief you accordingly.

Is the future for M&A one in which companies come together simply to pool their data resources? Privacy campaigners such as Jeffrey Chester of the Center for Digital Democracy, seem to think so, but they also believe there are dangers. Chester has argued of the AT&T/Time Warner deal that, ‘The goal of the next generation of Big Media mergers: bringing together under a single entity massive broadband network connections and vast production and content capabilities, along with sophisticated data-mining operations that deliver micro-targeted ads’. Dimitri Sirota, CEO of BigID, has also warned that LinkedIn has a ‘deep insight into the majority of professionals in terms of relationships, interests, satisfaction with their work, intentions to leave their work,’ noting that, ‘Mergers complicate how personal data is shared across franchises. These businesses will suddenly have new personal data it can leverage, begging questions around controls.’

Microsoft Chief Executive Satya Nadella said of the LinkedIn buyout that, ‘Nothing will get connected or linked without users opting in’, yet at the same time he said one result of the merger would be that they could use machine learning on user data to generate more recruitment leads and help drive B2B sales, indicating that privacy may not be his priority.

The recent decision by the Federal Communications Commission (FCC) to ban broadband internet service providers (ISPs) from automatically using large amounts of a person’s information on behalf of marketers and advertisers with a user’s say so, essentially enshrining Nadella’s commitment to ensure opt in into law, may go some way to assuaging such concerns. Traditionally, the theory has gone that customers are willing to hand over their data if they feel they are getting something in return. But does this theory hold water if it is being shared with a company from whom they are not getting anything? And do customers trust companies enough to ensure their data is secure during a merger? At the moment, there has been little public outcry outside of privacy groups, but as this becomes more of an issue it may be that companies see an increase in resistance from users. 

Comments

comments powered byDisqus
Data culture small

Read next:

Building A Culture Of Data

i