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Luxury: The Cost of Ignoring Digital Privacy.

Jun 15 2011

Mark Zuckerberg:David Cameron

For most web users, the terms "data protection" relate vaguely to hackers or identity theft and not much more. Rarely does the average consumer worry about the collection of seemingly innocuous personal data through web browsing, app use and social media (especially when accessed via mobile device). They should. More importantly, so should luxury industry executives for issues of digital privacy are more likely to impact negatively on their relationship with customers than mass consumer brands.

Social media platforms and mobile devices like smart phones and tablets may present exciting possibilities for connecting with customers but they also present a number of risks for users' privacy. Moreover, much of this data collection is happening without sufficient disclosure to users about the extent of the data collected and its potential uses (either current or future). If you consider the sheer amount of personal data currently being stockpiled by Facebook, Apple, Google and others and the lack of any real safeguards for consumers, the potential for excessive intrusiveness or exploitation either by the platforms themselves or by third party data miners is both real and significant.

I've raised the subject previously on The Luxe Chronicles but my sense is that the issue of privacy is over the heads of many luxury industry executives. Most are therefore ill equipped to ask the difficult questions of their tech partners (developers, digital agencies, tech partners). Also, in my experience, when the issue is raised with tech companies, developers or digital agencies, it is met with the usual banalities or thinly veiled contempt for the issue. I believe this is largely because these actors have no satisfactory answers to offer and in many ways, it would be contrary to their interests to delve into the subject.

Indeed, the U.S. tech sector has invested considerable resources since the late 1990's to ensure digital privacy stays off the agenda of U.S. lawmakers and that meaningful legislative efforts to protect consumers are sufficiently watered down such that they do not pose a threat to research & development and marketing of new technologies. Facebook and other tech players are currently gearing up to lobby fiercely against the proposed privacy bill of rights (Commercial Privacy Bill of Rights Act of 2011) in the U.S. Lest there be any doubt about just how seriously Facebook intends to resist meaningful data protection legislation, they've just recruited Joel Kaplan, previously deputy chief of staff in the Bush White House and the man who is credited with helping the Bush administration pass the hugely controversial and intrusive Patriot Act.

Not surprisingly, U.S. tech giants are adopting much the same strategy in Europe as evidenced by some of the statements to emerge from the e-G8 summit in Paris a few weeks ago. In the words of Eric E. Schmidt (Google): “Before we decide there is a regulatory solution, let’s ask if there’s a technological solution. We will move faster than any of these governments, let alone all of them together.” Tech companies may move faster than governments but they have an appalling track record on privacy and are unlikely to implement even a modest curb on data collection without the threat of legal sanction. Moreover, so-called "technological solutions" are usually designed by the tech industry for the tech industry and rarely favor the interests of anyone outside that industry least of all end users.

Admittedly, privacy is not a sexy subject. More importantly, it is a messy, complicated subject especially for policy makers and web users including luxury brands and their customers. Notwithstanding this, luxury brands need to face up to the potential risks of associating their brand with companies like Facebook, Google, Apple and others who openly and consistently flaunt their disdain for users' privacy. High net worth and highly affluent individuals, the core market for luxury goods and services, tend to place a much higher value on discretion than the average consumer. They live in gated communities, rarely fly commercial, bank offshore and otherwise go to great lengths to protect their privacy. Unlike mass consumption brands, luxury brands therefore have a much greater interest in protecting the personal data of their customers (current and future). To date, I've seen little evidence that the issue even registers on their radar. Luxury brands ignore the risks at their peril.

Sincerely,

The Luxe Chronicles

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The Luxe Chronicles is a collection of interviews, profiles and musings on various aspects of the luxury industry and occasionally, a rant on our celebrity obsessed culture and the dumbing down of our collective sense of style and esthetic.

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