Sunday, August 15, 2010

Innovation vs Privacy on the Battlefield between Google & Facebook

Innovation and Privacy are at war on the battlefield where the machinations of both Google and Facebook are at work. These two companies have dynamic competitive opportunities. On the one hand, to stay competitive and profitable both companies need to continue the innovation spawned from their existing platforms and products. On the other, how do they continue to balance user privacy successfully. Facebook has had several close-calls with the pushing of the privacy envelope. While suffering some user backlash, they've been managing it well thus far. Google risks being left competitively behind and losing momentum if it doesn't more aggressively look to use its super rich user data (a combination of Gmail, Google Docs, Android OS, and search data).

A simple truth that challenges Google's supremacy: web visitors funneled from Facebook spend an average 20% longer on the site than from search engines like Google. The combination of Facebook's profiles and networks of friends provides rich user data that makes advertising more relevant than based on search terms used on search engines. This could be considered a close equivalent to the phrase: "virtual word of mouth." With Facebook nipping at their heels, Google needs to consider how to leverage user tracking data profitably without committing privacy evils.

In one Google example they are combining the power of its Android mobile operating system with the synergies of Gmail, contacts synchronizations, and Google maps that can help lead to more relevant ads. In a similar example Facebook is leveraging it's "I Like" feature on web sites and the discerning tastes of users gained from the profiles and social interactions on their platform. Both companies are developing powerful tools to better sell targeted ads for advertisers. The problem is can they continue to, as Google unofficially says, "do no harm."

Ultimately I believe that some privacy will be forsaken in the name of better customer value - through innovation. It's the price that the public will probably have to pay for "free" services. Now both Google and Facebook will not outright eliminate privacy, as it would risk corporate suicide. But to continue to be competitive and profitable, I suspect some of that privacy will be interpreted and handled differently in the name of innovation.

BEWARE! If you wish to keep complete anonymity, then consider other providers or only share what you don't mind to have publicly known (even as there are privacy controls in place today, they are not 100% fool-proof).

The public will find it difficult to stymie this web/mobile trend of leveraging innovative synergies to provide rich customer value over privacy. Until a reasonable and just as innovative fee-based service appears that can serve as a counter to what may be perceived as violations on privacy, consumers will have little choice. And as a result of this a potential future trend may materialize for the paying for such services when compared to, as I reported in an earlier post, paid-for content/news from media organizations (like the Rupert Mudroch News Corp model).

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