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Privacy Thunder Clouds Forming for Google

I come from the school of thought that when you do ANYTHING on the public Internet, that action will be monitored or will be monitorable. I am okay with this, but I understand some folks are made nervous about predictive modeling, real time analytics, clustering, log file parsing, entity extraction, and data fusion. I suppose folks need to learn what methods are in wide use and do some thinking about what actions online are appropriate for them. I caused a bit of a stir at one of the text analytics programs last year when I shared research results which indicate that online actions can be tweaked using some interesting, but little known, methods. In short, privacy is one of those things that uninformed people talk about. When the conversation involves those who understand nuances of online, the definition of “privacy” needs to be nailed down. Most folks don’t bother. Everyone knows what privacy is, right?

I find the thunderclouds forming and heading toward Google both amusing and somewhat disturbing. There are folks who have been doing more exciting and interesting things with user data for many years. Nope, I won’t provide names. I am not a journalist, although some home economics majors at public relations firms find this fact tough to swallow.

Consider this Reuters news story. Keep in mind that Reuters is part of Thomson Reuters, and it has quite a number of online properties and a significant amount of information about its users. The company acquired ClearForest, at the time one of the leaders in filtering information for flakes of gold. Thomson Reuters also licensed or bought the Lexalytics’ system to do some interesting things with the unstructured text flowing through the Reuters and Thomson systems.

Now navigate to “EU Regulators Want Google to Halt New Privacy Policy.” The news story asserts that the regulators see Google as having a moped. Just hit the brake and stop. Actually Google is more like a nuclear powered aircraft carrier. Stopping the darned thing takes planning, time, and quite a bit of work. Toss in a turn and one has to figure out how to get the fishing boats out of the way. When the aircraft carrier is chugging along at cruising speed, sudden maneuvers are not part of the captain’s expected routine. What happens if the stopping or maneuvering goes wrong? Well, check out the Costa cruise captain. He’s under house arrest and easy to find.

Here’s the passage in the news story which I noted:

In light of the above, we call for a pause in the interests of ensuring that there can be no misunderstanding about Google’s commitments to information rights of their users and EU citizens, until we have completed our analysis.” The European commissioner in charge of data protection, Viviane Reding, welcomed the move, saying it was a necessary to establish that EU data rules were being firmly applied. “The Commission therefore calls on Europe’s data protection authorities to ensure that EU law is fully complied with in Google’s new privacy policy,” she said in a statement.

I also found the grace note poignant:

Google said the raising of concerns came as a surprise.

Google has several challenges on its hands. Let me capture them before my addled goose brain awash with weird medications fails me:

1. There is the advertising revenue problem; that is, traffic up, spendable dough down. Add to this problem the fact that mobile advertising is not as rich of a golden goose as the 2004 to 2007 online variety, and you have a looming revenue / net profit problem unrelated to Google’s friends in government.
2. There are financially and technically capable competitors: Apple, Facebook, and Microsoft, among others. Unlike the period from 1998 to 2007, Google now has to cope with marketplace push back and active resistance from competitors with different core competencies.
3. There are a broad range of business fronts on which Google is focusing resources. Trimming small scale projects is essentially irrelevant in light of the market sectors in which Google is actively trying to expand market share: mobile, online advertising, enterprise services, and consumer social services. As a result, management’s ability is put to the test and, as the financial results for the last quarter suggest, is stretched.
4. Legal challenges abound and some seem to be open ended and add friction to the smooth operation of the company; for example, books and the dispute with Oracle.

The net net is that Google’s scrutiny at privacy may bog down the company even more than its on going activities. Unlike a dollars and cents issue, unease about privacy may end up one of the more costly challenges Google faces. Opportunity cost may outweigh the legal fees associated with the European storm which is racing forward.

Stephen E Arnold, February 3, 2012

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