Privacy as a Competitive Advantage - 4 Case Studies on How Tech Is Building Consumer Trust - eMarketer
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Privacy as a Competitive
Advantage
4 Case Studies on How Tech Is Building Consumer Trust
Shifting consumer attitudes and new regulations have raised the stakes on personal
protection. Today, privacy is more than a compliance concern—it’s a key opportunity
for differentiation. This eMarketer Report gives a closer look at why this opportunity
is especially true for emerging tech platforms and applications that rely on users’
trust to grow.
presented by
Dear eMarketer Reader,
eMarketer is pleased to make this report, Privacy as a Competitive Advantage:
4 Case Studies on How Tech Is Building Consumer Trust, available to our readers.
This report features eMarketer data, insights, and four case studies that illustrate
how trust and privacy practices can fuel adoption, growth, and increase or retain
market share.
We invite you to learn more about eMarketer’s approach to research and why we
are considered the industry standard by the world’s leading brands, media companies,
and agencies.
We thank you for your interest in our report and Adtaxi for making it possible to offer
it to you today.
Best Regards,
Nancy Taffera-Santos
Nancy Taffera-Santos
SVP, Media Solutions & Strategy, eMarketer
eMarketer, Inc. www.emarketer.com
11 Times Square, Floor 14 nancyts@emarketer.com
New York, NY 10036
Privacy as a Competitive Advantage: 4 Case Studies on How Tech Is
Building Consumer Trust
Shifting consumer attitudes and new regulations have raised the stakes on personal data protection. Today, privacy is
more than a compliance concern—it’s a key opportunity for differentiation. This is particularly true for emerging tech
platforms and applications that rely on users’ trust to grow.
Why are privacy and trust so important for tech
Priorities and Actions in Protecting Their Privacy
companies now?
According to Consumers Worldwide, June 2020
Privacy is at an inflection point. Between growing market % of respondents
demand, shifting consumer norms, and new legislations, tech
firms recognize their product development and business
models must adapt to address these concerns. Rebuilding 89% 70% 29%
and establishing consumer trust will be necessary to drive
adoption of the next wave of innovations.
I care I'm willing to act I've acted
I care about I am willing to spend I have switched
How are leading tech companies differentiating data privacy time and money companies or
themselves with privacy-protecting values and I care about to protect data providers over
protecting others This is a buying their data policies
product designs? I want more control factor for me or data sharing
practices
I expect to pay
Big tech firms like Amazon and Facebook are taking privacy more
concerns into account when developing new products Note: n=2,602
Source: Cisco, “2020 Consumer Privacy Survey”; Insider Intelligence calculations;
like smart speakers and AR and VR platforms. Apple has Oct 21, 2020
given users more information and control over how they 265586 InsiderIntelligence.com
are tracked.
KEY STAT: There is a market for privacy: While nearly nine
What are the competitive impacts of tech’s privacy and out of 10 consumers state they care about data privacy,
trust-building efforts? about three out of 10 consumers worldwide have actually
acted on those preferences and switched providers over
A solid privacy strategy can fuel user adoption, revenue
their data policies or data-sharing practices, according to
growth, and help companies increase or retain market
Cisco’s 2020 Consumer Privacy Study.
share. Likewise, breaches of trust and unmet consumer
expectations around privacy open up opportunities
for competitors.
Contents
WHAT’S IN THIS REPORT? This report features four case
studies that illustrate how trust and privacy practices can 3 Privacy as a Competitive Advantage: 4 Case Studies on
fuel adoption, growth, and increase or retain market share. It How Tech Is Building Consumer Trust
also looks at how breaches of trust can open opportunities 4 Key Points
for competitors.
4 Privacy and Trust: Essential Foundations for Emerging
Technology Adoption
4 The Market for Privacy—Why Now?
8 Building Trust in Emerging Technologies Through Privacy:
4 Case Studies
16 Best Practices for Differentiating on Privacy
17 Editorial and Production Contributors
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 3Key Points The tech backlash rages on, and emerging tech products
and platforms have some work to do to regain users’ trust
■ There’s a market for privacy. Consumer attitudes with their data, especially as new interfaces get smarter
have evolved beyond the “privacy paradox”—the idea and more intimate on our bodies and in our homes. Tech’s
that users’ stated preferences don’t always match biggest players understand this and are pivoting their
their actual behaviors and choices. Privacy-conscious product development strategies to meet consumers’
consumers are willing to spend time and money to growing demands for responsible data management.
protect their data and identify trustworthy companies.
This report examines four cases that illustrate how tech’s
■ Tech companies should consider users’ trust from biggest players are establishing, maintaining, and even
the start of product development. New behaviors, losing consumers’ trust with their data practices and privacy-
interfaces, and devices—like smart speakers and centric product development. From smart speakers, to
extended reality wearables—are changing norms augmented reality (AR) and virtual reality (VR), to messaging
around trust. Tech companies need to keep user platforms, to the entire app ecosystem—these cases
concerns and preferences in mind from day one of the illustrate how approaches to privacy and trust are becoming
design process. strategic initiatives. The report also lays out best practices to
ensure that privacy and trust are essential pillars of all digital
■ Communication is key to building trust. Tech transformation efforts.
companies should respect their users by speaking to
them in plain, transparent, and honest terms, as well as
by allowing them to state their preferences and provide
consent regarding the use of their data. The Market for Privacy—
■ Privacy and trust are foundational to any company.
Why Now?
These strategies apply beyond emerging tech
platforms and companies; they’re part of any digital Consumer and privacy advocates have been talking
transformation effort that relies on data and is built on a for the last decade about the tradeoffs posed by
close relationship with the consumer. an economy fueled by data. For years, the “privacy
paradox” has hung over this discussion—the idea that
users’ stated preferences don’t always match their
Privacy and Trust: Essential actual behaviors and choices. But concurrent forces
Foundations for Emerging have now reached an inflection point, making privacy a
competitive differentiator. Shifts in the market demand
Technology Adoption
for privacy, consumer norms, regulations, and product
Shifting consumer attitudes and new regulations have design suggest that the time has come for technology
raised the stakes on personal data protection. Today, companies to actually make progress in building
privacy is more than a compliance concern—it’s a key consumer trust and differentiating on privacy practices.
opportunity for differentiation. Consumers are not only
becoming increasingly aware of data’s foundational role
in the digital economy, they’re also beginning to make
The Market for Privacy Is Here
informed decisions about companies based on their Recent research indicates consumers are becoming more
data policies and practices. discriminating about sharing their personal data online.
Cisco’s June 2020 worldwide survey of consumers found
that seven out of 10 consumers were willing to spend time
and money to protect their data, while nearly three out of
10 have actually acted on those preferences and switched
providers over their data policies or data-sharing practices.
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 4Priorities and Actions in Protecting Their Privacy Consumer Norms Are Changing
According to Consumers Worldwide, June 2020
Consumers’ expectations and requirements around the
% of respondents
handling of their data are shifting. Consumer concern about
privacy is steadily increasing, according to CivicScience,
and an overwhelming majority of US adults are at least
89% 70% 29% somewhat concerned about consumer privacy.
I care I'm willing to act I've acted
I care about I am willing to spend I have switched
Levels of Concern About Consumer Privacy
data privacy time and money companies or According to US Adults, Q1 2020-Q1 2021
to protect data providers over
I care about
their data policies % of respondents
protecting others This is a buying
factor for me or data sharing 51%
I want more control practices 49%
I expect to pay 47% 47% 46%
more
Note: n=2,602 40% 40% 39% 40% 39%
Source: Cisco, “2020 Consumer Privacy Survey”; Insider Intelligence calculations;
Oct 21, 2020
265586 InsiderIntelligence.com
In February 2020, Consumer Reports similarly found that
45% of US consumers were potentially willing to pay for
products like search in lieu of having companies collect, 12% 13%
11%
13%
11%
share, or sell their personal data.
While privacy isn’t the top societal issue that adults
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
worldwide expect brands to address, it’s still relatively
Very concerned Somewhat concerned Not all concerned
high on the priority list, according to Edelman’s 2020 Trust
Note: 232,563 responses were obtained online during January 1, 2020-March 31, 2021;
Barometer report. numbers may not add up to 100% due to rounding
Source: CivicScience as cited in company blog, April 20, 2021
265451 eMarketer | InsiderIntelligence.com
Societal Issues that Adults Worldwide* Expect
Brands to Address, Oct 2020 Meanwhile, a PwC survey published in 2020 found that 36%
% of respondents of consumers were less comfortable sharing information
now than they were in the previous year.
Climate change/environmental 42%
Coronavirus pandemic economic challenges 39% Trust in technology is also declining. Edelman’s 2021 Trust
Coronavirus pandemic employment challenges 38% Barometer showed that trust in the technology industry
Coronavirus pandemic health challenges 38%
dropped 6 percentage points between 2020 and 2021, a
figure that was tied for the biggest drop among a handful of
Poverty 37%
other industries.
Job loss due to automation 35%
Cybersecurity and data privacy 34% Similarly, Edelman found that trust in specific emerging
Coronavirus pandemic educational challenges 33% technologies—AI, the internet of things (IoT), and VR—has
Fake news and misinformation 33%
declined at similar rates as the tech industry as a whole, year
over year.
Systemic racism, injustice, and discrimination 33%
Unifying people despite political differences 32%
Government corruption 27%
Helping big cities 25%
Immigration policy 23%
Election participation and integrity 21%
Note: ages 18+; *Brazil, Canada, China, France, Germany, India, the UK, and the US
Source: Edelman, "Edelman Trust Barometer 2020: Brands Amidst Crisis (Special Report),"
Nov 24, 2020
262881 eMarketer | InsiderIntelligence.com
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 5Trust in Select Technology Sectors Among Internet Reasons Consumers Worldwide Are Not Able to
Users Worldwide, 2016-2021 Effectively Protect Their Personal Data Today,
% of respondents June 2020
66% % of respondents
64%
63% Reasons why not
62% 63%
61% Too hard to figure out what companies 79%
62% 57% are actually doing with my data
57% 57% If I want the service, I have to accept 51%
59% how my data is used
56% 56% Feel my personal data is already 45%
52% 55% available
53% Don't understand what service 44%
choices are
No
Don't trust companies to follow 40% 48% Yes
stated policies 52%
44%
2016 2017 2018 2019 2020 2021
Internet of things (IoT) VR platforms AI 5G Able to effectively protect
personal data
Note: ages 18+; respondents were asked to rate their trust in businesses to do what is right
on a 9-point scale; percentages reflect responses in top 4 boxes Note: n=2,602 ages 18+
Source: Edelman, "2021 Edelman Trust Barometer: Trust in Technology," March 31, 2021 Source: Cisco, "Consumer Privacy Survey," Oct 21, 2020
265152 eMarketer | InsiderIntelligence.com 260582 eMarketer | InsiderIntelligence.com
Misuse or abuse of personal data was the top reason (41%)
US adults would lose trust in a company, according to a Regulation Is Forcing the Issue
2020 Genesys/Wakefield Research survey.
Europe’s General Data Protection Regulation (GDPR),
which went into effect in 2018, set the global standard for
What Would Make US Adults Lose Trust in a protecting consumer data and regulating data practices.
Company? Now, US state laws, beginning with California’s Consumer
% of respondents, April 2020 Privacy Act (CCPA) and the subsequent California
Misusing or abusing their personal data Privacy Rights Act (CPRA), are changing the regulatory
41% requirements for companies’ handling of consumer data, and
Failing to deliver a product or service as promised introducing a patchwork of rules along the way.
21%
Poor customer service when resolving issues Sentiments among marketers suggest a federal standard
20%
for privacy would be welcome: 37% of US marketers
A lack of empathy in helping address their needs
noted that building patchwork compliance was a leading
10%
privacy compliance challenge, according to a July–August
Overwhelming them with advertisements and notifications
2020 survey from enterprise data management service
8%
Treasure Data.
Note: ages 18+
Source: Genesys, "Personalization & Empathy in Customer Experience" conducted by
Wakefield Research, May 20, 2020 Consumers are increasingly informed of their data rights.
259555 eMarketer | InsiderIntelligence.com
Nearly half of worldwide consumers under age 45 are aware
of privacy regulations, per Cisco’s June 2020 research. The
When it comes to controlling their data, consumers don’t same survey found that a plurality (40%) of respondents
feel empowered. Cisco’s June 2020 worldwide survey of believe that native governments should be responsible
consumers found that just under half didn’t feel they were for protecting data privacy. And, worldwide, those polled
able to effectively protect their personal data, primarily had overwhelmingly positive or neutral evaluations of the
because it’s too hard to figure out what companies are impacts of privacy laws.
actually doing with it. Consumers also bristled at accepting
the terms of use without choice.
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 6Sentiment of Consumers in Select Countries Moreover, innovation-leading companies value data
Toward the Impact of Privacy Laws, June 2020 privacy and security more than innovation laggards and
% of respondents have invested in and prioritized data privacy to improve
the customer experience, according to an October 2020
Australia
58% 38%4% Harvard Business Review survey.
Brazil
42% 50% 8%
Attitude of Business Executives Worldwide Toward
China Data Privacy and Security Affecting the Customer
80% 18% 2%
Experience, by Maturity Level, Oct 2020
France % of respondents
43% 56% 1%
Executives at all Innovation Innovation
Germany organizations leaders laggards
38% 44% 18% Organization considers ensuring data 38% 41% 33%
privacy and security important to the
India
customer experience
75% 21%4%
Organization has/plans to invest in 37% 46% 28%
Italy data privacy and cybersecurity
52% 45% 3% management to improve the customer
experience
Japan Organization is prioritizing data privacy 26% 36% 19%
41% 56% 3% and security to enhance the customer
experience
Spain
Organization made recent investments 15% 23% 9%
54% 37% 9%
in data privacy and cybersecurity
UK specifically in response to the coronavirus
pandemic
48% 48% 3%
Source: Harvard Business Review (HBR), "The Value of Experience: Customer Needs Top the
Positive Neutral Negative Innovation Agenda" commissioned by Mastercard, March 30, 2021
265080 eMarketer | InsiderIntelligence.com
Note: among respondents ages 18+ who are aware of the regulation; read chart as 48% of
UK consumers believe GDPR has had a positive impact; numbers may not add up to 100%
due to rounding
Source: Cisco, "Consumer Privacy Survey," Oct 21, 2020
Half of executives said cybersecurity and privacy are now
260580 eMarketer | InsiderIntelligence.com baked into every business decision or plan, according to
PwC’s Global Trust Insights 2021 report. But only seven
But privacy is not only a data protection concern. It’s in 10 executives in North America believe they can clearly
increasingly becoming part of the antitrust conversation communicate to customers how their data is stored,
as well. Established antitrust enforcement has focused on protected, and used, according to a July 2020 NTT Data
predatory pricing, but leading legal scholars have made the Services report.
case for expanding to a broader notion of consumer harm
resulting from the anticompetitive tactics of free internet
50%
platforms. They argue that consumers are also harmed by
poor experiences caused by a lack of choice in competitors,
leaving consumers with no alternative but to surrender
their data.
Product and Business Models Shift to of executives worldwide said that
Reflect These Changes cybersecurity and privacy are now baked
Tech giants are noticing these shifts in consumer opinion into every business decision or plan.
and government regulation and are questioning long-held
PwC, October 2020
assumptions that more user data is always better. That means
some tech companies—including Facebook—are exploring
product designs that capture and process data on the device
rather than in the cloud. Product teams and organizational
structures are starting to consider privacy from the start,
rather than checking a box with legal before shipping. “Privacy
by Design” principles are becoming the industry standard.
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 7The paradigm shift common across new privacy legislation ■ And Facebook’s Reality Labs is rebuilding trust in the
emphasizes the importance of first-party data relationships company and starting from scratch in VR and AR by
with consumers. Some firms are seeing this shift as an taking a data minimization stance and including privacy
opportunity for new ad-based revenue models that extract in user testing and field research.
value from their privileged position as the first-party data
holder. In fact, companies like Walgreens are already
starting to enter into the retail advertising market. But that's
a risky strategy and doesn't match the intent of privacy
laws. Companies should instead use this moment as an
opportunity to build consumer trust based on those primary,
first-party relationships.
Building Trust in Emerging
Technologies Through Privacy:
4 Case Studies
The adoption curve for emerging technologies has
always involved some amount of trust. Early adopters
are willing to take on both risk and costs to potentially
benefit from an entirely new experience. To maintain
trust among this vanguard, developers, engineers, and
business managers alike should take data and privacy
concerns into account from the start, rather than treat
data privacy as an afterthought.
The following four case studies look at how technology
companies can build, maintain, standardize—and sometimes
lose—user trust based on their data practices and
privacy stances. Maintaining Trust in an Intimate
■ Amazon’s Alexa continuously iterates and adds to Assistant: Alexa Trust
privacy and transparency features that give users Users can whisper to Amazon’s virtual assistant, Alexa, and
control, allowing it to maintain a privileged position as it will whisper back. It can play white noise to lull users to
an “always-on” listener in users’ most intimate spaces. sleep, and will pick up on the annoyance in a user’s tone of
voice when it plays the wrong song. A recently launched
■ Thanks to its brand recognition and established
feature, Alexa Hunches, allows the device to proactively
user trust, Apple’s privacy labels and App Tracking
complete tasks based on a user’s previous habits and
Transparency framework are setting standards for
requests. While Alexa is available on several different types
privacy and data sharing as well as causing an opt-in
of devices, it’s often accessed on a smart speaker. And the
paradigm shift in the industry.
top location for smart speakers is actually in the bedroom,
■ After establishing a reputation for secure messaging according to Voicebot data. That kind of intimacy requires a
that’s encrypted by default, WhatsApp’s new data- certain level of trust.
sharing policy for businesses was poorly received by
users whose expectations and trust were broken.
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 8Where in the Home Do US Smart Speaker Owners Which Organizations Do US Adults Trust the Most
Keep Their Smart Speakers? vs. the Least with Personal Data?
% of respondents, Jan 2020
% of respondents, April 2020
Bedroom 45.5% Most Least
Living room 43.2% Banks or other financial services providers 48% 6%
Health care providers 43% 8%
Kitchen 41.5%
Government agencies 29% 18%
Bathroom 13.3% Health insurance companies 29% 7%
Home office 11.6% Home & auto insurance companies 16% 8%
Digital retailers (e.g., Amazon) 10% 17%
5.8% Dining room
Social media companies 8% 47%
Garage 5.5% Smart home technology companies (e.g., Google Home, 8% 27%
Amazon Alexa)
2.9% Work office
Charitable causes (e.g., Red Cross, Cancer Society, museums, 8% 10%
arts groups)
Note: ages 18+
Source: Voicebot, "Smart Speaker Consumer Adoption Report," April 28, Restaurant and hospitality providers including hotels 7% 17%
2020 Uber, Lyft, or other personal transportation providers 5% 23%
255024 www.eMarketer.com
Genealogy companies (e.g., Ancestry.com, 23andMe) 5% 17%
Airlines 5% 5%
Voice assistants and smart speakers introduced a whole Retailers (both digital and brick-and-mortar) 4% 21%
new user interface experience to consumers. With Alexa, Cryptocurrency providers 3% 15%
Amazon led the way in helping users get comfortable Note: n=1,000; ages 18+
Source: Genesys, "Personalization & Empathy in Customer Experience" conducted by
with voice-controlled devices in their most intimate Wakefield Research, May 20, 2020
spaces. The Alexa team has made user trust core to its 259554 eMarketer | InsiderIntelligence.com
development strategy.
The trust barriers to adoption for new users are high. For
THE CHALLENGE: Alexa first entered the home through its US internet users who don’t own a smart speaker, most said
Echo and Dot devices. But now Amazon—the market leader it bothers them that devices are always listening, and they
in smart speakers—needs to maintain users’ trust and win don’t trust companies to keep information secure, according
over skeptics to keep its spot in living rooms and bedrooms to a 2020 NPR and Edison survey.
as well as continue future growth.
Reasons that US Internet Users Do Not Own a Smart
Despite rapid adoption rates, voice assistants and smart Speaker, April 2020
speakers still suffer from trust issues. % of respondents
It bothers you that smart speakers are always listening
Smart home tech companies were the second-least trusted 66%
organizations to handle personal data, with only social You worry that hackers could use smart speakers to get access
media companies trusted less, according to an April 2020 to your home or personal information
65%
Genesys/Wakefield Research survey of US adults.
You don't trust the companies that make the smart speakers to
keep your information secure
58%
You worry that smart speakers could allow the government to
listen to your private conversations
46%
Note: ages 18+
Source: National Public Radio (NPR) and Edison Research, "The Smart Audio
Report," April 30, 2020
255316 www.eMarketer.com
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 9Sixty-two percent of smart product owners said they worried ■ User control: Amazon recently added the ability to
about potential loss of privacy when buying smart products, command Alexa to “delete everything I’ve ever said,”
according to the 2020 Consumer Reports survey. wiping the audio history of processed interactions.
Users can also change how long the platform holds
THE STRATEGY: The audio-first interface of voice on to interaction history and review which skills are
assistants and smart speakers required a steep learning connected to Alexa, including third-party interfaces
curve to establish consumers’ expectations about with other smart home devices and applications. At
interactions. Key elements of Alexa’s product development CES 2021, Toth shared that “every product released is
have centered on privacy and trust. In a press release, Anne coupled with a privacy feature release.”
Toth, director of Alexa Trust at Amazon, put it clearly: “The
future we envision for Alexa is not possible unless we earn ■ Dedicated organizational structure: Amazon has an
and continually re-earn our customers’ trust in us.” entire team dedicated to consumer perceptions of its
smart assistant: Alexa Trust. Led by Toth, the team looks
“The future we envision for Alexa is not possible across the range of policy decisions that inform features
on the platform. According to Amazon’s website,
unless we earn and continually re-earn our
“Privacy by design is not a platitude with the Alexa team,
customers’ trust in us.” —Anne Toth, Director of Alexa it’s a daily operational reality.” Alexa also has an Alexa
Trust, Amazon Privacy Experiences team focused expressly on how
users encounter these privacy features and interfaces
■ Designing for transparent interactions: Amazon and supports an “Alexa Privacy Bar Raiser” program.
has put a lot of emphasis on the wake word—saying
COMPETITIVE IMPACT: Toth has said she recognizes
“Alexa” to trigger user interactions. Toth describes
that Alexa has gained users’ trust and must work hard
such design features as “conscious friction” that help
to retain it. According to our forecasts, 27.2% of the US
train and educate users about what to expect in an
population will have smart speakers in their homes this year,
interaction with a relatively new user interface and
and nearly two-thirds (66.9%) of smart speakers will be
experience. In addition to the wake word and a ping
Amazon devices.
audio cue that lets users know Alexa is hearing and
processing commands, Echo devices have a blue light
ring that signals an active interaction. Echo devices US Smart Speaker Users, by Brand, 2019-2022
also feature buttons that stop them from listening— % of smart speaker users
73.0%
when the red light is on, the mic cannot be activated.
66.8% 66.9% 66.9%
Amazon’s Echo Show 10 has a built-in shutter that
covers the camera when users want extra confirmation
of visual privacy.
■ Explainability is key to maintaining trust: Alexa has
introduced numerous commands that help provide 31.1% 30.4% 31.4% 31.9%
transparency by explaining its actions and behaviors.
For instance, a user can ask Alexa to repeat back what 17.9% 17.6% 18.4% 18.6%
it has heard, or ask, “Alexa, why did you do that?” While
most Amazon smart speakers have no visual interface,
Alexa will take users straight to the privacy settings 2019 2020 2021 2022
page in the smartphone app or web page when asked, Amazon Google Other
“Alexa, how do I review my privacy settings?”
Note: individuals of any age who use smart speakers at least once a month
on any device
Source: eMarketer, July 2020
258929 www.eMarketer.com
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 10But Amazon’s market dominance has taken a hit over time as according to a March 2021 report from AppsFlyer and
competitive products from Google and Apple gain traction MMA Global.
and third-party devices like Sonos interoperate with multiple
smart assistants.
Who Do US Smartphone Owners See as
Responsible for Educating Consumers About the
By comparison, Facebook’s Portal has hardly any market
Usage of Personal Data?
share, holding just 4% of US smart speaker owners in 2020,
% of respondents, Feb 2021
per Hub Research. Portal was admittedly late to market, but
consumers are seemingly less trusting of Facebook when Leading tech companies (e.g., Apple, Google, etc.) 53%
it comes to collecting data: An eMarketer/Bizrate survey Content publishers and app developers 32%
found that just 3.4% of US adults trusted the company with Brands/marketers 31%
their personal information, and just 1.5% of US adults would
Government organizations 27%
consider buying a video calling device made by Facebook.
Industry consortiums 17%
OUR TAKE: Without visual interfaces, default settings Trade associations 14%
matter. Alexa could do more to guide new users through 4% Other
preference setting in the onboarding experience to establish Not sure 24%
true user choice about privacy and preferences from the
get-go. This commitment to transparency will be increasingly Source: AppsFlyer and MMA Global, "Personal Data, Privacy, & Smartphones: The Cautious
Consumer," March 17, 2021
important as Amazon expands its business model beyond 264613 eMarketer | InsiderIntelligence.com
ecommerce transactions to advertising. For example, Alexa
will need to be clear about when it’s presenting ads and how The Consumer Reports survey found that US adults think
the platform is using transaction data to personalize and companies (42%) should be most responsible for protecting
target experiences. consumers’ online privacy, compared with the federal
government (32%) or individuals (17%).
Amazon will need to demonstrate clear value for convenience
to overcome consumers’ and critics’ worst dystopian fears THE STRATEGY: Apple has deployed a multipronged
about these always-on spies of surveillance capitalism. strategy, including privacy-focused ad campaigns and
policies for its ecosystem of partners, to establish its
authority as a privacy leader. Apple’s careful curation of
Standardizing Trust in Platform Values: the App Store experience has been integral to establishing
trust. It also allowed users to more easily opt out of
Apple’s Privacy Labels location tracking by apps in iOS 13. Now, Apple’s new
Apple has already established itself as a privacy-friendly privacy “nutrition labels” and App Tracking Transparency
company among consumers. Now, it’s leading the charge requirements released in iOS 14.5 set a new standard that all
to hold the rest of the tech industry to its claims of high app developers must comply with.
standards in the name of consumer protection. Disrupting
the dominant data-driven business model of the internet ■ Privacy nutrition labels aim to put policies in plain
stands to benefit Apple’s bottom line, as well. terms for users, requiring app publishers to describe
what types of data are being collected and for what
THE CHALLENGE: Noting the rise of polarization and purpose. Nearly three quarters (72%) of US iPhone
disinformation on platforms that optimize for engagement, and iPad owners indicated they were aware of the
the tide is turning on companies with business models privacy labels’ introduction, according to a January 2021
based on the “goal of collecting as much data as possible,” SellCell survey.
said Apple CEO Tim Cook in a January 2021 speech to the
■ App Tracking Transparency requires apps to ask users
Computers, Privacy, and Data Protection conference. Cook
for permission to track their activities across other apps
suggested that business built on data exploitation without
and websites. The alerts are the platform’s first attempt
consumer choice deserves reform.
to introduce meaningful, opt-in consent for advertisers
Just over half of US smartphone users think tech companies using Apple’s unique device identifier, IDFA. Apple is
are responsible for educating consumers about the use preempting shifts in policy and law by requiring opt-in,
of their personal data, more than any other stakeholder, rather than opt-out, consent.
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 11With its new platform policies, Apple is single-handedly Would US Smartphone Owners Prefer to Allow
enforcing a paradigm shift that is meant to inform users and Data Tracking or to Pay a Subscription to Access
give them more control over their data. But privacy labels an App?
aren’t perfect. For now, they are self-reported, though Apple % of respondents, Feb 2021
intends to review them as it does app submissions to the Would allow tracking to all the apps that I use to avoid paying subscription
App Store. 31%
Would not allow tracking to any apps, but I would prefer to pay a subscription
for certain apps only
72%
30%
Would do something in the middle (e.g., allow some apps to track me and pay
for some others)
30%
Other
9%
of US iPhone/iPad owners are aware that Source: AppsFlyer and MMA Global, "Personal Data, Privacy, & Smartphones: The Cautious
Consumer," March 17, 2021
Apple introduced App Store Privacy Labels 264611 eMarketer | InsiderIntelligence.com
in recent OS updates. But the survey also found that 6 in 10 respondents were
SellCell, January 2021 willing to pay for at least some of their apps in exchange for
not being tracked.
COMPETITIVE IMPACT: Apple tops the Ranking Digital Following Apple's privacy nutrition labels, Google
Rights Corporate Accountability Index for global tech just announced it will require app developers to provide
companies’ stance on privacy. Of users who switched from details on data collection and use in a new safety section of
an Android to an iPhone in the past five years, 24% thought the Google Play app marketplace. Google’s requirements
Apple was safer, 18% made the choice because they wanted put the emphasis on data security and handling, rather than
a phone with better privacy protections, and 15% wanted calling into question data collection and tracking overall.
apps that were better vetted for privacy and security,
according to Consumer Reports’ research. It also found that Apple has packaged these moves as taking a moral high
4 in 10 Android users considering a switch cited privacy ground on behalf of consumers, but it’s also good for Apple’s
and security reasons. These are clear signals that the Apple bottom line. If the shift toward opt-in tracking hobbles
ecosystem is winning over competitors on privacy. the current digital advertising model for the internet,
subscription models for content and experiences could see a
Apple’s privacy labels could help users choose between boost—and Apple stands to benefit by taking its 30% cut of
comparable apps. For example, a consumer comparing subscription revenues generated through its App Store.
messaging apps Signal and WhatsApp side by side will
clearly see the differences in their data-sharing policies. Facebook has vocally opposed Apple’s privacy measures,
suggesting that the changes would “severely impact” the
Consumers seem to be split: 31% of US smartphone owners social media platform’s core business—its ad business.
would allow tracking on all their apps to avoid paying to WhatsApp has also complained that the requirements
access them, while 30% wouldn’t allow any app tracking unfairly advantage iOS’s own iMessage app. Apple’s moves
but would prefer to pay a subscription for certain apps, have been criticized as gatekeeping and have brought
according to the AppsFlyer/MMA Global survey. the company—along with the entire tech industry—under
antitrust scrutiny.
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 12OUR TAKE: Apple has led the way on privacy because THE STRATEGY: WhatsApp bungled this recent rollout.
exploiting user data was never part of its business model. Users interpreted the new terms to mean that Facebook
But the recent shift toward first-party data relationships would be able to access the content of their private,
could make Apple cocky as it enters into new advertising encrypted messages because the messaging wasn’t clear.
revenue opportunities in its App Store. Those first-party And the ultimatum was aggressive—accept or stop using
data experiments might not sit well with users who have WhatsApp altogether by the deadline.
expectations about how Apple will and will not use their
personal data. Apple will need to proceed with caution if WhatsApp had to clarify that data sharing only affected
it doesn’t want to lose all the brand loyalty and trust it has content sent between users and businesses for the
worked so hard to build. It’ll also have to convince regulators purposes of managing those transactions. It had to send
that its consumer-protecting benefits outweigh its outsized countless clarifying messages and post FAQs confirming
impacts on the competitive landscape. that WhatsApp and Facebook have no access to encrypted
messages between users. The rollout was delayed from
February 8 to May 15 to address user backlash and give
Losing Trust by Breaking Consumers’ more time for review. Instead of deactivating or shutting
down accounts after the deadline, WhatsApp has
Expectations: WhatsApp’s Tangled announced that those who do not accept the new terms will
Policy Messaging gradually lose functionality.
In January 2021, WhatsApp users received a push COMPETITIVE IMPACT: As a result of user outrage,
notification requiring them to accept new terms and privacy downloads of competing messaging apps Signal and
policies to continue using the messaging app. The policy Telegram soared in the ensuing weeks. There were roughly
introduced data sharing between WhatsApp and Facebook 7.5 million downloads of Signal worldwide from January 6
to allow businesses to use shared resources across the two to 10, more than 40 times higher than the preceding week,
platforms to enable ecommerce and payment transactions. according to Sensor Tower data. During the same period,
Users interpreted the data sharing to mean that Facebook Telegram was downloaded 5.6 million times, according
could now read or listen to their messages and calls. That to Apptopia.
upended WhatsApp’s established reputation for being a
privacy-first, encryption-by-default messaging platform. In Brazil, where we estimate WhatsApp has a near-complete
Users’ expectations for privacy protection were disrupted. 99.8% market penetration among mobile phone messaging
app users, a quarter of internet users polled thought the
THE CHALLENGE: WhatsApp always positioned itself as a policy changes were an invasion of or disrespectful to their
privacy-friendly, secure messaging service—one that claims, privacy, per a February 2021 Toluna survey. The same survey
“Privacy and Security is in our DNA.” But when Facebook also found that 13.7% of respondents planned to stop using
acquired WhatsApp for $19 billion in 2014, the service WhatsApp because of changes to its privacy terms.
lacked a business model. A policy change was necessary for
the platform to finally roll out a monetization strategy.
Internet Users in Brazil Who Plan to Stop Using
During the acquisition, Facebook assured EU regulators WhatsApp Because of Its New Privacy Terms,
that there would be no data sharing to match user accounts by Gender, Feb 2021
between the parent company and the encrypted messaging % of respondents in each group
platform. Two years later, WhatsApp policy updates Male
suggested data would be shared for certain personalization 18.4% 60.7% 21.0%
and ad-targeting features, leading EU regulators to further Females
investigate the terms of the merger and fine the company. 9.7% 63.1% 27.1%
Further data integration plans were put on an “EU Pause” Total
13.7% 62.0% 24.3%
until data sharing between the two platforms could be
made GDPR compliant. The app has shared details like Yes No Don't know what the new privacy terms are
phone numbers with Facebook since 2016 to improve Note: n=1,087; numbers may not add up to 100% due to rounding
Source: Toluna, "Redes sociais," Feb 23, 2021
recommendations and ads on the app.
264515 eMarketer | InsiderIntelligence.com
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 13WhatsApp’s policy rollout still faces great uncertainty, Attitudes Toward Facebook Among US Adults,
especially in its largest market, India. Courts there June 2020
are evaluating whether the new policies violate India’s % of respondents
technology and privacy laws on several counts because they There is a lot of 'fake news' on Facebook
fail to specify the nature of user data being collected or to 40.9%
notify users about that collection. The government stated it Don't like to use Facebook to log in to other (third party)
websites/apps because of privacy concerns
had “grave concerns” that Indian users have not been given 34.1%
the choice to opt out of this data sharing. And in Germany, Facebook targets ads to me based on my internet behavior
regulators have declared Facebook can no longer process 32.6%
WhatsApp user data, which will likely go on to be reviewed Concerned about others being influenced by political
by the European Data Protection Board. propaganda on Facebook
32.3%
Network effects are strong. We have yet to see if Think Facebook is addictive
22.6%
WhatsApp’s market share has been materially affected
Facebook targets ads to me based on what it hears through my
in geographies where it dominates, but the spike in phone's microphone
downloads for its competitors suggests that consumers 17.3%
are willing to take at least some of their secure messaging Concerned about being influenced by political propaganda on
business elsewhere. Facebook
12.6%
OUR TAKE: WhatsApp built its reputation on secure Get my news from Facebook
7.4%
communications, but the Facebook acquisition and
Trust Facebook with my personal information
data-sharing policy change broke that trust. Communication
3.4%
is everything. This rollout was bungled because it was an
Would consider using Facebook's cryptocurrency ("Libra") in the
affront to user expectations. When a company builds its future
reputation on trust, security, and privacy, it must continue 2.0%
to meet and exceed consumer expectations built on Would consider buying a video calling device for my home that is
made by Facebook ("Facebook Portal")
those principles.
1.5%
Note: ages 18+
Source: "The eMarketer Facebook Flash Survey" conducted in June 2020 by
A Vision for Rebuilding Trust: Bizrate Insights, June 29, 2020
256614 www.eMarketer.com
Facebook Reality Labs
Trust and privacy are essential for introducing new
Facebook’s Reality Labs division is charged with developing
computing interfaces. So why should consumers trust
the next generation of computing interfaces. Between AR
Facebook to develop the next computing interface,
glasses, VR headsets, and neural interfaces to control and
especially one that users wear on their faces?
interact with these new systems, Reality Labs is designing
for the post-smartphone era. Facebook is throwing a lot of
THE STRATEGY: Andrew Bosworth, head of Facebook’s
engineering power behind these efforts: Nearly a fifth of
Reality Labs, has made his strategy loud and clear. In
Facebook employees are working in Reality Labs. But Reality
a memo to his team, he set the terms for a new data
Labs and Facebook will have to win back user trust to realize
minimization approach, dubbed “The Big Shift.” Bosworth
their vision for the future.
wrote, “Instead of imagining a product and trimming it
down to fit modern standards of data privacy and security
THE CHALLENGE: Users don’t trust Facebook with their
we are going to invert our process. We will start with the
data. In our June 2020 Digital Trust ranking of nine social
assumption that we can’t collect, use, or store any data. The
media platforms, Facebook landed at the bottom of the list.
burden is on us to demonstrate why certain data is truly
As mentioned earlier, 3.4% of US adults trust Facebook
required for the product to work.” Bosworth doesn’t want to
with their personal information, according to a June 2020
just meet consumer expectations; he wants Reality Labs to
eMarketer/Bizrate survey.
“differentiate our products on the basis of privacy. Let other
companies scramble to keep up with us.”
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 14“We will start with the assumption that we can’t entirety of our culture” if Facebook is going to redeem itself
collect, use, or store any data. The burden is in consumers’ eyes. Bosworth likened the shift to that of
Microsoft’s engineering culture change to address security
on us to demonstrate why certain data is truly
challenges in the early 2000s.
required for the product to work.”
—Andrew Bosworth, Head of Facebook Reality Labs COMPETITIVE IMPACT: It remains to be seen how
privacy-focused changes in product development and
Reality Labs statements say that privacy is “baked into engineering culture will manifest in AR and VR experiences.
our entire design process.” Facebook knows it’s breaking In a Wired podcast released in April 2021, Bosworth said
new ground, and that means users don’t necessarily have the company attempts to process user data locally on the
expectations about how these new interfaces can and devices created by Reality Labs, rather than sending it to the
should function. That’s why Reality Labs has developed a set cloud. He also said to expect to see similar data architecture
of principles for responsible innovation that put privacy and choices in AR and VR moving forward.
security first. They include:
Facebook’s Oculus held just over half of the VR headset
■ Never surprise people: be transparent about data market in 2020, accounting for 53.5% of headset shipments
collection and uses. worldwide, according to Counterpoint Technology
Market Research.
■ Provide controls that matter: give users clear choices.
■ Consider everyone: not only users, but those who Extended Reality (XR) Headset Shipment Share
may be caught in the field of vision of a device in a Worldwide, by Brand, 2020
public setting. % of total
■ Put people first: when faced with tradeoffs, users win
over businesses.
Other
18.6%
These principles, along with the formation of internal
teams focused on issues like privacy, trust, and responsible Pico
4.8%
innovation, will be integral to design choices that set clear Oculus
DPVR
expectations for users’ interactions with AR and VR devices. 5.5% 53.5%
HTC
Facebook knows it must tread carefully. Even the mere 5.7%
mention in an internal meeting about considering whether or Sony
11.9%
not to test facial recognition features in AR ballooned into a
media frenzy, with Buzzfeed reporting that the company had
been considering it. Note: includes VR and AR headsets
Source: Counterpoint Technology Market Research as cited in press release, March 10, 2021
Under “Project Aria,” Reality Labs is deploying researchers 264312 InsiderIntelligence.com
wearing smart glasses prototypes that collect data about
AR interactions in the Bay Area and Seattle. In a photo But adoption is still in its early stages. Just 8.5% of the US
provided by Facebook, the tester wore a T-shirt identifying population owns a VR headset, according to our forecasts.
themselves as a researcher, and the company said that
In keeping with Facebook’s early history, Bosworth has said
all data gathered during the process will be processed to
he’s primarily focused on the technology development and
remove faces and license plates before researchers can
product experience—not the business model to support it.
use it.
In an interview with The Verge published in January 2021, he
Facebook has also introduced a privacy review process said, “I have the great luxury of not worrying about it. I’ve got
for all its products, but Bosworth admitted that the enough real problems right in front of it to go tackle before I
company’s engineering culture hasn’t yet internalized a worry about the business model.”
shift toward prioritizing privacy in the user experience.
Still, he acknowledged the need to change in his memo:
“The next step is for the priority of privacy to permeate the
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 15While this may be liberating for Reality Labs’ research and Ask for meaningful consent. Allow users to opt in, rather
development, the statement raises some red flags. Many than opt out. Give them information to ensure they’re making
consumer concerns about privacy and trust center around clear and informed decisions.
the exploitation and use of data as part of the fundamental
business model employed by the internet and social media Reveal default settings. Ambient interfaces for emerging
platforms like Facebook. technologies like smart speakers and AR make it harder to
dig into settings. Companies should make defaults privacy-
OUR TAKE: Facebook’s Bosworth is approaching Reality protecting from the start. Make defaults clear to users and
Labs’ development as a blank slate. But if the company’s provide opportunities to change settings from the outset.
history teaches us anything, it’s that starting out with
the tech and letting the business model figure itself out Write simple, clear policies. Spell out what your firm
later comes with significant risk and potentially perverse will and won’t do with users’ data. Don’t make then wade
incentives. Facebook needs to be clear with users about how through 75+ hours’ worth of legalese.
these interactions will be monetized now and far into the
future. Bosworth is also known for his controversial polemics Be honest about the business model. Consumers
that spark conversations but don’t necessarily set policy. increasingly understand the value exchange for their
Given his history running Facebook’s News Feed and ads data—whether it’s improving the service, better targeting
businesses, we’ll believe the data minimization stance when personalized recommendations, or subsidizing a free service
we see it. with advertising. Companies that are honest and upfront
about the business model will earn more trust and respect
from consumers.
Best Practices for Differentiating Prioritize user testing and feedback. Engineers can’t
on Privacy build in a vacuum. Solicit user feedback at every step of the
development cycle. Seek out your blind spots. Watch for
Companies need to have a clear privacy strategy in unanticipated use cases and evaluate how nonusers are
place to establish trust and win consumers’ business. affected by the technology in their environments.
That’s true for any business built on customer data—
Take first-party responsibility seriously. Just because a
both tech companies as well as industries in the midst company holds a privileged first-party relationship with a
of digital transformation. Here are some best practices consumer doesn’t automatically grant it their trust to use
gleaned from these cases that all companies can follow their data for new products. Evaluate where their trust lies
to differentiate on privacy: and focus on providing benefits to consumers there. The
paradigm shift to first-party relationships should not be an
Give users agency and control. Concerns over opportunity for exploitation.
consumer privacy have evolved away from exposure
and data collection and toward autonomy, choice, and Value changes require culture shifts. Putting privacy
control, especially as emerging technologies increasingly first doesn’t happen overnight. Dedicate cross-functional
make assumptions about user intent. Consumers need teams to overseeing privacy-centric thinking across the
mechanisms for stating their preferences and intent. organization. Establish processes and performance metrics
that prioritize and value consumer privacy.
Build in privacy by design. Companies should build
privacy-protecting principles into the design and architecture
of systems from the start. Ask yourself, what’s the minimum
amount of data needed to serve a customer’s needs?
Keep data close to the device rather than in the cloud. Be
proactive, not reactive.
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 16Editorial and
Production Contributors
Anam Baig Senior Report Editor
Rahul Chadha Director, Report Editing
Joanne DiCamillo Senior Production Artist
Donte Gibson Senior Chart Editor
Katie Hamblin Director, Charts
Dana Hill Director, Production
Erika Huber Senior Copy Editor
Ann Marie Kerwin Vice President, Content
Na Li Senior Data Research Manager
Penelope Lin Copy Editor
Stephanie Meyer Product Specialist
Heather Price Senior Director, Managing Editor
Magenta Ranero Senior Chart Editor
Amanda Silvestri Senior Copy Editor
Julia Woolever Senior Report Editor
Ali Young Copy Editor
PRESENTED BY: Copyright © 2021, Insider Intelligence Inc. All rights reserved. Page 17ADVERTISING IN
THE AGE
OF PRIVACY
"The process of collecting, analyzing,
and leveraging first party data is part
of a necessary value exchange. Consumers are
inclined to trust businesses as they become more
privacy focused, but it’s up to each to maintain and
build that trust with consumers while balancing
data collection needs. Brands that aren't actively
pursuing privacy-centric data strategies will
be left behind."
BRIAN KROLL
VP, Strategic Accounts
Adtaxi
DATA PRIVACY PERFORMANCE
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