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The Tension Between Innovation and Application Privacy Regulation

Today’s discussions about application privacy revolve around smartphones and tablets. However, the app ecosystem is evolving significantly beyond these devices to encompass new services and emerging technologies, such as wearable computing—for example, fitness accessories and smart eye wear. These trends raise questions about how to best regulate app privacy in a technology-neutral way that will keep pace with rapid change and consumer adoption. The solution—whatever it is—will be determined in large part by the various stakeholders, trends in the ecosystem and the future of app innovation.

On the regulatory front, FTC and state level privacy enforcement is becoming increasingly aggressive. However, their efforts and solutions are impaired by a legal framework designed in an era when the frenetic pace of today’s technology-driven society could not have been conceived. Although enforcement orders will continue to have a place in privacy regulation, the focus on preemptive measures—such as 20-year monitoring programs—as a way to cure abuses and change behavior is questionable, given the extent of technological change in the past few years.

Legislative activity also follows this trend. When an app gains notoriety for privacy infringement, some legislators tend to react by introducing app privacy bills that would impose blanket restrictions on the entire market. The intent behind these proposals is laudable, but all this would do is impose difficult compliance costs on developers, many of whom are poorly equipped to make such changes. Meanwhile, technology charges forward, changing consumer norms and expectations along the way.

Rather than trying to anticipate and prevent abuses through cumbersome enforcement and inflexible legislative proposals, it seems prudent to focus on targeted enforcement of offenders against evolving privacy norms, informed by app privacy guidelines and best practices. Current app privacy self-regulatory efforts have not yet proven their efficacy, but they are better equipped to adapt to change and should also be given an opportunity to guide future app privacy issues, in place of formal legislation.

The current app delivery system further demonstrates the complexity of controlling app privacy in a changing environment. Some app delivery platforms have the ability to address certain privacy concerns directly—such as Apple’s recent move to stop accepting apps that access a device's unique identifier. Apple can address this because it is a vertically integrated platform; it controls the hardware, software, services and distribution of its products.

Other platforms, such as Google and Amazon, are by design decentralized. This allows for more developer discretion and growth, but also diffuses responsibility for privacy away from a central authority. In theory, the former model presents less of a regulatory challenge, because one entity is “responsible” for non-compliance. On the other hand, the distributed model seems to be gaining traction. Further, the scalability of a central, curating authority, given the fast growth of the app industry, is debatable. It’s also important to note that new players can enter and alter the ecosystem at any time—or they may create entirely new communities to deliver apps to users. These future models and technologies will further frustrate existing approaches to app privacy regulation.

The app ecosystem will continue to evolve as new devices make their way into the marketplace. Smart phones and tablets, which have only recently become essential consumer devices, will likely be replaced by revolutionary new computing devices. But the future isn’t just about wearable computing; it’s the “Internet of Things”—the growing connectivity of electronic devices and everyday objects, which offer specific services while providing new and exciting user experiences. Accordingly, regulators and policymakers need be thinking about app privacy with a broader, technology-neutral perspective in mind. Regulation based on specific devices, or even certain characteristics of devices or platforms is likely to become quickly outdated. The challenge will be ensuring privacy protection in a way that enables effective enforcement but does not impose restrictive technological mandates.

Let’s not forget about consumers.

With their insatiable appetite for new technology and new ways to connect with each other, consumers are at the heart of the app privacy challenge. But they are also critical to the solution. Consumers drive the direction of innovation through the choices they make and the technologies they adopt. They are best positioned to demand responsible behavior from the commercial interests involved in the app ecosystem. Consumers will continue to use apps and technologies that operate in a manner consistent with their norms and expectations. App providers who fail to align their offerings in this way will lose out on adoption and are likely to fail.

Perhaps the concept that "consumers need to be protected from themselves" with respect to these technologies—with which they so readily engage—is best left behind.

Written By

Kenesa Ahmad, CIPP/US

1 Comments

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  • Sandra R. Hughes, CIPP Jun 11, 2013

    Kenesa, I agree with you that consumers can vote with their purchasing behavior, especially with app-downloading. Here’s an additional idea/question—Is there already anything available in the ecosystem for those insatiable consumers who get so turned on by the novelty of new technology that they throw privacy to the wind...and when they find out that it has been violated, it is too late?! Is there already an app out there to save them from themselves, or at least provide some potential ‘awareness’ before buying yet another cool thing? What about: 1) a ‘magic mirror’ app that does a scan of cyberspace to pull together all the publicly available personal information about a consumer and presents a profile to him/her…before making a purchasing decision.. or how about 2) a ‘whistle blower app’ where consumers can EASILY log a complaint after the fact when their privacy has been violated…kind of like an ‘Angie’s List’ for apps? 
    
    To the IAPP Blog Universe – what do you think about these ideas? Any others? What’s a consumer to do if app developers are not regulating themselves and regulators don’t have the capacity to enforce all the developers?
    

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