CONSUMERLAB. Consumer privacy in an online world

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1 CONSUMERLAB Consumer privacy in an online world An Ericsson Consumer Insight Summary Report, February 2012

2 introduction Ericsson ConsumerLab has done research during the past year on consumer awareness, attitudes and behavior when it comes to privacy, trust and security when using the internet. The report Consumer Privacy in an Online World, covering internet users in US, India, UK, Germany and Sweden, looks into the challenges that internet poses to consumers privacy and seeks to understand people s expectations of over-the-top services, internet players and operators in this regard. Point of departure for the report is the continuous evolution of social media. More and more people are sharing personal information on social networking sites on a daily basis. A driving force behind this development is the smartphone gaining popularity worldwide, making sharing even more convenient and accessible wherever you are. In the long term given that in the networked society there will be more than 50 billion connected and communicating devices privacy will become increasingly important. According to the International Data Corporation (IDC), there will be an estimated 35 zettabytes (35x followed by 21 zeroes bytes) of digital records worldwide This suggests that it will become even more important for people to safeguard their privacy. But although awareness is increasing, conclusions from the study which forms a basis for this report clearly shows consumers still lack a sense of urgency. privacy Privacy harm is caused when producers misuse consumers personal information, either by own fault or if third parties somehow manage to breach the safeguards trust On an individual level trust is a prerequisite for business success in the online space sharing The act of sharing can primarily be defined as the individual s allowing of selected others to access their personal information Ericsson ConsumerLab The Voice of the Consumer Ericsson ConsumerLab is a knowledge-based organization, our main offering is insight. We have more than 15 years experience in consumer research, which involves studying people s values and behaviors, including the way they act and think about ICT products and services. We provide consumer insight to influence strategy, marketing and product management within the Ericsson Group. Our knowledge helps operators develop attractive revenue-generating services. We gain our knowledge through a global research program based on annual interviews with 100,000 individuals in more than 40 countries and 10 megacities statistically representing the views of 1.1 billion people. We use both quantitative and qualitative research, and spend hundreds of hours on in-depth interviews and focus groups with consumers from different cultures. Our research includes general market and consumer trends and in-depth insights into specific areas. To be close to the market and consumers, Ericsson ConsumerLab has team members in most of Ericsson s market regions. Being part of the Ericsson Group gives us a thorough understanding of the ICT market and business models. This broad knowledge is unique and is the basis for our credibility and integrity. We see the big picture, understand where the individual fits in, and know what this means for future trends and services. 2

3 GROWING AWARENESS OF PRIVACY CONCERN Sharing has become a daily habit In a connected world more and more data will be shared online. Consumers are already sharing tremendous amounts about themselves on social networking sites like Facebook, Google+ and Twitter, as well as on local sites such as Orkut in India. As much as 63 percent in the survey say they log on to a social networking site on a daily basis. Many spend hours every day connected to others through social networks online. It is fair to say sharing has become a daily habit and that it is social networking sites that have paved the way. While new technology is pushing the envelope, consumers are quickly adapting and adopting these new and easy ways of displaying themselves online. And it is not only people who normally consider themselves to be outspoken about their private lives out in the real world who are sharing intimate details on the internet. Individuals are becoming more and more open and are inviting people to events which they would not have invited them to before the era of social networking. People are saying they are being more open and sharing more information now than they would have ever considered or expected just a couple of years ago. Social networking sites are evolving to be more than just a fun pastime they are becoming tools people use to shape their own identity. Demand for privacy services will increase In the light of these new habits of sharing how important is privacy for consumers? On the contrary of what one might expect, experts say that nothing indicates that consumers wish for privacy is diminishing. Ryan Calo, director of the Consumer Privacy Project at the Stanford Center for Internet & Society, argue that experience is everything when it comes to trust and privacy concern. In the past, our privacy was protected by default, since it was complicated in practice to obtain information on one another. Today, when there is tons of information about us easy accessible online, privacy concerns will surge if we land up in situations in which our privacy is threatened. According to Ryan Calo, better legal protection for privacy is needed, but he is also convinced there is a market for commercial services that protect consumers. He sees a growing demand in this area. People will pay more for something if they can buy it from a site that they perceive has better privacy. So you can use the market to compete over these things. Ryan Calo Time spent on social networking sites >3 h/day 1-3 h/day <1 h/day Several times/week Once/week More rarely Never Ryan Calo primarily works with a concept entitled privacy by design, the idea that applications, websites, etc., should be designed in a way that consumers understand what they are doing and how their personal information will be used. 3

4 Social media usage increases awareness When asked a direct question all consumers say privacy is important. But when comparing with other issues and needs a slightly different picture emerges. A majority of the consumers in the survey are conscious about privacy issues online but only a minority is very concerned. However, among younger respondents who also are on social networking sites the most the number is much higher. More than 4 out of 5 between the ages of 20 and 24 say they worry a lot about their privacy when using the internet. This suggests the usage of social networking sites in fact increases privacy concerns. Consumers who are using location based services to check in worry more about their privacy online than people who don t use these features. Sharing your location with your smartphone thus increases the awareness of possible privacy harm among its users. At the same time a lot of people feel uncomfortable about sharing their current whereabouts with others in their social network. Privacy online not a key concern yet Even though the awareness of online companies using consumer data for commercial purposes is growing, there still is little change in behavior when it comes to sharing information online. Consumers trust the system and con- venience prevails as long as no harm on a personal level is inflicted. Despite the fact that consumers are aware of threats and issues, they either don t think they will get in jeopardy themselves, or they simply think the benefits of the internet outweighs the risks of being subjected to privacy harm. The awareness of privacy issues is increasing, but there is still no sense of immediate urgency. Attitudes towards different statements on a scale from 1 to 7 where 1 means I don t agree at all and 7 means I agree completely I don t agree (1 2) Middle (3 5) I very much agree (6 7) My family is more important to me than my career To me, it is important to stay up-to-date with news and headlines It s important to me to always be reachable wherever I am To me it s important to be able to access the Internet wherever I am I worry about my privacy when using the Internet Even when I can afford them, I m not willing to pay much for new technical gadgets or services I spend a lot of time organizing and planning my and my family s activities I m constantly on the lookout for the most high-tech products avaliable Carrying the latest model of moblie phone gives a good impression to others The design of a mobile phone is more important than its features 0% 100% 4

5 not connecting the dots People claim to be aware that companies have the right to use their information no less than 80 percent think online companies can access and use their personal data for commercial purposes. Yet they fail to make the connection between their personal information, for example in s, and the targeted ads appearing on their screens. As many as 54 percent in the survey answered they would share less if they received personalized ads about something they discussed in an . This is curious considering that for example Gmail automatically scans s to add context-sensitive advertisements to them. Joseph Turow, professor of Communication at the University of Pennsylvania s Annenberg School of Communication, expresses it as consumers not connecting the dots. They do not understand that their personal information is being used in a way that they themselves find unacceptable. He argue people in general are not aware of what data mining means, whereby a company can get a complete picture of you from all of the fragmented pieces that are out there on the web and use it, for example, to tailor ads to fit your profile on a social networking site. People know they re being followed, but they really don t understand what data mining is. They don t understand the links that take place, the connections of the dots and all of that. And when that is brought to their attention They get concerned. Joseph Turow Do you think the following companies can access and use your personal data for commercial or other purposes? Share of respondents who say they know or believe companies can do this. Social networking sites Online companies Internet service providers Mobile phone operators IP telephony and chat providers Government authorities Operating system providers Financial institutions Individuals not acquainted with you 86% 80% 75% 75% 73% 73% 72% 65% 64% 80% of all people sharing information on social networking sites are selective with whom they share personal information 5

6 Consumers trust the system There is a belief in the market as benign and self-regulatory and people think companies would ask for permission before using any personal information. They reason that producers need to and are expected to behave; otherwise they would go out of business. Trust is thus a prerequisite for the interdependent relationship between producers and consumers. The study also shows that consumers are most concerned about other individuals getting access to their personal data not commercial companies. The government and financial institutions are also a greater cause for concern than companies. Like one study participant from Sweden said: If it s only companies [that can access your information], you don t have to be careful about how you use your smartphone. People think they already have protection When it comes to safeguarding their privacy online and on their mobile phone, people tend to believe they are already protected. For example, 22 percent in the survey are under the impression that they have an antivirus app installed on their mobile phone, and 1 out of 5 respondents claim they have an app or service that lets them surf the internet anonymously, leaving no trace. What would make you share less on the internet on a scale from 1 to 7 where 7 means It would severely affect my behavior? Share of respondents who answered 6 or 7. If there were no laws protecting my personal information online, making it accessible to anyone If I received a sales call offering me a product or a service I had just searched for on the Internet If I received personalized ads on my computer, containing offers for something I had discussed in an conversation If someone I know was a victim of Internet fraud If the government sent me a letter asking me to stop downloading copyright content If I received a text message from a store, offering me a discount, just as I was passing If I started a new job that required a more professional demeanour If my friends stopped sharing information online 28% 26% 64% 55% 54% 53% 47% 42% I mean if people like Google and Yahoo! and Skype had access to my conversations, I think they d probably get a good laugh. Andrew, 28, US None of the above 12% 0% 70% 6

7 Coming reinstatement of the walls As sharing has become an invaluable part of people s lives, users on social networking sites are at the same time becoming more and more conscious of what they share and to whom. Your digital image is turning out to be increasingly important in a connected world where your identity to a large extent is shaped online. Consumers sharing behavior is to a great degree determined by what is considered socially acceptable, which in turn is evolving with time. People are least inclined to share personal information about their medical records or financial situation, while music playlists, religious beliefs and current mood are seen as safe to share with everyone. 3 out of 5 respondents in the survey say they would be very concerned about sharing family photos or video The things we share with our friends we don t share with our parents. Abbas, 18, India I think the market for reinstating the walls that we used to have where there were our friendfriends and our workfriends and our other kinds of friends is coming back. Susan Freiwald clips from family vacations online if they had no control over who could see them. These results show how important user control is when it comes to sharing. On social networking sites, friends are sorted into different groups to decide who gets to view what some don t get the full story. What is socially acceptable to share, or not, differs between markets. In India, users on social networking sites are hesitant to upload any information regarding their romantic relationship status if they are not married. In the US, young people worry they will not get into law school if they are showing themselves off as irresponsible online. Susan Freiwald, Professor at University of San Fransisco, is predicting a need to reinstate the walls. Users will want to and expect to have full control over their digital image online. What would you be concerned about sharing online if you had no control over who could see it? 7

8 low awareness of mobile threats The mobile phone is the most private media device that you have. It can be lost or stolen, and is therefore vulnerable to privacy harm. At the same time, smartphones are considered to be safer than computers by most individuals. Smartphones are not seen as actual computers people do not worry much about getting viruses on their phones today. But since the importance of the mobile phone is increasing, consumers are saying they are willing to pay in order to feel it is protected. 36 percent of the respondents in the survey answered they would like to get an application for their mobile phone that protects it from viruses and intrusion. Privacy not top-of-mind when downloading apps Consumers rarely reflect on security when downloading applications for the smartphone. People seldom, or never, refuse to download an app just because it wants access to the phone address book or GPS. Neither do they consider the company behind the app people tend not to care about brand name when choosing what app to download. When asked, a low price, user ratings and recommendations from friends are equally important as privacy issues and brand name. How would you grade the importance of the following when choosing which app to download? Share of respondents who answered 6 or 7 on a scale from 1-7 where 7 means Very important. The type of information the app wants to access Recommendations from my friends A low price 51% 48% That it s from a brand I trust 48% User ratings 47% 50% Perceived use and demand for mobile phone protection services Yes, I already have it 36% No, but I would like to get one No, and I m not interested 22% 23% 8

9 Opportunities in a connected world Which company do you trust the most? Share of respondents who trust at least one of the following types of companies the most. Trust the most In the ICT industry, there is an unanimity that privacy issues will grow in importance. The continuous evolution of social media, and the growing number or devices used accessing the internet in the network society, will put privacy high on the agenda. More and more sensitive information will be stored on more and more open platforms as company unique systems will be too expensive and cumbersome to use. Thus, hackers illegal as well as legal will be able to access and compile data into severe and possibly harmful combinations. People and companies will get hurt and there will be a power struggle between good and bad forces to have the smartest system to protect or to break data. Operators trusted as guardians of privacy As awareness turns into concerns, consumers will realize that they will not be able to manage all their privacy handling themselves. They will need to find a trusted provider that can help them safeguard their privacy online. In the survey, the respondents got to choose which brands they trusted the most and the least respectively in terms of privacy concerns. While Facebook turned out to be the least trusted brand, consumers across all markets tend to see operators as more trustworthy than other players. Operators are therefore well-positioned for providing privacy and security services when the need comes. Privacy a hygiene factor In a near future, privacy will become a hygiene factor for consumers. Users must understand what they are doing and how their personal information is being used. Systems and services holding consumer information must be privacy and data protection compliant right from the start this should not be bolted on afterwards. However, consumer awareness and concern are lagging in relation to industry activities and technical development. Online privacy will thus not likely be a consumer driven issue, but rather an industry driven one. Today there is an opportunity for companies to brand themselves as one who would never misuse any personal information. Though, in the future, branding yourself as safe will most likely be a hygiene factor rather than a competitive advantage. Willingness to pay for security and control 9

10 Willingness to pay for security and control By looking at the survey results, it is obvious there is a growing consumer demand for services protecting mobile phones from viruses and intrusion, as well as for apps and services that let the user be in control. Martin Ortlieb, Google, foresee that companies handling consumer data will need to be transparent and to let people be in control over their own personal information. Giving access to those settings is the way to make it easy for people to be in charge of what data is being stored. I find that if you don t let people know this, and you re not very clear on your policies, that can make people very suspicious. Martin Ortlieb Apps and services that let you know who has access to your personal information online, as well as let you control your information being shared and stored online, are considered worth paying for according to the respondents in the survey. 36 percent would want to pay for an app or service that lets you know who has access to your personal information. 36 percent would also want to pay to browse the internet anonymously, and 24 percent say they are willing to pay for the ability to erase selected personal information that is stored online. Opportunities in a connected world 1. Personalized offerings E.g. discount based on interest/usage 2. KNOWLEDGE & CONTROL offerings E.g. let consumers know who has access to their personal information 3. Protection offerings Protection against e.g. intrusion and virus 4. hygiene level privacy by design Branding Personalized offerings At the same time, consumers feel it is okay for companies to gather information about them as long as it is considered beneficial. This can for example be achieved by offering consumers targeted and personalized ads. People overall tend to appreciate targeted ads likely because they would prefer it over the alternative of spam and uninteresting advertisements. This is especially true if they are financially compensated for letting companies use their personal information for commercial purposes, for example by receiving discounts or coupons in return. 44 percent of the respondents in the survey say they would consider receiving discounts and offers on products or services based on their personal interests a positive aspect of companies accessing their personal data. People also tend to be pragmatic when it comes to these matters. As one respondent from the US said during a focus group interview: If it was between not having Google and Google advertising I ll take Google advertising. Lindsay, 27, US Still, it is essential that the consumers feel they are behind the steering wheel. An intuitive user control is needed, and furthermore, consumer trust must never be violated. While people say they consider receiving discounts and offers based on their personal data the most positive aspect of companies accessing their personal information, they feel most negative towards receiving personalized ads based on what they share on social networking sites. 10

11 Positive aspects of commercial companies using personal data Discounts and offers on products/services based on my personal interests Discounts and offers on products/services based on my gender, age group, zip code etc. Discounted calling plans in exchange for accessing my personal information Discounts and offers on products/services based on my current location Discount coupons based on my personal surfing/calling habits Free online services in exchange for accessing my personal information Discounts and offers on products/services based on my income span, my sexual orientation etc. Personalized online ads based on the information I share on social networking services 44% 34% 34% 34% 31% 29% 21% 18% Facts about the survey Quantitative study Online web questionnaire among internet users age respondents in five countries: US, Sweden, India, UK and Germany Qualitative study 13 focus groups of smartphone owners ages and interview respondents in: US (New York City, NY and Davis,CA), Sweden (Stockholm and Hässleholm) and India (Bangalore) Ericsson ConsumerLab conducted the research in Q1 and Q Expert interviews 5 expert interviews, mapping the academic debate. Daniel Solove George Washington University Law School, Washington, DC Martin Ortlieb Researcher at Google, Zürich Ryan Calo Stanford Center for Internet & Society Susan Freiwald University of San Francisco School of Law Joseph Turow University of Pennsylvania Annenberg School of Communication 11

12 Ericsson is the world s leading provider of technology and services to telecom operators. Ericsson is the leader in 2G, 3G and 4G mobile technologies, and provides support for networks with over 2 billion subscribers and has the leading position in managed services. The company s portfolio comprises mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry. The Sony Ericsson and ST-Ericsson joint ventures provide consumers with feature-rich personal mobile devices. Ericsson is advancing its vision of being the prime driver in an all-communicating world through innovation, technology, and sustainable business solutions. Working in 180 countries, more than 90,000 employees generated revenue of SEK billion (USD 28.2 billion) in Founded in 1876 with the headquarters in Stockholm, Sweden, Ericsson is listed on NASDAQ OMX, Stockholm and NASDAQ New York. The content of this document is subject to revision without notice due to continued progress in methodology, design and manufacturing. Ericsson shall have no liability for any error or damage of any kind resulting from the use of this document Ericsson SE Stockholm, Sweden Telephone: EN/LZT R1A Ericsson AB 2012

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