Location data collection and the privacy paradox

Everything has a price, including privacy. That's one of many conclusions to be drawn from audit, tax and advisory services firm KPMG's new Consumers & Convergence study--the annual survey reveals that while user concerns over data privacy are growing, with 79 percent of respondents worldwide expressing angst over unauthorized access to their personally identifiable information, 58 percent of respondents also say they would be willing to allow tracking of their digital behavior and profile information if it resulted in lower costs. KPMG also notes the emergence of what it calls "Information Sharers"--i.e., mobile subscribers willing to exchange personal data for cheap or free content, as well as conduct their banking and even access personal medical information via wireless device. The study indicates Information Sharers now make up about 10 percent of the overall mobile user population, led by consumers in China and India; however, U.S. respondents represent just 4 percent of the Information Sharer segment, despite making up 12 percent of the KPMG survey group.

Consumers' paradoxical response to data privacy further muddies an increasingly complex and critical issue--one poised to continue growing as mobile advertising, location-based social networking and related technologies go even more mainstream. Consumer privacy was back in the headlines this week when Apple (NASDAQ:AAPL) responded to a congressional probe into its location data collection policies, contending its geo-specific services exist to enhance the user experience and emphasizing that it only activates location solutions upon receiving consumer consent. In a 13-page letter released Monday by Reps. Edward J. Markey (D-Mass.) and Joe L. Barton (R-Texas), Apple general counsel and senior vice president of legal and government affairs Bruce Sewell writes "Apple collects location data for only one purpose--to enhance and improve the services we can offer to our customers," stating the company does not share consumer location information collected via iPhones and iPads with AT&T or other partners. "Apple is committed to giving our customers clear notice and control over their information, and we believe our products do this in a simple and elegant way," Sewell states. "We share [legislators'] concerns about the collection and misuse of location data."

Apple began offering location-based solutions in January 2008, Sewell states, with services now extending across devices including the iPhone, iPad, iPod touch and Mac computers running Snow Leopard--the company notes that beginning with the April 2010 release of iPhone OS 3.2, it relies on its own databases to provide location-based services and for diagnostic services. "Apple has always provided its customers with the ability to control the location-based service capabilities on their devices," Sewell explains. "In fact, Apple now provides customers even greater control over such capabilities for devices running the current version of Apple's mobile operating system--iOS 4." Controls include a single On/Off toggle switch to disable all location-based service capabilities, express consumer consent when an application or website first requests location-specific data, iOS permissions to identify individual apps that cannot access location information even if the global LBS setting is toggled to "On," and an arrow icon alerting iOS 4 users when an app uses geo-specific information.

Sewell also clarified data collection protocols specific to Apple's new iAd mobile advertising network, introduced earlier this month. "Customers can receive advertising that relates to their interests ('interest-based advertising') and/or their location ('location-based advertising')," he writes. "For example, a customer who purchased an action movie on iTunes may receive advertising regarding a new action being released in the theaters or on DVD. A customer searching for nearby restaurants may receive advertising for stores in the area." Sewell adds that Apple does not share any interest-based or location-based data about individual customers with advertisers; however, the company does retain a record of each ad sent to a particular device in a separate iAd database, accessible only by Apple, to guarantee consumers do not receive overly repetitive or duplicate ads. In the event an advertiser wishes to provide more specific information based on user location, a dialogue box will give the consumer the choice whether to transmit their latitude/longitude coordinates--Apple notes that information is not provided to the advertiser.

Given Apple's near-fanatical devotion to its own privacy, it's highly unlikely so much insight into its data collection methods would ever have been divulged without federal prodding. But after Apple revised its consumer privacy policy in late June to authorize the collection and sharing of "precise location data" from devices like the iPhone and iPad. Markey and Barton--co-chairmen of the House Bi-Partisan Privacy Caucus--quickly sent a letter to CEO Steve Jobs asking for additional clarification: "Given the limited ability of Apple users to opt out of the revised policy and still be able to take advantage of the features of their Apple products, we are concerned about the impact the collection of such data could have on the privacy of Apple's customers," the lawmakers wrote at that time. While Markey and Barton thanked Apple for outlining its policies, they expressed lingering concern over the rise of data collection: "The new challenges and concerns that present themselves with the collection and use of location-based information are particularly disconcerting," Barton said in a statement. "While I applaud Apple for responding to our questions, I remain concerned about privacy policies that run on for pages and pages." It's clear many consumers share those concerns--at least up to the point where free stuff enters the equation. -Jason