Do the Tech Titans Need Collected User Data?

It’s well-known technology news that large tech companies have collected huge volumes of user data. Google, Apple, Amazon, Facebook, and Yahoo, for example, all robustly collect user data. The range is fairly vast. The information collected includes search queries, e-mail addresses, IP addresses, browser information, facial scans, ISPs, locations, phone number, profile information, recognition, ad clicks, device specific information, third-party information, and the time and date.

Lots of Data Collection Is Conducted to Optimize Searches…

For the tech titans, it’s good business strategy to know a lot of information about people using the web. The information can be used to, for instance, optimize ads targeted to users and to optimize search results.

Optimization of search results is frequently given as the rationale in collecting user data. Consumers and businesses searching for something, the argument goes, are much more likely to receive targeted and useful searches if the search agent, like Google or Yahoo, “knows” the searcher.

Companies like Amazon and Apple can ostensibly deliver the goods and services that align with what the searcher has demonstrably liked or bought.

But there is also increasing concern that privacy standards might be violated by the massive collection of data. One assumption has been that optimization and convenience is a fair trade for any erosion of privacy in internet browsing. While privacy policies exist, they are often massive. Few users are likely to fully read what they have agreed to while surfing the web.

…which is used to predict consumer behavior.

…but Does It?

A recent Harvard Business Review points out, though, that at least some evidence points to the fact that collected data don’t optimize searches any better than random searches. The implication is that companies’ may not need this data to provide better searches.

The article cites a working paper from the National Bureau of Economic Research, which was spurred by privacy legislation in the European Union (EU). In 2008, the European Commission issued a recommendation that the companies behind search engines cut back the period in which data collection was kept. Yahoo and Microsoft, the parent of search engine Bing, beefed up their data privacy policies.

The working paper authors examined repeated searches both prior to and subsequent to the new privacy policies. Presumably, dissatisfied searchers – those with nonoptimized results in the wake of stringent privacy safeguards – would hit the search button again.

But there was no appreciable difference in searches before and after.

This implies that the implicit reason behind a lot of data collection, optimization of the search capability to meet the needs of searchers, is not really relevant. Searchers exhibit no change in behavior with data collection behind a search or without it.

As the HBR notes, it also implies that the tech titans who collect data don’t actually get much benefit from it. They are sometimes accused of being nascent monopolies. If they don’t exert much influence over the market, it’s one argument that they don’t have monopoly characteristics.

It is likely that issues of data collection and privacy policies will be debated both globally for years to come. But at least one study indicates that data collection vis-à-vis search engines doesn’t improve the experience or confer competitive advantage.