Privacy as a feature

Privacy is in the news. But, as I’ll explain, economic analysis shows that people actually don’t care about this feature much relative to other features. What is then government’s rationale for forcing this feature ahead of others?

 

There is a lot of innovation in the tech industry as result of strong demand and intense competitive pressure. Yet, accoding to privacy advocates little has been done with regards to privacy, yielding some kind of unacceptable trade-off. If people are really that concerned about privacy, then why is it served poorly? 

 

Could it be that privacy is hard to see (you don’t know if the feature is there)?

The same can be said of Halal or Kosher food, which probably taste the same as regular food. Yet those features and the accompanying certifications developped naturally in the market.

 

Could it be that people aren’t aware of the lack of privacy?

I am sure most people don’t understand web technology and its privacy implications (web beacons, third-party cookies, …). But if there was demand for privacy, profit opportunities would invite the creation of privacy-respecting services by entrepreneurs, who would advertise their unique features as a competitive advantage (educating the public in the process).

 

Could it be that services are unclear in disclosing their privacy practice?

If that were the case, competitive advertisement would bring the issue to light. Also, I would expect people to avoid such unclear services. After all, if you are vegetarian, you don’t order dishes unless their are clearly labelled as such (or you ask).

 

From all this, I can only conclude that people demonstrate little preference for privacy features relative to other features these days. Political regulations would impose an opportunity cost of more desirable features, thereby making people worse off. Even if privacy became a priority for customers, there is no theory or evidence to suggest that government involvement would improve the competitive process or bring any net benefit.

 

PS: I talked about privacy without defining it. In reality it is not a single feature. In a way, many privacy features are already widely implemented: your account is password protected, and your search history, emails and personal information are not published in the open.

PPS: Even from an ethical angle, the notion of privacy “rights” is silly. First, such rights would be incompatible with rights to property and contractual agreements. Second, people tend to avoid services that violate their rights (this is not like unsolicited email, or spam, because users choose to use the products that have tracking built in). Third, I suspect people should be more worried by government’s surveillance programs than that of advertisers.

 

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