Companies need to be more wary of the customer and the law.
On the Internet, few phrases carry the cachet of off the shelf cynicism towards free services. "If you're not paying for it, you're the product," is now a mantra of the faux-maverick, shrieked in haste before a retreat to Reddit to revise anti-corporate prejudice.
The trouble is that companies often fuel this complaint, as Facebook and OkCupid have recently proved. While the social network tweaked feeds based on keywords to see how it affected users' emotions, the dating site falsified its matching algorithm to test if made any difference to user's behaviour.
The reaction of Kashmir Hill, senior online editor at Forbes, was common: "Facebook wanted users to have crappy days for science; OkCupid hoped they'd have crappy dates for science. What else are companies doing to us for the sake of experimentation?"
For a journalist from a respected business publication, the complacency should raise some eyebrows. What business has not, in one form or another, experimented on its customers? From changing shop displays to altering menus, firms have always been working out how to get the most money from customers. So what has changed?
It's all in the numbers
The answer has something to do with data. Whereas a business would have had to use copious manpower to record and amalgamate information in the past, on the internet these things are collected routinely. Even a Wordpress blogger can sign up to Google Analytics and follow her users through the pages of her site.
It's obvious why businesses would want this sort of information. Ecommerce sites can use it to recommend items to its customers, while search engines can try to make their search results more relevant. In the colloquial sense all of this counts as an experiment.
Yet some see a disparity between the above and what Facebook did. James Grimmelmann, professor of law at the University of Maryland, said: "Whatever you think of Facebook's ordinary marketing-driven A/B testing is one thing: what you think of it when it hops the fence into Common Rule-regulated HSR (human subjects research) is quite another."
He argues that the study was "experimental" because the participants were treated differently from one another, but it also happens that Facebook's study was co-authored by academics from Cornell University in New York and the University of California, San Francisco, which both receive federal funding.
"This study is a scandal because it brought Facebook's troubling practices into a realm -- academia -- where we still have standards of treating people with dignity and serving the common good," Grimmelmann added. He argues that we should expect more from companies like Facebook, and has even written to the Federal Trade Commission asking that they investigate.
The customer is king
But what the legal profession makes of the matter is arguably less important than what consumers think. A recent survey of WhatsApp messenger users by research firm GlobalWebIndex found that three-quarters thought Facebook had not right to use their personal information to sell advertising. A quarter even said they would "think twice" about using the app following its acquisition by Facebook.
"An astounding majority of users see the usage of their data to make money as something inherently unjust despite their provision of free services," said Fernando Troyano, founder and chief executive of Quack! Messenger, a rival of WhatsApp which commissioned the research. Three-quarters of those surveyed also thought companies should share the profits made from selling data and serving adverts, something that Quack already does.
Some might argue that users already are paid through the services that they use for free, but not everyone will see it that way. Either way Quack's gimmick is indicative of a general trend treating data as a commodity in itself, an idea that is increasingly capturing the attentions of supreme courts in the US and Europe.
But some take another view still. Writing in December 2012, Derek Powazek, head of product at Exposure, argued that the link between payment and treatment was irrelevant. "What matters is how companies demonstrate their respect for their customers. We should hold their feet to the fire when they demonstrate a lack of respect."
In general he believes the important thing is for companies to communicated properly with their customers, and for customers to make educated decisions about which companies to trust. That sounds almost too much to hope for, and no doubt many anti-corporate activists will feel the same way.
But the brazenness of OkCupid's announcement partially confirms Powazek's thesis. Building a trustworthy brand should be the goal of any company regardless of the rules, and openness is likely the only way to marry big data with an honest reputation.
Source: Company Press Release
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