CES 2019: Can brands be trusted in the data age?
From the massive Marriott breach to Facebook's many missteps, consumers in 2018 were given plenty of reason to worry about their online information. Given the trends in data collection revealed at this year's CES, the public may have only more reason for concern this year.
"Built on the foundations of the digital age, we're fast approaching the data age of consumer technology," Steve Koenig, VP of market research for the Consumer Technology Association, said at the start of the consumer electronics show in Las Vegas.
More and more decisions -- made by both consumers and businesses -- "are backed up, supported and informed by data," he said. "Data is going to be the common denominator."
It's easy to write off privacy and security concerns, given the robust growth of many data-hungry businesses. For instance, 74.2 million Americans are expected to use a smart speaker in 2019, according to eMarketer -- up 15 percent over last year. More than 63 percent of smart speaker users will use an Amazon Echo, while 31 percent will use a Google Home.
At the same time, consumers and public advocates are starting to push back against the most egregious data practices. The question now is whether businesses can rein in the practices that have gotten them in trouble, and whether they can earn their customers' trust, before the problem reaches a boiling point.
"We are really at an inflection point in terms of how the consumer is thinking about technology today," Kathy Sheehan, EVP of Consumer Life for GfK, said at CES this week. Looking back, she said, 2018 will be considered "one of those pivotal years of reassessment."
The market for digital assistants offers some insight into how the issue is affecting business, she said. In the last few years, the original barriers to purchase -- such as cost and lack of product knowledge -- have greatly diminished, according to GfK's latest data. At the same time, barriers around security and privacy are starting to increase. Privacy is now the top barrier for the adoption of digital home assistants in the United States, the market research firm says.
Eight out of 10 people say they're concerned about their social media footprint, while 17 percent of global consumers cite personal information falling into the wrong hands as a "top personal concern." While 17 percent may not seem high, the figure has been going up "steadily and significantly over the last decade," Sheehan said. "We would anticipate this becomes more of a concern" moving forward, she added.
This concern correlates with a larger erosion of trust, GfK's data shows. People are increasingly distrustful of large organizations like governments and religious institutions. "The flip side of this is trust is something people are seeking more than they have in the past," Sheehan said.
In 2018, 44 percent of global consumers said they agreed with the statement, "I only buy products or services from a trusted brand." That's up from just 28 percent in 2011, according to GfK.
IBM CEO Ginni Rometty broached the issue in her CES keynote speech, where she touted IBM's ability to help businesses scour "deep data" -- the granular data that often goes uncollected. Even the bend of your fingernails can help inform doctors and researchers about your health, she noted.
Rometty announced that the IBM-owned Weather Company will be using crowdsourced sensor data to improve local weather forecasting globally. This weather forecasting model will run every hour, every three kilometers across the globe, based on barometric pressure from cell phones -- "with consent from the user," she said. The announcement came just a few days after the city of Los Angeles filed a lawsuit against the IBM-owned company behind the Weather Channel app for "covertly mining" user data.
As she showcased the ways IBM is pushing technology forward, Rometty stressed that trust will be a "competitive differentiator."
Another major CES exhibitor, Sleep Number, also recently learned a hard lesson about customer trust. The full-body sensors in the Sleep Number 360 Smart Bed measure a customer's movement, breathing rates, heartbeat and sleep habits. Sleep Number now collects more than 8.5 billion full-body biometric data points every night -- giving it the largest database of consumer biometric data in the world, Sleep Number says. The data enables the bed to adjust its firmness to meet a user's needs, and on the macro level, it informs Sleep Number's product research. But it also created a communications headache for the brand last year.
In November, not long after Sleep Number converted its entire product lineup to 360 Smart Beds, speculation began circulating online that the beds contained hidden microphones. The was not true, Sleep Number said, and updated the language in its privacy policy that sparked the rumors.
"It was a great opportunity to talk about the importance and safety and protection of each individual's data," Sleep Number CEO Shelly Ibach told ZDNet. The company looks at data in the aggregate, she said, but "each indvidual owns their own personal data."
Data protection, Ibach said, was one reason Sleep Number in 2015 acquired the biometric sensor company behind its Sleep IQ technology -- "so we have certainty over the protection of that data."
As the company started integrating more technology into its lineup, it also made efforts to preserve customer trust through stronger one-on-one relationships, Ibach said. In 2009, for instance, the company stopped selling its products through third parties.
"As we move forward as a company, our relationship is directly with our customers," she said. "It's not about working with a bunch of companies. When you work with Sleep Number, it's us all the way through. It's our customer service, our home delivery team, our software engineers, our ownership of the sleep IQ platform."
Sleep Number's approach, as Ibach described it, doesn't really fit in with the vision of an "ecosystem of connected devices" typically espoused by the technology sector and industry leaders integrating their products.
But as we move into the data age, businesses will have to let go of some of the hype related to cloud computing and open ecosystems, suggested Gary Brotman, senior director of product management for Qualcomm. On a panel at CES, Brotman explained why Qualcomm is focused heavily on on-device AI, to "optimize compute capabilities so AI algorithms can run independently..without the need for the cloud to be in the mix."
"You won't want to have to share biometric data... with a third party that's not necessary," Brotman said.
As products evolve to offer more built-in protection, and as companies like Sleep Number adjust their market strategies, consumers are also in a stage of transition -- they're learning more about data risks and how to protect themselves. This has opened up an opportunity for the insurance company Allstate, which was at CES to showcase its new "digital footprint" product. The product helps consumers understand which companies have collected their information. Over time, it will also help them understand what kinds of information those companies have.
Allstate is new to the digital space, but the product fits in with the company's core mission of "helping protect consumers from life's uncertainties," according to Emily Snell, president of the Allstate-owned InfoArmor. Uses proprietary algorithms, Snell told ZDNet, the digital footprint product effectively scrapes the internet to find all of a customer's online accounts.
According to Allstate's research, the average consumer thinks they have 50 or fewer online accounts -- when in reality, the average is 152.
"Consumers are knowingly and unknowingly giving up personal information to providers of products and services," Snell said. "Our goal is to help them see it, understand it, and have more control."
The product will be offered as an employee benefit as part of its PrivacyArmor offerings, and it will come with a variety of educational tools. Customers can even get fake phishing emails to keep them on their toes. Snell said that Allstate won't share or monetize the information it gathers for the digital footprint product in any way.
Ultimately, Snell said, data management will have to be a shared responsibility, "between the businesses collecting information, consumers knowing what they're giving up, and other companies like Allstate advocating on behalf of consumers."
"When you get behind the wheel of a car you understand" the risks, she said. "Today when people go online or share data, they don't understand the risks or how to navigate the experience."