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Is the market for protected personal information about to take off?
Feb 23rd 2013 | REDWOOD CITY, CALIFORNIA |From the print edition
EMBARRASSING pictures on Facebook show you dancing the hula naked at a frat
party. A convicted bank robber in Texas has the same name as you as every
Google search makes all too clear. Such embarrassments would surely never
befall you, dear reader. But they are common enough to spawn an entire business
devoted to protecting and polishing people s image online. Reputation.com, a
Silicon Valley technology firm, is hoping that this year the market will
finally fulfil its potential.
Reputation has 1.6m customers. For $99 a year or more they get a basic
reputation starter package, which monitors when they are mentioned online and
alerts them if anything sensitive comes up, such as your real age, name,
address, mugshots, legal disputes or marital problems . For $5,000 a year, the
firm will combat misleading or inaccurate links from your top search results
(most people do not look at results much below the top page or two).
The problem has been to create a profitable business. Although there has long
been evidence of growing unease about online privacy, getting anyone to pay for
greater control of their image has proved difficult. A lot of companies have
started with idealism about empowering the online user, only to find that the
user wouldn t pay, says Esther Dyson, a technology investor, who nonetheless
remains optimistic that this will change.
Michael Fertik, Reputation s 34-year-old founder, thinks the change is now
happening, helped along by several recent deals. In January Reputation acquired
Reputation 24/7, a British competitor. It also began a partnership with
Equifax, one of America s big three consumer-credit monitoring firms, offering
Equifax s customers free access to Reputation s basic online
identity-monitoring and clean-up services. TransUnion Interactive, a competitor
of Equifax, will roll out a similar arrangement with Reputation in the spring.
The next step is to launch a data vault like a bank vault containing all the
data that constitute a person s reputation. It is the most important step in Mr
Fertik s idea not merely to give people more power over their data but to
invert the basic business model of the internet . The current business model,
as he describes it, is that giant firms give customers something free, collect
data on them without their knowledge and sell it to third parties to do with
whatever they like. We want to turn it on its head, by [letting] the consumer
decide if they want to sell information about themselves to companies that want
to get to know them.
The upstart firms face some technology problems. Reputation is making progress
in some areas, such as how to ensure the person whose online presence is being
monitored is actually the person you think he or she is. But the biggest
challenge is to find enough buyers and sellers to create a marketplace
potentially worth billions. Mr Fertik reckons critical mass will come at around
10m individual customers and around 50 companies keen to pay for access to
their data vaults.
Not everyone is convinced consumers will go for this. One boss at Microsoft
argues that most people will find managing personal data too complex and that
in practice online privacy will be secured by regulation, not products. In the
past couple of years more firms have started to accept that personal data will
be protected more strongly than before, whether by regulation which is likely
to be tightened in Europe and America or through market mechanisms like those
envisaged by Mr Fertik. Indeed, the data vault may usher in the sort of
market-based solutions that might discourage heavier regulation by Congress,
where protecting privacy is one of the few genuinely bipartisan causes, says
Jon Leibowitz, the (outgoing) chairman of America s Federal Trade Commission.
Reputation.com is very far ahead of the curve in trying to give consumers some
control over their data, he adds.
Reputation is not alone, though. It competes with a host of start-ups, from
personal.com to mydex. Another firm, Snapchat, is tackling the problem at its
source by allowing people to send photos to friends that erase themselves
shortly after being viewed. Some big firms, including banks and maybe even
current internet giants, will probably enter the new market. Some may even
offer to buy Reputation. Mr Fertik is not fazed. His firm has the advantage of
that most valuable thing, which it must protect at all costs: a good
reputation.
From the print edition: Business