Protecting privacy online - The price of reputation

2013-02-28 09:16:54

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