Say Goodbye to Your Privacy. You Probably Won't Miss it Much

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You are being watched. It doesn't matter what site this article happens to be posted to. It doesn't even matter if some enterprising sort copied-and-pasted the entire thing and stuck it onto their personal blog for cheap clicks. Modern technology and data analytics have developed so many ways to track you, analyze your behavior, and propose responses that it's begun a fundamental transformation of how people interact with their machines and with each other. Get used to it, because there's no going back.

Tip of the iceberg
I chose this development -- the merger of targeted social advertising, privacy erosion, and data analytics -- as one of the key technology trends of 2012 just two months ago. Since then, there's been ample evidence to support my prediction.

Apple (NAS: AAPL) had a brief kerfluffle over the "Path" app pilfering its users' iPhone address books. Google (NAS: GOOG) changed its privacy policy, began offering users payoffs to install Chrome-based tracking extensions, and acknowledged bypassing privacy settings on Apple's Safari browsers, all in the span of less than a month. Microsoft (NAS: MSFT) took aim at Google's privacy changes with sanctimonious ads, but it's not got a leg to stand on in the fight. Using Kinect, Microsoft plans to create mall ads that offer customized content depending on what type of consumer walks by.

Each of these events got a bit of press, but what's the result? A "Do Not Track" button in Web browsers, agreed to in principle by the browser giants after much wailing and gnashing of teeth. Clicking it won't get you far, since you'll still be fair game if companies feel like doing market research or product development. Loop, meet hole. After all, what's the point of tracking if not to research a market?

Stranger than fiction
The average Web surfer pays minimal attention to the many ways they can be tagged and tracked because it's very rare to see the system laid bare in action. But it can be quite jarring when the veil is lifted. Take Target's (NYS: TGT) efforts to connect to expectant moms.

Through analytics, the company identified the shopping habits of pregnant women, and has been reaching out to them to lock in that critical mommy-shopper segment. Target's even identifying the pregnant before family members do, in some cases! (Although it had to start being subtler, as pre-birth coupon books offering nothing but diapers and baby clothes started freaking out mommies-to-be. Real smooth, Target. The diaper coupons are now wedged in between power drill specials.)

Now let's think about that applied in real time. Microsoft's still working on its Minority Report Kinect-ed advertising, but a spatially sensitive virtual greeter has already popped up in one upscale Toronto store. It's only a start. Location-based advertising is already on the upswing, thanks in part to Groupon (NAS: GRPN) , which recently bought out a location-based targeting software company.

That's great for companies when customers sign up, but "opt-out" seems preferable to "opt in" -- Groupon CEO Andrew Mason doesn't expect location-based sales to be real contributors for a while. He might change his tune if Groupon got a foothold in Kinect-ed ad displays. Hey, you! You look like a fit middle-aged male, and your shoes look uncomfortable. Here's a half-off coupon for some cross trainers!

All eyes on you
A recent Atlantic piece on drone proliferation points out that the feeling of being watched in public could force changes to the way we view privacy itself. It also notes that we don't seem to care much that our every click is dissected, analyzed, and optimized for advertising online.

Perhaps machines saying they know what you want as soon as you enter a store will trigger the necessary visceral repulsion to make people realize they need barriers, but somehow I'm not so sure. Inch by inch, millions (maybe billions) have gotten used to their every move being watched. Many eagerly join in. I often wonder why my friends want to "check in" on social media when they go places, but this is part of the transformation I mentioned earlier. Privacy advocates, despite their efforts, don't speak for the majority. With half a billion people using Facebook every day, it's safe to say there are plenty of people who view privacy as a thing of the past.

Get used to it
It's meaningless to reject companies using these surveillance techniques if they all do it. We might imagine Big Brother when told that the billboard knows our secrets, and recoil in horror from the prospect of 30,000 surveillance drones over American skies by decade's end. By the time real-world tracking technology advances to the point of seamlessness, we'll either be used to it or holed up in our homes doing everything online. As we all know, there's already tracking out the wazoo on the Internet.

The litmus test for investors here boils down to participation. If your chosen companies have anything to do with consumers, how well are they using the tracking and analytical tools available? If companies don't start learning more about their users, they'll probably wind up shut out by those companies that can better reach out. Not every company will have its own system, so the best analytical companies will have plenty of room to expand.

To find out more about one company leading the analytics charge, take a look at this free report. It'll tell you everything you need to know about this company's prospects and how it's changing the way companies use data to reach consumers. Reserve your free copy now while it lasts.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights.

At the time this article was published The Motley Fool owns shares of Apple, Microsoft, and Google.Motley Fool newsletter serviceshave recommended buying shares of Apple, Google, and Microsoft; creating a bull call spread position in Microsoft; and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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