Why Amazon's Data Usage Doesnt Scare People - But Facebook's and Google's Does

We understand that all of the big tech companies know a lot about us. Some probably know more about what we are likely to do than we do ourselves. And their cousins in finance, retail and consumer goods are catching up fast. 

But when it comes to how this knowledge - or concern - influences institutional brand and reputation, there are dramatic differences in customer attitudes based more perception than on actual behavior.

The US government, for instance, is in the digital equivalent of a 'time out' familiar to any three year old. Its data-hoovering transgressions have added to an already staggering lack of trust. It must be admitted that much of this decrease was purposely engendered by politicians hoping to score points with voters already so inclined - and the government was responding to an acknowledged external security threat - but the omnivorous nature of the gleaning and the self-righteous posturing in its defense have not enhanced brand value that would enable further initiatives in support of its mission.

Facebook and Google have, as the following article explains, also developed reputations as enterprises that view your data as their data (and their data is also their data), to be used as they see fit. At some point the belief grew that this strategy had less to do with providing the consumer with additional services and convenience and a lot more to do with generating profits for themselves. Online search and social connections are accepted aspects of contemporary life but these companies have engendered a lingering concern that the uses of the information may not be entirely consistent with customer preferences.

Amazon, meanwhile, continues to receive a free pass, the peer-despised student who wins the teacher's approval, despite chronic transgressions when she is not looking. Amazon has not been as overt about its data use intentions - and has kept the customer benefits in the forefront of its marketing. Whether it can continue to differentiate itself in this way remains to be seen: as the financial pressure to perform becomes more intensive, the demands to render data into profits will become more persistent. As a result, the enterprise's ability to exercise prudence in knowledge management will diminish - and the institutional imperative may well diverge further from trends in societal acceptance. JL

Nadia Tuma and Laura Simpson report in Advertising Age:

When it comes to data, it's not how much data companies have, it's what they do with it.
For the most part, we've accepted the new reality that a lot of companies have a whole lot of data about us. And, thanks to Edward Snowden, Americans now know that the Government is officially the biggest brother of them all.If we explore consumer attitudes toward specific brands, the usual suspects of Facebook and Twitter still top the corporate charts of perceived privacy threats.
Meanwhile, the folks who perceive Google as a threat has jumped to 32% in 2013 from 18% in 2011. Once viewed as the friendliest information-organizer on the planet, now the average consumer is increasingly aware of just how many areas of their lives are touched by Google products, from Gmail to search to maps to Google Plus. And in 2012, Google changed its privacy policy so it could combine the information it collects from different sources -- arguably making it the world's most powerful collector of data.
But as scrutiny of Silicon Valley intensifies, there's a data giant that seems remarkably resilient in the privacy shakedown. Amazon, which has buckets of powerful purchasing information, is not only the most admired company in the privacy research, but the level of admiration leapt to 47% in 2013 from 34% in 2011. Indeed, only 7% of American consumers regard Amazon as a threat in privacy terms.
The truth is, consumers trust Amazon and this trust translates into consumer affection. It's this love and affection that insulates the brand in privacy and security conversations. As a consumer in our focus group stated, "Every time I see that green tick security sign, it's like a child's lolly . . . I just can't resist."
There is a simple distinction in the consumer mind when it comes to these companies: Facebook and Google are seen to "own" my data, while Amazon "uses" my data. The enduring power of sentences like "customers who bought this item also bought" and "recommendations for you" has convinced people that their data is being consistently and simply used for their own good (even if it might be bad for the pocketbook!). On the other hand, when talking about Facebook, Twitter and Google, consumers use language like "taking" and "owning" my data. It's not that their data is being used today in a way that upsets them; it's the belief, rightly or wrongly, that it is being stored for some future, unspecified purpose.
And yet, as we enter a whole new era of data convergence, it will be interesting to see if Amazon can maintain this insulation. Amazon and Facebook recently announced a partnership that would offer users a personalized Amazon page, where people could see product recommendations influenced by friends as well as their own tastes. The partnership means that, with permission, Facebook would now have access to key pieces of data, and could quantify the effect of social recommendations to sales figures. As powerful data partnerships become de rigueur, all companies need to get ahead of the game in terms of how they compensate consumers for the data they are sharing.
It's well known that people are more willing to give up personal information if they receive benefits in return, most commonly expressed as discounts or deals. But as companies increasingly compete to access consumer data, companies need to recognize that not all compensation is created equal.
For example, image database Foap has created a platform that invites consumers to upload their photos, which could be featured in a brand's ad campaign. Consumers are financially compensated but, beyond that, feel a kinship to and trust for the brand that has chosen to showcase their work.
At the top of the ladder, some compensation is so intrinsic that consumers believe that it helps them to be a better person. Health and fitness apps and products like Nike Fuelband have led the way here. WebMD recently launched WebMD Pregnancy App -- a free service that helps people "Keep Track Every Day, Until That Special Day." Women input the intimate details of their bodies and, according to the company, more than half of the women who use the app spend over an hour a week getting or sharing pregnancy facts. The difference between these companies' services, and the Facebooks and Googles of the world, is that consumers do not even think of this process as explicitly "giving up their data". Rather, consumers perceive the service to provide such an invaluable benefit to their lives, it doesn't feel as if they are giving up personal data in the traditional sense.
Companies like Amazon have so far navigated this environment successfully, serving as a role model in creating strong relationships with their customers. But as consumers continue to demand more in return for their data, Amazon will need to evolve its strategy to match those expectations. People metabolize benefits quickly and the brands that are more imaginative in providing deeper personal benefits will break away from the pack and lead the data conversation. Many brands publish a privacy policy, but the next phase in data innovation will require a deeper privacy philosophy as well.