Are Privacy Fears Causing Consumer Trust in Mobile Services to Plunge?

In a word, yes.

The larger question is whether the issue is actually privacy, as it is commonly understood, or more about control of the information, how it is used - and who benefits. JL

Chris O'Brien reports in Venture Beat:

Only 20 percent (of consumers) said they are willing to share richer “contextual” data, (i.e., location, browsing history, and shopping habits.). The impact of brands having access to contextual data has eroded consumer trust and experience to date. Brands and operators must now achieve a balance of driving both value and trust along the mobile journey
Casting a spotlight on the immense challenges confronting the mobile industry, a new report shows that a range of security and privacy issues have dramatically eroded consumer confidence.
According to the study released at the Mobile World Congress in Barcelona by Syniverse, a mobile enterprise communications company, about 50 percent of consumers report that their trust in brands and mobile operators has dropped. Overall, more than 70 percent of consumers say they don’t trust mobile-related businesses to safeguard their private information.
This reluctance on the part of consumers comes just as the mobile industry itself is facing a big transition. After years of runaway growth in smartphone handsets and tablets, device sales are cooling this year, and the industry needs to find other ways to monetize its audience.

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The most obvious route is offering new services that spark increased usage and consumption among the current user base in order to generate new ad dollars and possibly subscription revenue. But those efforts could be severely undercut if users are reluctant to share the personal information that could be necessary to make such services useful, the report says.
“Using big-data elements – like demographics, location and interaction history – to personalize services and target promotions is critical to emerging mobile business models and sophisticated brand engagement strategies,” Mary Clark, chief marketing officer for Syniverse says in the report. “Success assumes consumers will willingly share personal data in return for more personalized services and more relevant offers along their mobile journey. This assumption is wrong: Consumers are far from ‘willing.’ ”
The study focused on consumer attitudes in eight countries: U.S., Brazil, India, China, South Korea, Germany, and France.
Across the board, consumers said they were increasingly concerned about issues like transparency, security, and the ability to control the use of their data.
Only 40 percent of consumers said they would “reluctantly share basic personal data (age, gender, and name)” with brands and mobile operators. And far fewer, only 20 percent, said they are willing to share richer “contextual” data, (i.e., location, browsing history, and shopping habits.)
The report comes after several years of high-profile hacking incidents, as well as ongoing revelations related to the leaks by Edward Snowden about government snooping.
If there is a bright spot for mobile companies in all of this, it is that consumers did indicate in the survey that they would like more personalization in their services — providing the appropriate controls and safeguards are in place.
“The impact of brands having access to contextual data has eroded consumer trust and experience to date,” Clark says in the report. “Brands and operators must now achieve a balance of driving both value and trust along the mobile journey.”