Individual privacy should be of concern to investors, if only because it is becoming a trend that is already having an impact on the market.
To be sure, some of the world’s most successful, profitable, and impactful businesses have thrived despite a distinct lack of privacy.
Companies like Google (now Alphabet) and Facebook (now Meta Platforms) use the massive amounts of consumer data at their disposal to cherry-pick advertisements that nudge you to buy something you don’t need but really, really want. This is made possible by consumers agreeing to give up their privacy in order to provide that data.
For a time, few customers seemed to mind, and the market rewarded those businesses. In 2012, Facebook debuted on the Nasdaq with a market capitalization of $60 billion, and by last August, it had risen to more than $1 trillion. Google followed a similar path, beginning with a market capitalization of $23 billion in 2004 and peaking just shy of $2 trillion late last year. They both accomplished this by monetizing consumer data.
In 2017, The Economist declared data to be the most valuable resource in the world, surpassing oil, echoing data scientists’ rallying cry that “data is the new oil.” Consumers, on the other hand, are starting to notice that their information is being pumped out of them. As a result, that data is becoming more difficult to collect and use.
The paradigm is shifting in favor of greater privacy.
