10/15/99

Beware What You Leave On The Net ... Someone's Watching.

Amazon pushes the privacy boundaries .. WHEN Amazon.com started publishing what it innocently calls "purchase circles" on its Web site last month, its aim was to help its customers better understand what books, videos and music people just like them were purchasing.

Little did the Seattle content pedlar imagine it was about to help bring one of the biggest issues in the cyber-economy, consumer privacy, to centre stage.

Purchase circles are a way to aggregate what Amazon knows, from looking at the e-mail and mail addresses of its 12 million customers, about the preferences of large groups of these individuals. Favourite purchases by various customer segments are listed, with buyers sorted by company, university, and geographic location.

A user can learn, for instance, that Madonna's March 1998 album Ray of Light is today's most popular CD at Harvard Business School, while the guys down at Salomon Smith Barney are way long on Tom Wolfe's A Man In Full (perhaps fondly recalling the bond-trading anti-hero of Bonfire of the Vanities).

Amazon's decision to publish this data was daring. One of the great fears of most Internet users is that their personal data will be recorded and later abused: a Forrester Research survey in September this year found 91 per cent of surfers were "very" or "somewhat" concerned about releasing personal data online.

It also created waves among other firms engaged in e-commerce. Within days of the launch of purchase circles, IBM CEO Lou Gerstner reputedly sent Amazon CEO Jeff Bezos a rocket e-mail warning him that privacy and trust were such key issues in e-commerce that publishing the data was madness. IBM has since disappeared from the bunch of companies where employee purchases are made public.

Amazon continues to publish the purchase circles (albeit less prominently). Systematic tracking of user behaviour and purchasing is key to most current business models on the Internet.

Firms hope that by learning more about surfers, overtly or covertly, they can precisely target ads and e-commerce opportunities. Putting cookies onto surfers' browsers and hence building deep profiles of consumer behaviour is a key objective of almost every high-traffic site.

The risk Amazon took in publishing the purchase circles was that it made all this obvious - and potentially raised consumer consciousness over the data exchange increasingly implicit in every foray on to the net.

Already, there are a host of sites and services which attempt to give users the right to protect their surfing patterns and Internet Protocol data (a unique Internet address) from content and advertising providers. The more users realise what data is being collected, the more customers such sites are likely to find.

One site is Anonymizer.com. It charges $US50 ($76) a year for a "proxy server" service that washes out most meaningful data on surfers.

A second service, a Lucent spin-off, allows users to easily create fake profiles at sites where data collection is requested.

A third firm, Zero Knowledge Systems, has a similar product, Freedom. It charges a flat fee of $US50 a year for five online pseudonyms.

Another group of players in this space are the financial institutions jockeying to become the definitive online "wallet".

These firms hope to not only become a single trusted repository for credit card and ordering data but also to help their customers get a better return on their data.

The underlying game for all these firms is to become a trusted third party; first shielding customer data from the big sites and advertising networks that want to collect it, and then hopefully persuading a few customers to release anonymous demographic data on the way through to pay the bills.

This role of "infomediary" - a trusted online guardian of personal data - was first explored by John Hagel, a Silicon Valley partner at the consulting firm McKinsey, in his 1999 book Net Worth.

Hagel's proposition is that a new class of intermediary will arise to shield customer data from content and advertising providers, collecting a fee for that service on the way through. Eventually, he suggests, many consumers would figure out their data was worth far more than the services sites exchange for it. Some sort of transactional arrangement would emerge, where consumers receive a more direct and proportionate return on their data.

Hagel may still turn out to be right but the Internet has not so far turned out this way. Surprisingly, most surfers have proved surprisingly willing to give away all sorts of information for little or nothing.

The biggest beneficiaries so far have been the big advertising players on the Internet - particularly Doubleclick and a bunch of rival firms owned by the Internet conglomerate CMGI.

One of the latter, Engage, boasts that it now has detailed surfing profiles for 30 million individuals stored in its database.

The advantage advertising sites have is they can collect surfing data from cookies on user browsers at every site where they sell ads - in Doubleclick's case, 6400 different locations across the Web.

Eventually, they hope to turn the profiles of interests and behaviour from this tracking into gold.

The less consumers think about this the better. No wonder Amazon's big-noting of its stockpiled data was so unpopular.

By STEPHEN ELLIS.
AUSTRALIAN 14/10/1999