Dec 21, 2018

Your corner store could be Congress' next privacy challenge

A shopper browses the aisles of an Amazon Go store. Photo: Stephen Brashear/Getty Images

In crafting new privacy laws to cover tech giants' vast appetite for user data, lawmakers are finding that they're having to draw up new rules for the old-fashioned brick-and-mortar world, too.

Why it matters: Consumer data is now the most valuable asset for nearly all companies — not just digital ones. Most large businesses operate simultaneously in both realms, and the boundaries between data's use online and offline have blurred.

The big picture: Consumers understand that Google and Facebook track them, but the same kind of profiling increasingly happens in the physical world — from facial recognition at Taylor Swift concerts to Amazon's cashier-less convenience store. Any new privacy law will have to reckon with questions about transparency and consumer choice not only in apps and on websites but as we walk through stores and drive down streets. 

By the numbers: Companies across the economy gather data on consumers in the physical world for a wide range of business purposes.

  • Euclid, which tracks customers who go to physical stores by connecting with their smartphones, announced this summer that its database had crossed the 120 million active devices mark.
  • Over the next 3 years, Amazon is considering building as many as 3,000 of its Amazon Go convenience stores, which use hundreds of cameras to let customers take items off the shelf and buy them without ever interacting with a cashier, per Bloomberg. (The company reportedly doesn't use facial recognition software to run the stores.)
  • Relentless Recovery, a company featured in a Washington Post article earlier this year, reportedly used scanner technology to read 28 million license plates in 2017 as it looked for vehicles to repossess.

Offline data collection can then be merged with online targeting — and nowhere is this more evident than with location data.

  • “It’s not a coincidence that when you’re in Walmart they’re showing you a Dove ad," said Serge Matta, the president of location tracking firm GroundTruth, at an Axios event earlier this year.
  • “A lot of people, admittedly so, will think this is a bit creepy," he said later.

Why you'll hear about this again: Federal lawmakers are under pressure to write a national privacy law, spurred on by data scandals at Facebook and Google.

  • Industry also hopes that Congress will supersede a new California privacy law before it goes into effect in 2020. Other states are expected to write their own rules, too.

Lawmakers said in recent weeks that they were still figuring out how to make sure their work could apply outside the bounds of the web:

  • Sen. Jerry Moran (R-Kansas) said that examples of offline data collection show this is a "broader issue than the big tech companies that are so at the forefront of the conversation" and a reminder of "how difficult it is for us to craft legislation that covers all circumstances."
  • "I’ve been asking my staff, what happens if you are in a brick-and-mortar location, but the data collection is through devices and on the cloud — is that online data collection?" Sen. Brian Schatz (D-Hawaii) told reporters last week while introducing his own privacy bill. "And I’m just going to be blunt and say I’m not really sure yet who this would apply to and who not."

One solution would be to leave the details to the Federal Trade Commission or another agency — but some lawmakers will likely want Congress to offer regulators more guidance.

Harlan Yu, the Executive Director of Upturn who has studied the use of body-worn cameras, said that it is safe to assume that data collection in the brick-and-mortar world "is just going to grow larger over the coming years."

  • "Cameras are used for everything now," said Michael Suswal, the COO and co-founder of Standard Cognition, which builds technology that lets consumers buy items in a store and check out without dealing with a person. "Video is the new data.”
  • Suswal said regulations were a good thing for tech companies but urged lawmakers to make sure they understood the technology they were dealing with. (Standard Cognition says its technology doesn't link individual shoppers with their identities.)

The bottom line: "To the extent that these problems are difficult to address online, it’s even more difficult to address privacy issues offline," said Yu.

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