Boom Dot Bust
By Glen Emerson Morris
As the comedy group the Firesign Theatre observed in their recent parody of e-commerce, a CD aptly titled Doom Dot Bust, what goes boom will eventually go bust. Judging from Amazon.com's recent revision of its privacy policy, one of the biggest busts in Internet history may be about to happen.
Amazon recently changed its privacy policy to allow it to classify as an asset everything it can find out about users (previous users who requested privacy still have privacy guarantees.) The reason for this policy change is that Amazon, estimated by some to run out of cash in two quarters, wants to have all the assets it can to sell in case it goes under. The policy change has brought howls of protest from consumer privacy groups like EPIC (Electronic Privacy Information Center) and Junkbusters, and a significant consumer backlash seems unavoidable.
Amazon's unpopular move is in response to a recent court decision preventing an online toy store from selling its consumer information database in bankruptcy proceedings. The court ruled that the sale would have violated the stores posted privacy policy, though it would not have violated current law if the stores privacy policy had stated otherwise. Amazon's move will allow it to legally sell nearly everything it knows about nearly everyone who uses it if it goes under, and that is a very substantial amount of information.
There are going to be two major consumer backlashes if Amazon continues this policy and goes under. The first backlash, consumers against Amazon, is already underway. The second backlash, consumers against current privacy law, will happen after the Amazon consumer database is sold and the inevitable consumer horror stories that result become public.
This is more than a remote possibility. Amazon's database includes sensitive information that could have profound effects on some people's lives--if it fell in to the wrong hands. In addition to recording everything people looks at on their site, Amazon solicits significant personal information that it makes available only to "trusted" friends of the consumer. Well, if Amazon does go under, millions of Americans will soon find one of their most trusted friends goes under the name "highest bidder."
Most likely, Amazon's database will be purchased by someone who will resell it, name by name, to hundreds of businesses. Given the millions on names involved here, and the kind of data, some horror stories are statistically inevitable. Some people who read gay magazines will find health coverage hard to get. Some people who read politically incorrect books will find it hard to get jobs. And some of these incidents will get the attention of an alarmed press. If the business magazines are worried about Amazon's privacy policy, how upset will the general press be with this once they understand it?
This is just the kind of angle the press loves to exploit; people betrayed by technology supposed to help them. At one point, millions of people provided Amazon with sensitive information about themselves in order to buy products tailored just for them. Now, there is an excellent chance that some businesses, attempting to tailor their consumer base "just for themselves," will use supposedly confidential information to decline consumers service, health care, even jobs.
Will most consumers risk gaining a little short-term convenience for an unknown long-term cost? Probably not, and that has serious implications for e-commerce.
One of the biggest gold mines in the Internet era has been the information online businesses have been able to collect about their customers. The brick and mortar bookstore may be able to track sales, but it can't track what customers look at when they're in the store. Amazon.com can, and it can customize the book displays to the consumer's buying habits, significantly increasing the odds of making sales.
Until now, consumers have passively allowed themselves to be tracked on the Internet by failing to take readily available technical or political actions to protect their privacy. The scale of disaster Amazon might cause going under could just be enough to set of a massive consumer call for stricter privacy laws, and possibly even worse, make them stop accepting cookies.
While privacy laws would ultimately prove to be just be an inconvenience for e-commerce, millions of consumers disabling cookies in their Internet browsers would result in online purchasing being disabled at most e-com Websites, at least until they were significantly reprogrammed. Collectively, the costs could easily run into hundreds of millions of dollars, possibly billions, and the reprogramming would take months to complete. Also gone with the cookies would be the ability of businesses to track what consumers looked at while at their Websites. It's harder to put a price tag on this one, but it's a major feature of e-commerce. Unfortunately, it's a feature consumers could disable with a mouse click.
All consumers have to do to turn off cookies is to change a setting in their Internet Explorer or Netscape browsers. Most consumers don't really understand what a cookie is, how cookies are used to track them, or how easy it is to turn cookies off. A single paragraph in a newspaper article could explain it to them, and if Amazon goes down, there could be a number human interest "loss of privacy destroyed my life" type newspaper articles with paragraphs about cookies in them. The Web would be full of them.
Most online businesses use the information they collect about their customers in a ways that don't harm their customers' careers or social standing. Unfortunately, most isn't the same as all. Ultimately, most businesses will have to live with laws written to contain the excesses of a few. It's not going to take too many Amazon.com scale disasters, where major, and highly publicized, privacy breaches occur before the average consumer has a completely different attitude about privacy.
The collapse of Amazon.com, if it happens, could be more than a landmark case of the e-commerce boom gone bust. It could also mark the beginning of a cycle where information, once freely and copiously supplied to businesses by millions of consumers, slows to a trickle. The consumer information boom may just be about to go bust.
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