The Unintended Consequence of Efficiency

The Internet along with our iPads, Kindles, Androids, iPhones, laptops, etc. have made our lives infinitely more efficient over the last several years.  Twitter and Facebook give us access to information we didn’t even know we needed.  And who needs an encyclopedia when we have Google search and Wikipedia. We can do almost EVERYTHING virtually through technology – communicate, shop, learn, bank, pay bills, manage investments, etc. and the list goes ON and ON.  Our lives have been made immeasurably easier by our access to technology, almost to the point that we cannot function without it.  Most would agree that this has been a positive step forward and the “intended consequence” of creating efficiency has been accomplished.  BUT I would argue that the unintended consequence of having our entire lives exposed to the world is one that is rarely discussed and can have some serious and even devastating implications.

In an article titled “Google Defends New Privacy Policy” by The Wall Street Journal, it is apparent that we are being constantly monitored and followed when we use any Google product (and don’t we all?).  According to Google, this is being done to make our lives easier, not to mention making Google infinitely richer through increased advertising dollars.  What many users translate this into is receiving targeted ads every time you go to the internet – annoying but not necessarily devastating.  Right?  Wrong!  You are clearly being followed just as if someone was stalking you in a shopping mall.  It is an invasion of privacy and is pretty darn scary.

An article came out yesterday in Business Week entitled “Microsoft Ads Bid to Capitalize on Google Privacy Backlash”.  In the article, Microsoft Corp. is aiming to take advantage of a backlash against Google’s privacy policy changes by rolling out new ads that say its rival is risking users’ privacy to squeeze more revenue out of them.  Will Microsoft really be any better?

Facebook, by the way, may soon be facing the same issue.  In an article in the Daily Caller entitled “Facebook Surrenders Its Privacy In IPO Documents”,  Facebook  openly admits that it has concerns that both the U.S.  and Europe may impose tougher privacy rules that would make it more difficult for the company to stockpile information about its users.  Everyone is doing it!!!

So what does all this mean for the user?  Be careful!!!  In our eagerness to share excessive amounts of personal information from our daily/hourly goings-on in Facebook to our everyday (don’t even think about it anymore) transactions, we are opening ourselves to Trouble (yes, with a capital T).   Many negative unintended consequences such as cyber bullying, robberies, cheating, identity theft, reputation bashing, etc. are all a result of making our lives more “efficient”.  As a recent victim of one of these unintended consequences, identity theft, I can tell you that trying to fix the problem FAR exceeds the efficiency that was initially created.  By the way, my problems were not caused by a local hooligan but by a VERY sharp hacker (most likely tens of thousands of miles away) that helped himself to ALL my personal informationBut for the internet, I would never have crossed paths with this individual (this is an assumption since this person will most likely never be caught).  As a result, I have fallen back to the good old U.S. mail, writing checks that actually require a signature and no longer do any “transactions” on-line.  Inefficient maybe, safer YES!

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Up Close and Personal?

The March 2nd edition of The Chicago Tribune had a short article that really caught my attention.  The Supreme Court’s ruling in FCC vs. AT&T was, in a somewhat surprising outcome, unanimous agreement that corporations are not protected by a right to “personal privacy”.  While a discussion of the various reasons that may have brought conservative and liberal justices to the same conclusion would be really intriguing, I want to focus on some of the implications and risks for businesses.

First, a little more detail about the case.  AT&T was accused of overcharging schools and libraries for internet services.  The charges were investigated by the FCC and the company paid a $500,000 settlement.  Now, some of AT&T’s competitors are seeking release of the documents from that investigation under the Freedom of Information Act (FOIA).  AT&T resisted, using the argument that there is a provision in the law that allows for withholding law enforcement records if they might result in an “unwarranted invasion of personal privacy.”  Basically, the Court said that ‘personal’ does not apply to an impersonal company.

So, what are some of the implications?  First, the immediate (and presumably intended) consequence of the Court’s ruling is that the files generated by ANY investigation of your company by an agency that has police or (I assume) regulatory powers can be obtained by your competitors under FOIA.  That deserves repeating.  Get investigated, whether for criminal or other form of violation and the documentation of the case fair game and must be released if anyone, like another company, requests it under FOIA.

But, wait a minute.  The court just ruled that companies do not have personal rights!  How then does you competitor get to assert a right to information under an act that was designed to help PEOPLE obtain information from GOVERNMENT entities that might want to withhold that information?  First, your competitor may be a “person” under contract law but, according to the Court, your competitor does not have the rights of a person.  Oh, well.  I’m sure the lawyers are all over that and we’ll get another decision in, oh, say 5-7 years to clarify.  Of course, in the meantime, FCC vs. AT&T is the “law of the land” so, for the foreseeable future, you’re at risk.

Oh, and by the way, the right is retroactive.  A competitor can go get the results of investigation into your company’s alleged misdeed that was conducted in 2001, 1991, 1981, etc.  Do you say, “Hey, that was a non-issue.  The whole case was thrown out!”  Don’t count on it.  The ruling says that if a governmental agency holds the information and receives an FOIA request, they have to give it up.  Good luck trying to get ahead of that one before (or after) the spinmeisters have released the story (documented through SEC or FCC, OSHA, EEOC etc. files) as they see it.  Even your efforts to be a good citizen by self-reporting inadvertent violations could back-fire if there’s a record of the investigation.

What about the longer term issues?  What if a competitor wants to get a leg up?  How about an anonymous tip to any regulatory or police agency they can think of?  If agency opens an investigation, they can get their hands on the files.  All it takes is a little convincing that there enough smoke to go looking for a fire.  And, one has to assume that the same rules would apply to any kind of investigation.  So, the results of that audit by a regulatory agency are likely to be open as well. 

Now, I’m sure that most companies would take the high road here and we won’t see a flood of FOIA requests for information that has, in the past, been considered confidential.  But, if we look at what is going on with, for example, WikiLeaks, the potential for a huge negative impact is there.  Again, the issue was not around the requestor’s status.  It was all about whether the company that was investigated should be protected from an “unwarranted invasion of personal privacy”.  So, that disgruntled employee, extreme environmental group, unhappy consumer, or any other individual or organization can now get the goods on you and, of course, send them spinning into cyberspace. 

On final thought.  The Supreme Court reversed a lower court ruling that was based on the definition of “person” included in the FOIA.  The definition specifically includes a “partnership, association or corporation”, similar to the concept of “person” that permeates contract law.  How long a leap is it from the Court’s ruling in this case to a challenge to the broader arena in which the corporation as person is the basis for much of our entire economic system?  As if there weren’t enough drags on the economy!

Is this no big deal, something to think about, or a major sea change for businesses?  Let me know your thoughts.

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