Businesses stressing benefits of 'big data' to consumers will gain most from their projects, says expert

Information law specialist Marc Dautlich of Pinsent Masons, the law firm behind Out-Law.com, said that a recent opinion by a group of EU privacy watchdogs had underlined obstacles in data protection legislation but was short on practical guidance for busy practitioners. One way through this is intelligent focus on ways to incentivise consumers to permit their data to be used in big data projects, he said.

Earlier this month the Article 29 Working Party, a committee made up of representatives from each EU national data protection authority, said that companies "almost always" require individuals' "free, specific, informed and unambiguous 'opt-in' consent" in order to use data they have previously collected about them in new big data projects that involve analysing or predicting their "personal preferences, behaviour and attitudes". 

The Working Party defined 'big data' as organisations' extensive analysis of "gigantic digital datasets" using computer algorithms with a view to better understand and exploit data for the purpose of making "better and more informed decisions". 

Eddie Short, the head of data and analytics at accountancy firm KPMG, recently said that many companies were struggling to "extract real value" from the data they have collected. He said firms should make use of data analytics in a way that "highlights what products and services need to be stopped or improved to delight customers and consumers".

Dautlich said that there were already examples of firms making the most of the information they have about consumers in new big data projects, but said that one thing to take away from the Article 29 Working Party's opinion is the need for firms pursuing big data initiatives to focus on ways to provide consumers with incentives to allow their data to be re-used.

"The Working Party has made it quite clear that organisations who wish to re-use personal data they have collected from individuals for the purpose of direct marketing, behavioural advertising or other profiling in big data projects need to invest some resources in promoting the benefits of these activities to consumers," Dautlich said. "Firms in some cases will not be able simply to rely on consent given previously by individuals for the use of their data where the purpose outlined for the initial collection of that data was different."

"As a result, it will be the businesses that best convey to consumers how they can benefit by permitting the use of their personal information in big data projects that will themselves glean the most insights from those projects. Big data offers companies seemingly limitless opportunities to understand more about consumer habits and trends and to make better informed business decisions as a result, but firms risk being left behind in that regard if they cannot convince consumers of the benefits of engaging by allowing their data to be used," he added.

Dautlich drew attention to Tesco as an example of a company using data it has collected to its commercial advantage but at the same time offering consumers a "genuine incentive" to engage with the product.

Last month Tesco announced the launch of a new online TV and movie service for its 'Clubcard' users. At the time it said that it would sell Clubcard data - information about shoppers' in-store purchases - to advertisers in order that the service could be used for free. Advertisers would then be able serve personalised ads to Clubcard users based on their purchasing habits recorded through the use of the card in order to target consumers who had bought rival products, whilst the information could also reveal whether particular advertising campaigns prompted shoppers into buying their products, according to a report by the Financial Times.

Dautlich said that the concept of 'big data' often involved global data flows. He said firms have to recognise that data they want to piece together may either be located, or be sourced, from different jurisdictions and therefore they need to structure these projects at the outset with data protection in mind so that, for example, informed decisions are made about which jurisdiction to host the data in.

Whilst privacy issues relating to the use of big data have dominated headlines, Dautlich previously told Out-Law.com that other fundamental issues relating to intellectual property rights and competition law must be considered by businesses before they engage in big data projects.