Privacy-Enhancing Technologies: The Benefits and Challenges for Tech Giants
Every year, advertisers spend billions of dollars to reach their clients with Google, Meta, Apple, Amazon, and Microsoft — tech giants of the AdTech industry.
However, the collection, storage, and usage of personal data for advertising is regulated by privacy laws.
To help their ad platforms comply with those privacy regulations, the Silicon Valley tycoons are adopting a growing number of privacy-enhancing technologies (PETs).
In this article, we’ll answer the following questions:
What are privacy-enhancing technologies?
What are the benefits of PETs for tech giants?
What challenges do PETs pose for tech giants?
This blog post marks the first in a series of seven articles about how tech giants are adapting their tech stacks to incorporate privacy-enhancing technologies.
To ensure their users’ safety and comply with privacy protection regulations, tech giants are adopting their advertising technology to incorporate privacy-enhancing technologies (PETs).
Implementing PETs can help Big Tech companies comply with privacy laws, mitigate the risk of data breaches, and safely monetise user data.
Challenges of PETs for tech giants include impact on data-driven business models, technological implementation challenges, and limitations regarding user data monetisation.
Why Are Tech Giants Adopting Privacy-Enhancing Technologies?
Legislation, such as GDPR, governs online user privacy and holds a superior position that AdTech companies must comply with. These regulations encompass a range of provisions, including the assurance of data security, the safeguarding of user identities, and the prevention of data breaches, among other measures.
Even though privacy laws prescribe specific rules for the collection, storage, and usage of personal data, when it comes to technological solutions, companies can employ various tools and techniques to ensure user security. Technology giants such as Google, Meta, Amazon, Apple, and Microsoft have embraced privacy-enhancing technologies (PETs) in pursuit of this goal.
From a user’s perspective, the regulations are beneficial, as they enhance their privacy and data protection. On the other hand, those regulations can also be limitations that impact advertising platforms and operations, forcing them to look for optimal tech solutions.
Technology behemoths, which collect large amounts of data, extend their influence in the advertising business through their primary platforms and devices, such as Kindle and Fire TV Stick. Consequently, tech giants actively engage in research and frequently update their products to incorporate privacy-enhancing technologies.
Before delving into the reasons why Big Tech companies adopt PETs, let’s take a moment to review what PETs actually mean.
What Are Privacy-Enhancing Technologies?
Privacy-enhancing technologies (PETs) is an umbrella term for tools, techniques, and protocols designed to protect an individual’s privacy and secure their personal data in various digital environments.
The goal of PETs is to enable individuals to retain control over their data, minimise the collection of sensitive information, and limit access to personal information only to authorised parties.
Some examples of privacy-enhancing technologies include:
Converting plaintext into ciphertext; only authorised parties can decipher a ciphertext back to plaintext and access the original information.
Removing personally identifiable information (PII) from data sets.
Differential privacy (DP)
Adding noise or randomness to data queries.
Secure multi-party computation (MPC)
Enabling parties to jointly perform computations on their data without sharing the raw data itself.
Federated learning (FL)
Training machine learning models across multiple devices without transmitting individual user data to a centralised server.
Privacy-preserving data sharing
Helping organisations share data without exposing the raw data to others.
Private browsing and VPNs
Masking users’ IP addresses and encrypting their internet traffic.
Privacy-focused web browsers
Minimising data collection, tracking, and third-party cookies.
Examples of privacy-enhancing technologies are encryption, anonymisation, differential privacy, multi-party computation, federated learning, and other techniques and technologies that improve user privacy.
Benefits of Privacy-Enhancing Technologies for Tech Giants
Privacy-enhancing technologies are often seen as something of note primarily to users concerned about safeguarding their data. However, it’s essential to recognise that these technologies also substantially benefit tech giants.
Let’s delve into these advantages in greater detail.
Ensuring Regulatory Compliance
Both tech giants and massive online platforms are deeply concerned about adhering to privacy regulations. This means they must ensure that they follow the rules and laws set by governments and regulatory authorities to protect user privacy.
PETs play a crucial role in helping tech giants meet these regulatory standards. By incorporating PETs into their operations, tech giants can align their practices with the legal requirements and, in turn, minimise their exposure to potential penalties and legal complications.
If Silicon Valley giants failed to comply with privacy regulations, they would:
face penalties that could have a significant impact on their financial health;
be subject to lawsuits, legal investigations, and court proceedings, which can be costly and time-consuming;
lose user trust, which could lead to a decline in their user base and potentially damage their brand image.
Google, Meta, Apple, Amazon, and Microsoft face particularly intense scrutiny due to their size and prominence in the tech industry. They are often the focus of regulatory authorities’ attention because of their extensive reach and influence.
Mitigating the Risk of Data Breaches
PETs offer tech giants an effective means to limit the amount of collected and stored data and secure that data. This decreases the inherent liabilities associated with holding vast amounts of personal information. Beyond safeguarding user data, these technologies extend their protective umbrella to shield sensitive corporate data, proprietary algorithms, and intellectual property from potential data breaches and unauthorised access.
The comprehensive protection PETs provide is vital for minimising the potentially devastating consequences of data security breaches, ranging from financial losses to damage to a company’s reputation.
Facilitating User Data Monetization
Privacy-preserving techniques empower tech giants to unlock the value of data without infringing on individual user privacy. This is a significant advantage for advertising and data-driven analysis.
By leveraging PETs, Google, Meta, Apple, Amazon, and Microsoft can help advertisers power ad targeting and share aggregated data insights with third parties, thereby enabling more effective data analysis and targeted advertising campaigns.
Challenges of Privacy-Enhancing Technologies for Tech Giants
Tech giants must comply with various privacy laws, such as obtaining consent to process user data, before implementing privacy-enhancing technologies. Compliance with these regulations reduces the risk of fines, legal issues, and reputational damage resulting from privacy violations.
However, there are several other challenges in this field.
Impact on Data-Driven Business Models
Big Tech companies thrive on data-driven business models that rely on extensive collection and use of user data for advertising and personalisation. The adoption of PETs can limit their ability to collect and utilise user data for these purposes. This may set back their advertising effectiveness, potentially leading to a loss of revenue.
Technological Implementation Challenges
Integrating PETs into existing systems can be technically challenging. Technology tycoons often have complex infrastructure setups, and retrofitting them with privacy-enhancing technologies may lead to compatibility issues, system vulnerabilities, and weaker performance.
User Data Monetisation Limitations
PETs can limit the extent to which tech giants can monetise user data. Sharing aggregated data insights with third parties — a common practice for monetisation — becomes more challenging when PII cannot be used. This restriction may require them to explore alternative revenue streams and business models.
How Are Google, Meta, Apple, Amazon, and Microsoft Adopting Privacy-Enhancing Technologies?
Thank you for taking the time to read our article on privacy-enhancing technologies. We hope it’s helped you understand the benefits and challenges that PETs pose for industry giants and others.
As we’ve said in the beginning, this is the first of a seven-part series on tech giants adapting privacy-enhancing technologies. We’ll be linking to future instalments below once they’re published.
In case you have any questions or comments, feel free to reach out to us. We work across multiple industries to bring a wide range of services to any company in need of digital transformation or business consulting.