The Privacy Advantage 2016 - Amit Pau

© Proprietary & Confidential – Ariadne Capital

The Consumer is the legal owner of their data

Privacy: The Competitive Advantage29th April 2016

Amit Pau, Managing Director, Ariadne Capital

@AriadneCap@Encountry@amit_pau

Agenda – The Consumer is the legal owner of their data

2© Proprietary & Confidential – Ariadne Capital

GAFA – Gang of Four 3

Hernando De Soto Polar 4

Changing your business model 5

Data ownership 6

Mobile & Consumer Trust: Why it Matters 7

Can you build a business case for Consumer trust?

10

The identity framework 11

Consumer insights on trust 12

A framework for trust-based services: GDPR

15

GAFA – Gang of Four

281.8

306.1 479.5 538.6

Market capitalisation ($bn)

*Source: Thomson Reuters. Stock prices as of 28/04/2016.

1,606

Combined market capitalisation

The combined market capitalisation* of these companies is higher than Spain’s GDP for 2015, which reached the level of

c.$1.42tn**.**Source: World Bank

3

Property Rights – Hernando De Soto Polar

De Soto assigned property rights to Peruvian farmers and demonstrated that behaviour changed as a result.

“When people have assets, they can build wealth. Data is the most fundamental asset.”

4

Shape your industry by changing your business modelEverything is network-based, not linear – Everything is Multi-stakeholder

Company’s ability to shape industry dynamics

Company marketpower increases

Company valuationincreases

Step 1Micro

Step 2 Step 3Macro

Business model/Transaction

Goliath/David

Partnership

Building Net New

Revenue

Industry > EcosystemDistribution > Platform With Network Effects

5

Individuals should own their own data – it’s a question of timing

“We believe that consumers are going to take ownership of information about themselves and demand value in exchange for it. As a result, negotiating with consumers for information will become costly and complex. That process has already begun to unfold, but it could take several years to play out across broad segments of customers and products.” – John Hagel

https://hbr.org/1997/01/the-coming-battle-for-customer-information: A version of this article appeared in the January–February 1997 issue of Harvard Business Review. John Hagel III is Founder and Chairman of the Deloitte Center for the Edge, a research centre based in Silicon Valley.

6

https://hbr.org/1997/01/the-coming-battle-for-customer-information

https://hbr.org/1997/01/the-coming-battle-for-customer-information

https://hbr.org/archive-toc/3971

http://www.deloitte.com/view/en_US/us/industries/Technology/8dfff75d99efd110VgnVCM100000ba42f00aRCRD.htm

http://www.deloitte.com/view/en_US/us/Insights/centers/centers-center-for-edge/index.htm

http://www.deloitte.com/view/en_US/us/Insights/centers/centers-center-for-edge/index.htm


Mobile & Consumer Trust: Why it Matters

2016



2005 2016 2020

Connected Cars

Connected HomesInternet of

ThingsRobotics

Health Tech

EdTech

Monetised Big Data


7.5 billion 3.7 billionGlobal mobile connections Unique global mobile users


Can you build a business case for consumer trust?


$33 million settlement; 75,000 consumers’ data breached. Includes $100 compensation payment to each consumer37 million users’ data hacked and published

36 million users’ data hacked and published including 3.1 million user’s credit card data15 million consumers’ data leaked through Experian credit searches2.4 million customers’ data and 90,000 credit card details hacked and published

And many, many more…

$1.5 billion in fines for LIBOR rigging

$18.7 billion in fines for Deepwater Horizon

Maximum potential US fines $90 billion

The identity framework


“Identity will be the most valuable commodity for citizens in the future, and it

will exist primarily online.” The New Digital Age, E. Schmidt & J. Cohen

• Ariadne Capital’s research has identified Identity-as-a-Service as a $1.5 trillion ecosystem.

• The mobile operators are at the heart of the IaaS ecosystem.

• For users, coming online means coming into possession of multiple in the physical and virtual worlds.

• Organizations will have to discover their own formula of existing in both worlds, and how they will leverage the best and worst of what each world has to offer in the digital age.

• The number of people connected to the Internet worldwide increased from 350 million to more than 2 billion – first decade of the 21st century.

• The number of mobile-phone subscribers rose from 750 million to 7.5 billion over the same period.

• Those that can best navigate this new multi-dimensional world will find themselves ahead in the business landscape.

Consumer insights on trust


78% 62%Of consumers think it’s hard to trust

companies when it comes to the use of their personal data

Of consumers are concerned that information provided for one purpose is

used for another purpose

67% 44%Of consumers believe that companies

and agencies ask for too much personal info

Of consumers trust MNOs to protect their personal data

Survey data sources – World Economic Forum

$30Cost of customer acquisition based on

Facebook’s $19 billion valuation of WhatsApp with its 600 million uses

91%Of consumers want to be in control of

their data

“Consumers are legal owners of their data”



• Happy to share everything about themselves in public and online

Exhibitionists

• Lobby and intensely worry about privacy in all aspects

Privacy zealots

• This group has always had concerns, but mostly not sufficient to warranty action that takes any effort.

• It is a balanced view of effort vs. risk.

The mainstrea

mPreviously privacy zealots were concerned with widespread data use by governments, data breaches in companies and retargeting. In recent times, thanks to high profile cases of major companies’ data breaches, the Edward Snowden & Angela Merkel cases, the sleeping mainstream has awoken. Concern is being shared by all.



"Unconcerned"/"Trusting"

"Fundamentalists"/"Cautious"

"Pragmatists"/"Rationalists"

0 10 20 30 40 50 60

16

31

53

22

24

54

16

49

33

DataIQ % 2015 % 2012 %

For comparison – DMA & DataIQ

Sources: DMA, “What the consumer really thinks,” 2015 v 2012; DataIQ GDPR Impact research series



Governments are creating regulatory frameworks:

• Safe Harbour Privacy Pact• European Court of Justice’s recent ruling• EU data protection laws (GDPR)• Fines of up to 4% of global revenue for offenders

At the same time, consumers are themselves taking things into their own hands: • 63% of consumers refuse to ever sign into apps using

Facebook Connect – eshewing the convenience of single sign in because of fears of their own and their friends’ privacy

• The use of ad blockers has grown 44% year on year. The ad industry has paid the price for using essentially free ad delivery to not care what the response rate is – oblivious to how much the wrong message can upset consumers

© Proprietary & Confidential – Ariadne Capital


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Push Marketing

PullRelevance

Consumer Commerce

Make and Save

MoneyMake it

Easy

LegislationConsumer Data Awareness

Disruptive Models

Save Me Money/Time

Protect My Data

Context andSupport Me

Be ThereBe Useful

Control My Experience

Collect/Store

My Data

Own and Sell My Data

Create Shareholde

r ValueReward Me

for My Loyalty

Reduce Liability

DataTransfer

ThirdParty Data

If unsure of your data and impact of the GDPR we recommend you undertake a thorough audit with a specialist such as DQM GRC



The most significant rule to change:• The Individual’s data is

owned by him/her• It has an anticipatory

status as a legal asset and actor. Its value is recognised in an economic upside to the Individual in all his/her transactions as a citizen in the country

Ariadne Capital & EntrepreneurCountry Global call the economy which stems from this game—change: The Personal Economy

How will consumers be rewarded for their data in the Personal Economy?

Business model/Transaction

Ariadne Capital Amit Pau

Managing DirectorAriadne Capital Ltd

Mobile: +44 (0) 7792 943 596Direct: +44 (0) 203 021 [email protected]

www.ariadnecapital.comwww.entrepreneurcountryglobal.com

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