Privacy Concerns Limit Growth of Online Commerce

REDMOND, Wash., Dec. 8, 2000 — Those who believe that privacy issues are nothing more than a mild headache in the information revolution have misdiagnosed the problem, according to a top technology analyst. Public concern about privacy is more like a migraine with
“serious pain that will keep coming back,”
John McCarthy of Forrester Research said yesterday at SafeNet 2000.

During his keynote at SafeNet 2000, John McCarthy of Forrester Research emphasizes the need to better address Internet privacy issues, which still prevent many consumers from shopping online.

McCarthy told the gathering of 225 top security and privacy leaders at Microsoft’s Redmond campus,
“It’s a big issue that if we don’t address is going to cause all of us huge headaches.”

McCarthy offered the second keynote speech on the first day of the two-day summit, organized and hosted by Microsoft to seek solutions to high-tech security and privacy problems in the Internet age.

McCarthy said a large percentage of the public is worried about privacy issues, so much so that many are not willing to shop over the Internet. Those who do are limiting their online business.

Although U.S. consumer spending over the Internet should continue to grow rapidly, from almost $45 billion this year to nearly $270 billion in 2005, the growth would be considerably greater if not for privacy concerns, McCarthy said.

He noted that more than 35 million households made online purchases this year, but about half curtailed their online shopping because of privacy concerns. Another 20 million households refrained entirely from online shopping for the same reason. The annual total in estimated lost sales: $12.2 billion.

“Even when we focused on those online for four years or more, over half of them still have serious reservations about their privacy on the Web,”
McCarthy said.
“Consumers are spooked. Don’t kid yourselves.”

Many to Blame for Privacy Concerns

Unsolicited online advertising and mail has played a major role in fueling privacy concerns among online users who receive this so called
after giving out their email address. New technologies, such as wireless tracking in cellular phones, will only increase these concerns, McCarthy said.

He also blamed each of the groups in attendance at SafeNet, including online businesses, advocates, technology companies, lawmakers and regulators, for contributing to the problem in different ways. For example, he faulted online businesses for making
“unwarranted fishing trips”
for information, privacy advocates for offering
“Chicken Little”
scenarios, and lawmakers for a lack of understanding about high-tech privacy issues.

Despite their concerns, only about 12 percent of online users are willing to pay to keep their information private.
“Consumers see their personal information as a right that is worth government protection,”
McCarthy said.

He predicted increased government intervention into high-tech privacy, but also warned of a growing
“hodge podge”
of regulations that raise business costs and increase confusion over security.

“The privacy issue,”
McCarthy reiterated,
“is not going away any time soon.”

Related Posts