Date: Wed, 27 Oct 93 17:20:18 EST Errors-To: Comp-privacy Error Handler From: Computer Privacy Digest Moderator To: Comp-privacy@PICA.ARMY.MIL Subject: Computer Privacy Digest V3#065 Computer Privacy Digest Wed, 27 Oct 93 Volume 3 : Issue: 065 Today's Topics: Moderator: Dennis G. Rears (3 of 3)/Why Privacy Issues Arise More Frequently The Computer Privacy Digest is a forum for discussion on the effect of technology on privacy. The digest is moderated and gatewayed into the USENET newsgroup comp.society.privacy (Moderated). Submissions should be sent to comp-privacy@pica.army.mil and administrative requests to comp-privacy-request@pica.army.mil. Back issues are available via anonymous ftp on ftp.pica.army.mil [129.139.160.133]. ---------------------------------------------------------------------- From: Rob Kling Subject: (3 of 3)/Why Privacy Issues Arise More Frequently Newsgroups: alt.privacy,comp.society.privacy Date: 27 Oct 93 05:27:58 GMT Computer-based information systems can be used in a myriad of ways that help organizations with huge clienteles better manage these relationships. For example, in 1991 American Express announced the purchase of two CM-5 parallel supercomputers from Thinking Machines, Inc. which it will probably use to analyze cardholders' purchasing patterns (Markoff, 1991). American Express' purchase of these two multimillion dollar computers illustrates how the conjunction of large-scale database technology and information capitalism tilts the social system to emphasizing private enterprise values over libertarian values. While American Express is an innovator in experimenting with parallel supercomputing for market research, other firms which manage huge numbers of indirect social relationships with their customers will follow suit as the price/performance of these computers, the quality of the systems software, and the technical knowhow for using them all improve in the next decades. These styles of computer use systematically advance private enterprise values at the expense of libertarian values. In order to help organizations manage their relationships with a large population of clients with whom they often have indirect social relationships, organizations increasingly rely upon formal records systems. Today's computerized systems provide much finer grained information about people's lifestyles and whereabouts than was readily available in earlier record systems. While these data system primarily serve the specific transaction for which the customer provides information, it is increasingly common for computerized systems with personal data to serve multiple secondary uses, such as marketing and policing. Organizations using information capitalist strategies are increasingly seeking out entrepreneurs who are able to supply personal data for secondary uses. The emergence of "data brokers" is the most obvious example of this trend. Large HMO's seeking to cut costs by obtaining fine-grained information about potential clients turn to data brokers such as the Medical Information Bureau to fill their data appetites. Many other organizations that collect personal information as a by-product of their core activities, such as phone companies or airlines, have the ability to offer profitable data collection services for other information capitalist enterprises. During the last two decades, direct mail marketing and precision marketing have gotten big boosts through new techniques for identifying potential customers,(Culnan, 1992). In the early 1990s Lotus Development Corporation was planning to sell a CD-based database, Marketplace:Households, which contained household marketing data provided by an Equifax Marketing Decision Systems Inc., which is affiliated with a large credit agency, Equifax Inc. The data base would have given anyone with a Macintosh access to data on more than 120 million Americans obtained from Equifax. Lotus MarketPlace:Household provided marketers with detailed portraits of households so would be easier to ascertain where to send direct mail and what places are the best for telemarketing. All names came encrypted on the disk, and users were required to purchase an access code and use a 'metering' system to pay for new groups of addresses to search (Levy, 1991). Lotus attempted to reduce privacy problems by omitting phone numbers and credit ratings from MarketPlace:Household and by selling the data only to those who could prove they ran legitimate businesses. The street address could be printed only on paper and not on a computer screen. These measures did not adequately assure many people. Lotus withdrew Marketplace:Household in 1991 after it received over 30,000 complaints from consumers. Some industry observers speculated that Lotus withdrew Marketplaces:Household because its upper managers feared that bad publicity and consumer backlash could harm its sales of other software. Lotus did, however, release a companion product, Marketplace:Business, which characterizes business purchasing patterns, through a licensing arrangement. Lotus MarketPlace is an interesting kind of information product which illustrates another face of information capitalism, since it would be sold to small business which could more readily afford microcomputing. These users of Lotus MarketPlace: Household would have a new resource to help expand their own use of information capitalist marketing strategies. The particular computer platform for a product like Lotus MarketPlace: Household has some consequences for personal privacy. For example, it would be much easier to rapidly and consistently remove records of objecting consumers from a centralized database than from hundreds of thousands of CDs of various vintage scattered throughout thousands of offices around the country. Consequently, another firm which provides a mainframe-based version of Marketplace Household might face less resistance. Further, if the firm didn't risk loss of business from consumer complaints, they might tough out a wave of initial complaints. Thus, a credit reporting firm like Equifax or TRW might offer a variant mainframe-based version of Marketplace:Household. Debates about whether certain computerized systems should be implemented typically reveal major conflicts between Civil Libertarians on the one hand, and those who value the preeminence of Private Enterprise or Statist values on the other. Any particular computerized system is likely to advance some of these values at the expense of the others. Many socially complex information systems are enmeshed in a matrix of competing social values, and none is value free. Problems for the people about whom records are kept arise under a variety of circumstances, e.g., when the records about people are inaccurate and they are unfairly denied a loan, a job, or housing. Large-scale record systems (with millions of records) there are bound to be inaccuracies. But people have few rights to inspect or correct records about them -- except for credit records. During the last 30 years, people have consistently lost significant control over records about them. Increasingly, courts have ruled that records about a person belong to the organization which collects the data, and the person to whom they apply cannot restrict their use. Consequently, inaccurate police records, medical records, and employment histories can harm people without their explicit knowledge about why they are having trouble getting a job, a loan, or medical insurance. New ways of doing business and relatively weal legal protections -- taken together with computerized systems of personal records -- have reduced people's control over information about their personal affairs. On the other hand, representatives of those private firms and government agencies that have an interest in expanding their computerized information systems frequently argue hard against legal limits, or substantial accountability to people about whom records are kept. They deny that problems exist, or they argue that the reported problems are exaggerated in importance. And they argue that proposed regulations are either too vague or too burdensome, and that new regulations about information systems would do more harm than good. The proponents of unregulated computerization have been wealthy, organized, and aligned with the anti-regulatory sentiments that have dominated U.S. Federal politics during the last 15 years. Consequently, they have effectively blocked many attempts to preserve personal privacy through regulation. In this way many representatives of the computer industry and of firms with massive personal record systems behave similarly to the representatives of automobile firms when they first were asked to face questions about smog. As smog became more visible in major US cities in the 1940s and 1950s, the automobile industry worked hard to argue that there was no link between cars and smog (Krier & Ursin, 1977). First their spokesmen argued that smog was not a systematic phenomenon, then they argued that it was primarily caused by other sources, such as factories. After increases in smog were unequivocally linked to the use of cars, they spent a good deal of energy fighting any regulations which would reduce the pollution emitted by cars. Overall, the automobile industry slowly conceded to reducing smog in a foot dragging pattern which Krier and Ursin, (Krier & Ursin, 1977) characterize as "regulation by least steps." In a similar way the organizations which develop or use personal record keeping systems, behave like the automobile industry in systematically fighting enhanced public protections. The increasing importance of indirect social relationships which we described earlier gives many organizations legitimate interests in using computerized personal records systems to learn about potential or actual clients. These organizations usually act in ways to maintain the largest possible zone of free action for themselves, while downplaying their clients' interests. The spread of larger and more interlinked personal data systems will not automatically provide people with corresponding protections to reduce the risks of these systems in cases of error, inappropriate disclosure, or other problems (Dunlop & Kling, 1991). Information capitalist practices are closely implicated in these policy issues. The history of Federal privacy protections in the US is likely to be continued without a new level of political mobilization which supports new protections. The Privacy Act of 1974 established a Privacy Protection Study Commission, which in 1977 issued a substantial report on its findings and made 155 recommendations to develop "fair information practices". Many of these recommendations gave people the right to know what records are kept about them, to inspect records for accuracy, to correct (or contest) inaccuracies, to be informed when records were transferred from one organization to another, etc. Less than a handful of these proposals were subsequently enacted into Federal Law. Leaders of the computing movements which enable large-scale databases and its associated industry could help reduce the possible reductions of privacy that their applications foster by helping to initiate relevant and responsible privacy protections. However, expecting them to take such initiatives would be futile, since they work within social arrangements that do not reward their reducing their own market opportunities. The commercial firms and public agencies that will utilize surveillance technologies in the next decades face their own contests with their clients and data subjects, and they fight for legal and technological help, rather than hindrance. As a consequence, we expect privacy regulation in the next two decades to be similarly lax to the previous two decades. While the public is becoming sensitized to privacy as a mobilizing issue, it doesn't have the salience and energizing quality of recent issues like tax reduction, abortion, or even environmental pollution. Conclusions Information capitalism is our term for a set of management practices that encourage the use of data-intensive techniques and computerization as key strategic resources of corporate production. The basis of these practices is to be found in some of the major social transformations of the past 100 years in industrialized society: the increasing mobility of populations, the growth of nationwide organizations, and the increasing importance of indirect social relationships. The key link between information capitalism and the new digital technologies that support large-scale databases lies in the possibilities for enhanced information processing that it provides to analysts whose managerial strategies profit from significant advances in computational speed or in maintaining huge databases. We find it especially important to examine the institutional aspects of developing surveillance technologies. The information capitalist model argues that coalitions within organizations actively pursuing data-intensive strategies are a key driver of our society's increasing surveillance of indirect social relationships. Attempts to introduce products such as Lotus Marketplace:Household, srvices such as Caller ID telephones, and media such as interactive television are difficult to understand only as methods of improve bureaucratic efficiency or managing environmental uncertainties. Information capitalists actively pursue strategies that take advantage of broader changes in society and surveillance technology. The creation of strong support for data-intensive management techniques, education, professional mobilization, and career paths is an important driver of information capitalism. The growing importance of indirect social relationships in North American society leads many organizations to seek data about potential and actual clients. Some organizations collect their own data, and some rely upon specialized data brokers to help them construct specialized personal histories pertinent to their specific concern, such as credit worthiness, insurability, employability, criminal culpability, etc. The positive side of these informational strategies are improved organizational efficiencies, novel products, and interesting analytical jobs. However, as a collection, these strategies reduce the privacy of many citizens and can result in excruciating foulups when record keeping errors are propagated from one computer system to another, with little accountability to the person, This paper expands the research agenda about the social dynamics of computerized surveillance systems by focussing the role of information capitalism. Research on the links between information capitalism and surveillance systems could focus upon the managerial practices which make such systems attractive to their promoters. But it also expands the research focus to include the professional worlds of information capitalists -- worldviews, skills, and practices -- that they learn in school and through their diverse professional associations. It expands the focus of research about the development of surveillance systems to study the social movements that help energize them (Kling and Iacono, 1988). References Burnham, David. 1983. 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ACKNOWLEDGEMENTS This paper benefitted from discussions about information capitalism that Rob Kling had with Vijay Gurbaxani, James Katz, Mark Poster, Spencer Olin, and Jeffrey Smith. Mary Culnan and Jeff Smith also provide important insights into the importance of direct mail marketing organizations. My colleague John King has been a continual partner in provocative discussuons about technology and social change for twenty years. ENDNOTES ------------------------------ End of Computer Privacy Digest V3 #065 ******************************