Date: Wed, 27 Oct 93 17:20:18 EST
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From: Computer Privacy Digest Moderator <comp-privacy@PICA.ARMY.MIL>
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
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From: Rob Kling <kling@ics.uci.edu>
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).
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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
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End of Computer Privacy Digest V3 #065
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