Companies reliant on consumer data are at risk

Companies with business models reliant on the increasing quantity and scope of consumer data are at risk if public ambivalence about data privacy turns to opposition, according to a report prepared by Cornerstone Capital Group.

Taxonomy of data and consumer perceptions

“As policymakers and consumers struggle with data privacy issues, investors need frameworks to understand both the different ways companies monetize personal data and the business risks those business models face,” said Jon Lukomnik, IRRCi executive director. “Given the recent data scandals and the soaring level of concern around data privacy issues, investors are increasingly wary about how companies will evolve business strategies reliant on consumer data. As expectations for privacy shifts, some companies will flounder, and others will flourish.”

Several emerging trends are raising the issue of data privacy as a strategic and operational concern for companies and investors. This report:

• Identifies key regulatory, technological and behavioral trends that will drive societal response to concerns about data privacy
• Outlines four possible regulatory and consumer expectation scenarios that will impact companies
• Examines the business models relating to the gathering, use and sharing of personal data for eight case-study companies, including: Alphabet, Amazon, American Express, AT&T, Facebook, MasterCard, Twitter, and Walmart
• Provides a general framework for investors to monitor the impact of evolving attitudes toward data privacy on companies, plus an overview of emerging data-privacy solutions.

“The ambiguity of the current data privacy environment is unsustainable, and investors need to understand how social and governance issues like data privacy impact company performances,” said John Wilson, Cornerstone’s head of research and corporate governance. “As data privacy concerns rapidly evolve, investors need to evaluate how well the company’s governance is positioned to manage changing norms, expectations and regulations that may affect access to data, stakeholder trust and, ultimately, company strategy.”