As first seen in the Forbes Tech Council Newsletter, Jul 5, 2024.
By: Sean McElroy, Chief Risk and Security Officer, Lumin Digital.
In today’s digital economy, data privacy has become more than just a regulatory requirement—it’s a strategic differentiator. As companies increasingly integrate AI into their operations, the way they handle customer data can significantly impact their competitive edge. Prioritizing privacy can lead to numerous benefits, from enhanced customer trust to a stronger brand reputation, ultimately catalyzing business growth.
The Privacy landscape In the AI era
Integrating AI into business processes has revolutionized industries by enabling unprecedented efficiency, personalization and innovation. Increasingly, AI has been appearing in cloud services and consumer devices, from Apple Intelligence to Microsoft Windows Recall for Copilot+ PCs.
However, this evolution comes with heightened concerns about data privacy. AI systems thrive on vast amounts of data, often collected from users, raising questions about how this data is stored, used and protected. Unfortunately, moving fast usually comes with breaking things, and there have been several high-profile gaffes involving Slack’s training of AI models on user content and accusations that OpenAI appropriated Scarlett Johansson’s voice in ChatGPT-4o.
Consumers today are more aware of their data rights than ever, as troubling surveillance technologies are increasingly deployed and paired with AI tools and as data breaches persist in the news cycle. Individuals already lament the asymmetric tradeoff between the marginal benefits of technology improvements and the erosion of their privacy. However, there are ways to build digital relationships without alienating customers or wading into legal gray areas—namely, using data privacy as your superpower.
Privacy as a unique selling proposition
Privacy has emerged as a unique selling proposition in a landscape where data breaches can severely damage a company’s reputation and bottom line. Increasingly, consumers are aware that companies collect, store, use and share far more information than they need to, which creates significant risks. By embedding privacy into their core business strategies, companies can differentiate themselves from competitors that may overlook or under-prioritize data protection and minimization.
Building customer trust
Trust is a crucial component of customer loyalty. Customers who know a company values and protects their personal information will likely engage with its services and share their data. This trust is essential in AI applications, where data-driven insights are used to personalize user experiences. A commitment to privacy reassures customers that their data is safe, fostering long-term relationships.
Enhancing brand reputation
A robust privacy posture enhances a company’s brand reputation. Businesses known for their strong data protection measures are viewed more favorably by consumers, partners and investors. Apple, famously, has built privacy protections into the core of its brand strategy for its mobile devices and online services. More than promises, Apple uses privacy-enhancing technologies like end-to-end encryption and differential privacy to enhance its reputation as both an innovator and being respectful of end users.
By positioning themselves as privacy leaders, companies can attract privacy-conscious customers and partners, gaining a competitive edge in the market.
Regulatory compliance and risk mitigation
Compliance with privacy regulations is not just about avoiding fines; it’s about mitigating risks associated with data breaches and other privacy incidents. Regulatory compliance ensures that companies adhere to best practices in data protection, reducing the likelihood of costly data breaches and the legal repercussions that follow. Moreover, demonstrating compliance can be a powerful marketing tool, showcasing a company’s commitment to upholding high data privacy standards.
Privacy by design
A balanced approach called privacy by design (PbD) informs companies how to create and sustain a competitive advantage by putting people and trust front and center in the face of rapidly developing technologies. Core tenants of the PbD approach revolve not around recognizing data as the most valuable asset but relationships. Relationships thrive on being proactive and designing for human experience where respect for individuals comes first.
In terms of AI, this means embedding privacy into the design of systems so that privacy becomes the default setting, both for model training and model use. For model training, developers must take special care to ensure that adversaries cannot exfiltrate personal data used to train a model—a feature that can provide a summary with personal details, behaviors or habits of another can inflict serious privacy harm.
For model use, users should opt in to such experiences, which means they must never masquerade themselves as a natural person on the other end of a chat prompt. Authentic choice engenders respect; without respect, there can be no trust. Hiring privacy engineers who operate at the unique junction of technology, privacy, and value creation can help an organization build competency without a firm falling into the trope of “putting all the data into a model” and taking a gamble on consequences and benefits.
Privacy as a differentiator
Even today, some consider privacy a compliance-based activity because of the rapid pace of international and state laws and some focus only on antiquated concepts of notice and consent rather than individual choice. However, privacy is not about compliance but the personal choice of how one’s information is treated and respected.
Privacy can be a unique selling proposition, especially in fields where competitors rush to weave AI into every product screen and press release. Delivering privacy is not zero-cost, but it is net-positive when you can demonstrate a thoughtful approach to balancing emerging and exciting technologies with principled design and people-first consideration. Committing to a roadmap that prioritizes privacy exhibits ethical values. It also demonstrates a mastery of AI and other technologies beyond any hype cycle by considering the long-term value and prioritizing the needs of clients and consumers.
Conclusion
In the age of AI, data privacy is not just a legal obligation or hollow term; it’s a strategic approach to building a competitive advantage. Companies prioritizing privacy can build trust, enhance their brand reputation and gain an edge. By embedding privacy into their AI initiatives, businesses can navigate the complexities of the digital landscape while fostering growth and innovation. Privacy, ultimately, is not just about compliance—it’s about building a sustainable and trustworthy future in the digital age.
