The economics of trust in digital services

Our Consumer Openness Index (COI) shows the public is anxious about what lies ahead in their digital futures, about where their data will be stored and how it will be used. They’re unsure as to the privacy of communications they once considered totally secure.

Humanity generates 2.5 quintillion bytes of data every day; it’s no surprise that consumers are starting to wonder where it is all going and who has access to it.

Consumers are increasingly turning away from technologies that don’t respect their data privacy or security. Trust is emerging as a crucial factor for the success of internet service providers (ISPs) to such a degree that it is undermining the established economics of digital services. The companies developing services that do respect this data, however, are building new kinds of trust with their users. ISPs are finding that customers are so appreciative of trustworthy services that sustainable and successful businesses can be built on their loyalty.

Loyalty is an intrinsic human value much like trust and care. We naturally experience these emotions in many ways. But in a business sense, we ascribe great value to the organizations that can understand, respect and protect customers.

Federated and open technological services are crucial for retaining this loyalty, as you show your consumers you respect them enough to facilitate their personal choice of service. Open API’s let customers build their own applications using information from your services, further cementing their loyalty.

Existing business models focus on data monetization. Both venture capital and aggressively targeted advertising revenue depend on the harvesting and sale of data. New advertising models can build on open and secure systems to monetise at lower levels than the likes of Google and Facebook through generic data profiles, rather than personally identifiable information. Combined with built in DNS-based ad-blocking, improved security and privacy constitutes a unique selling point that drives more customers to the service, strengthening revenue over time.

Four out of five internet users agree that everyone should have a fundamental right to privacy, according to our research. Over half of those polled in our COI would stop using a social media site if news of a privacy scandal emerged.  Too often though, our data is jeopardised and our hands are tied — our data can’t leave even if we do. Only by creating alternative solutions, opening up the source code behind these services and giving control back to the users will it be possible to fix what is clearly a broken system. Despite many imperfections, you should only trust open, federation-capable systems or risk being swallowed by a world of insecurity and opaqueness.

As well as lowering costs and providing greater freedoms to consumers, adopting an open source approach is absolutely central for those looking to restore trust. To ensure a commitment to user choice and transparency in the long-term, at Open-Xchange we advocate four key commandments:

1. Any service must be available from many providers

Trust is earned, but can be so easily lost. Using a popular service that is only available from one provider doesn’t necessarily mean that users trust it. What it does mean, is consumers don’t have a choice to make at all. Facebook is certainly an example of this. Should Mark Zuckerberg decide to change the privacy rules to our disadvantage, what choice do we then have? There’s no easy way to migrate our photos, data and contacts effectively.

2. It must be possible to move data between services

Moving from one service to another also requires moving one‘s data. As long as services are based on open standards, like web domains, email contacts or documents, this is relatively easy. But proprietary formats make it impossible to effectively move messaging histories to other services because other software cannot read or manipulate the transferred data.

3. Services must also be available as software 

At some point or another, an organisation may want to in-source its service or run it in a cloud environment, with the necessary firewall and protection to keep sensitive data secure. Services like these must also be available as software.

4. The software should be available in source code to everyone 

Even with the software available, without open-source users cannot have full faith in a supplier not to alter the service. In an open-source environment the supplier is fully transparent about what the system does by showing the world how it works.

These commandments are key to establishing transparency, user privacy and crucially trust at the heart of digital services. In the last three decades the internet has completely revolutionised the way we communicate, work and live. We owe it to future generations to maintain an open and federated digital world. Understanding the economic value of consumer trust is the first step to making this a reality.