What Data Portability Means for Business

There has been a ton of discussion surrounding data portability in light of Facebook’s decision to bow out of Google Friend Connect and go it alone with their own service. Mike Arrington accurately argues that data portability is the new walled garden. The current race for social networks is to open up their platforms so that they become the “centralized me”; a central control panel that enables me to distribute my information to other places on the web.

What Does This Mean?
While you may look at what is currently going on with social networks and think to yourself that none of this matters to your business, the reality is that it does. It has far reaching implications once all of these details are worked out. The battle that is taking place between social networks and users is the same battle that will be taking place between businesses and consumers. Right now the users are consumers and the social networks are the businesses.

What is being played out is the future of a consumer’s interaction with that business. In the future I want to be able to walk into a store and the sales people and computers in that store to know who I am. Why do I want this? Well, I want a better sales experience. Once I leave the store though, I don’t want that store to be able to contact me or store any of my personal information.

At the least, if they have a way to contact me, I want to be able to have the control to turn off their ability to contact me in the future.

The Conflict of Interests
While some businesses may live by the motto “the consumer is always right”, traditional businesses do not want to give up what was previously ownership of consumer data in perpetuity. The old sales model was to figure out a way to incentivize you to provide as much personal data as possible. The best example I can think of is the old boxes they used to put in restaurants that tell you to “fill out this form and get a chance at a trip around the world.”

Within days somebody would contact you and try to sell you a timeshare. Depending on what you said to the sales representative, your information would go into different stacks on their desk: hot lead, warm lead, cold lead. Would they trash the lead? Definitely not! A cold lead is always better than no leads at all. This is business. This is sales.

Contrast this with data portability. Imagine those leads simply disappearing off the sales representative’s desk because the consumer simply want s their data back. That means that the consumer has control over the sales cycle, not the sales team.

Data Portability Removes the Incentive
One of the primary reasons that you enter your personal information on Facebook or any other website is because it helps to provide a more custom tailored experience that’s personal to you. What Facebook Connect, MySpace Data Availability and Google Friend Connect does is enable some of your experience to be custom tailored without having to register.

This means that the incentive for a user to register is reduced substantially because they don’t need to register for your site to have a personalized experience. This is great for Facebook and MySpace because they become the center of your identity and get to own your most personal data no matter what. Google gets access to some of this data by default through their Friend Connect service.

While these new systems are great for organization’s sake, they don’t really help out the businesses that you currently interact with. Companies now need to try harder to get your personal information. While you could argue that the businesses still win because they get page views which help them earn more advertising dollars, the reality is that not all businesses simply make money from you visiting their website.

At some point you need to register because registering helps that company build their database and get value from the user. Could you see a sales guy who’s stack of leads starts disappearing from his desk because the users “wanted their data back”? That’s what data portability provides. While it makes a lot of sense for the consumer, it doesn’t make much sense for the business and that’s why businesses don’t want it to happen.

A Counter-Argument
While walking around a mall you can always walk into a store, take a look and walk out without ever having to interact with a sales staff again. On the internet you frequently are forced into registering for a site without being able to take a walk around and check out the goods. The new services provided by Facebook, MySpace and Google all help the consumer by enabling you to have a custom experience on the website without registering.

In essence you are checking out the goods before you buy. This empowers the consumer and it’s good for both parties. The business also gets access to data that they previously wouldn’t have had access to. At least now they can know who’s visiting their site (or store) while they’re visiting.

Conclusion
All consumers will one day have the power to control what businesses get access to what data. Right now, Facebook, MySpace and Google are battling to be the companies that enable you to control that data. While this isn’t true data portability it is a step in the right discussion and at least the debate is taking place.

While you don’t need to be part of the discussion, it is a good idea to be part of it because one day data portability will be impacting your business no matter what type of presence your business has (virtual or physical).