Enter online sites at your own risk

Financial Review

PUBLISHED: 16 Jun 2012

Anna Bernasek 

The saying “don’t trust anyone over 30” came into vogue almost half a century ago. Perhaps now it should be “don’t trust anyone under 30”.

The custodians of our digital lives, the internet’s newly minted billionaires, are shockingly young. But while novel social media and purveyors of big data explode on the internet scene, age-old concerns about individual rights and liberties have not yet been addressed.

A glance at the sharemarket shows how large the impact has been on business. But longer-term effects on society and politics may be even more profound.

No one questions the cleverness of Facebook’s Mark Zuckerberg or Groupon’s Andrew Mason for instance. But as each new wave of twenty-somethings pushes technology into areas never before explored, who is thinking about the long term? Data security looks like an early warning sign.

Earlier this month LinkedIn, a respected professional networking site, reported the theft of more than 6 million user passwords. In itself that’s not too big a shock. Getting hacked is par for the course for many companies these days. The thing about stolen passwords, though, is that many people use the same password for lots of things. An errant message on LinkedIn is one thing, but a financial or medical intrusion would be quite another. And in LinkedIn’s case what surprised the experts was a minimal approach to data security.

Since the theft, LinkedIn says it has upgraded security. Many of the costs arising from the glitch won’t be borne by LinkedIn, though. LinkedIn’s users and the websites and businesses they frequent are poised to spend countless hours sorting out a potential mess.

LinkedIn isn’t alone. Other social networking sites, such as the online dating site eHarmony, have also reported bulk password theft. The internet is an ecosystem based on trust, so a problem in one area can affect many others.

Then there’s Facebook. A disastrous initial public offering left the company and its top managers looking greedy. The ensuing scrutiny put the company under a bigger spotlight and cracks are showing.

Facebook’s day-to-day business practices are raising eyebrows. Some users are getting an unwelcome surprise when they click the “like” button connected to a product. They find their name and photo appearing in an online ad promoting somebody else’s business. Had they read the Facebook user agreement, of course, this would have been no surprise. But show me someone who has the time to read the online user agreements they sign up for.

Even reading those agreements might not help. You’d probably need a lawyer to understand them. So, even if you read it, the user agreement would still be a farce, since it’s not as if you can change it.
In the long run, of course, these things tend to work out. Unreasonable user agreements will eventually give way to customer-friendly ones. But to be useful today, the agreements need to be clear and understandable, which they’re generally not.

With hundreds of networking, search and email sites, the problem is multiplied. The ever-expanding web of legal rights and relationships is too complex for an individual to cope with. Users simply don’t understand what they are getting into. Some have even found themselves in physical danger.

The latest case involves Skout, a social networking app designed for “flirting” between adults. When Skout figured out that children were using its site, they developed a separate service restricted to 13 to 17-year-olds. But adults managed to pose as teenagers, and now there are three cases of child rape associated with Skout.

The internet is nothing if not dynamic, with thousands of social experiments happening in real time. But the business model followed by many internet entrepreneurs raises red flags. It works something like this. First, figure out how to apply technology to something people want. Next, offer it for free with seemingly no strings attached. Then, after you build up millions of followers, spring the trap. Hold their data and relationships hostage as you exploit their trust for your commercial gain.

If you are lucky enough to get to critical mass, most users won’t leave because they don’t know how to get everyone else to go with them. Companies build up just enough trust to hook people in, but then they start consuming that asset. In many ways the internet looks like a get-rich-quick scheme where some prosper but leave much of the hard work to others.

So far internet companies have had a free pass on some big issues. Whether it’s sales tax, ownership of sensitive information, or data security, internet companies aren’t paying all their freight. Yet until the public and policymakers catch up, users are practically on their own. Maybe sites should be required to come with a warning: enter at your own risk.