15:30 GMT29 October 2020
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    Digital industries are using user’s personal data through technology to gain competitive advantage. Researchers at the University of Quebec have been looking at a new model of “generic management” which looks at the consequences users face.

    Guillaume Desjardins, an Associate Professor of Industrial Relations at the university spoke to us about this new model and about the safety of our personal data.

    Sputnik: Could you tell me a bit more about the generic management model?

    Guillaume Desjardins: Yes, the model we proposed in 2015, my colleague and I, is a result of the inadequacy of current management models to fully embrace new behaviour of firms in the digital age. So, most business models that we teach or even use today came from the second half of the 20th century, where the internet and technological advances like microprocessing, were not widespread.

    So new market opportunities were enabled by the internet. So we can think for example of marketplace websites like Amazon, or eBay, or social media like Facebook. But however, decision makers and scholars are still relying on Industrial Age models to understand business practices from those new industries. 

    So this results in reports of circumscribed behaviour from firms individually instead of an industry wide practice. So for example, in April last year, a news outlet in the US reported that Amazon will use data gathered by consumer buying from third-party sellers on their platform to create new products. So while we accumulate anecdotal practices, there was no attempt to get a picture of the landscape of those new industries, a generic model that could predict behaviour from behaviour and practices from firms. So this is why we created the first iteration of a generic model. 

    So the key idea of the generic model we proposed is the use of complexity to explain the competitive positioning of firms within an industry. So then the new model can explain why some firms seem to pursue roughly the same strategy while using different practices, including what we do with user data. So for example, we can argue that Amazon Prime video and Netflix are roughly offering the same services that is an internet-based platform where a user can for a subscription fee, watch movies and series. Both firms are getting consumer data from their service.

    However, Amazon is a lot more aggressive with monetisation of user data compared to Netflix. Netflix only used data to improve their in house algorithm, while Amazon used data in a more complex way, which include monetization or targeted ads on their platform for example. So this is why we created the first iteration of our model.

    Sputnik: How does the digital industry use data as a commodity?

    Guillaume Desjardins: Yes, well, apart from industry giants like Amazon or Google that got in-house use of their consumer data, it is mainly marketing and advertising agencies that are interested in selling our data. Their goal is to offer their clients or basically other digital age firms specialised, relevant and real time data on the movement of their market.

    They do that because user information has become vital to firm strategies. This is mainly from consumer behaviour research, as markets in most industries become saturated, firms must strategize to steal market shares from their competitors. And one such strategy is to focus on the consumer experience to offer them personalised products or services as opposed to a generic offer.

    Sputnik: How safe do you think our data is?

    Guillaume Desjardins: Well, this is an interesting challenge because with the internet and globalisation, it is almost impossible to know exactly who has what on us, and especially how they got it. Regarding the security of our data, I'm a little bit pessimistic, because if, for example, Desjardins this a Canadian bank here in 2019 and also Halifax bank in 2017, I think in the USA, had big data leaks and they are financial institutions, I don't have much of that company that have a commercial interest in selling our data will do their utmost to protect it adequately.

    Especially considering that most of the firms that use data as a commodity are not public on the stock market, and therefore are not accountable to anyone. In some cases, we saw data breached with some firms that didn't even encrypt credit card numbers of its users.

    Regarding who can access our data legislation in Europe is way ahead of us in North America regarding online privacy. However, I think that since we do not have a model that can explain or predict practices from firms in the digital age, we are stuck on analysing cases one by one, and decide as a society if we are comfortable with that kind of practice.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

    Tags:
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