Our Internet privacy is at risk -- but not dead (yet)

Legislation, stealth technologies, and emerging data privacy markets are proving that the battle for our Internet privacy has only just begun

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These free tools probably won't stop the NSA from spying on you, but they can help keep marketers and others from tracking your virtual movements and compiling profiles of your interests and habits.

The problem? These tools are at best inconvenient and at worst a total hassle. Many websites don't play nicely with them. Searching anonymously removes much of the personalization people have come to expect from Google and Bing. Surfing the Net via an IP proxy service can be painfully slow. And you'll have to set up these tools for every browser on every connected device you use -- desktop, laptop, tablet, and phone.

"What we need is a single download that lets you surf the Net in a more secure manner," says Gabriel Weinberg, founder of DuckDuckGo. "I don't think we have to get to 100 percent privacy. If we can get to 90 percent without sacrificing too much, that might be the sweet spot." 

No company has yet to package all of these tools into a single platform that's simple enough for the average user, admits Andy Sudbury, CTO and co-founder of Abine. And the companies best positioned to build a privacy-by-design system -- Microsoft, Apple, and Google -- are all in the data collection business.

Still, he notes, privacy is going mainstream. Products like DoNotTrackMe are being bundled with security suites from companies like Avira and Checkpoint. Enhanced privacy is becoming the default setting in popular browsers like Internet Explorer, Mozilla Firefox, and Apple's Safari -- though not without a lot of pushback from the online advertising industry.

"Privacy today is similar to how security was in the late 1990s," Sudbury says. "In the old days setting up a firewall was pretty complicated. Then Zone Alarm came along. Now every user running a Windows machine has a firewall built in. I honestly believe that in five years we'll have more control over our personal information than we do today."

The personal data economy: Putting consumers in control of their privacy

While dozens of small startups struggle to build a business out of privacy, big data collectors are discovering that it pays to offer consumers more control over how their information is used.

Within five to seven years, most consumers will be able to manage their own data, predicts Fatemeh Khatibloo, senior analyst at Forrester Research. They'll be able to log into their accounts, determine what information they're willing to share, who gets to see it, and what they'll get in return for it.

Khatibloo says data collectors and large enterprises will embrace PIDM (personal identity management) for a simple reason: It will save them money. Data breaches have cost companies such as Sony and Epsilon hundreds of millions of dollars. Companies are spending astronomical amounts of money gathering and storing data they don't know what to do with, don't really need, and struggle to keep secure, she says.

Customers in turn will embrace PIDM because it offers them control over their data and something of value in return -- such as targeted offers, free services, and freedom from having to provide the same personal information to dozens of sites.

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