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Mind your analytics - or get ready for ethical hot water

Katherine Noyes | Oct. 16, 2015
Soon, half of all business ethics violations will arise from the use of big-data analytics, Gartner says.

Big Data
Credit: IDGNS

It's no secret that the implications of big data extend far beyond organizational benefits into the societal and ethical realm, but market researcher Gartner predicts that the improper use of big data analytics will cause half of all business ethics violations by 2018.

Organizations could suffer loss of reputation, wasted resources, competitive weakness and even legal sanctions as a result, Gartner said.

The best-known example in this area may be the oft-told case of Target's pregnancy-prediction algorithm, which led the retail giant to deduce that a 15-year-old girl in Minnesota was expecting a baby. It wasn't until the girl began receiving coupons for baby-related items that her family caught on.

"Many of these violations happen unwittingly," said Alan Duncan, a research director for analytics at Gartner. "We expect to be able to understand behavior by using data as a proxy; what you end up with is a level of unawareness on both ends."

It's a learning curve similar to what's often required when new technologies are introduced. 

"If we go back 100 or so years to the very first motor cars, there was a guy who used to walk in front of each car with a red flag to warn pedestrians," Duncan said. "People didn't know how to interact with the 'driverless carriage.'"

No wonder the U.S. Federal Trade Commission and EU regulators are paying close attention.

There may be a fine line between what's acceptable and not. While most consumers have become comfortable with the idea of putting personal information on social media sites such as Facebook and Twitter, they're not necessarily comfortable when companies "scrape" that data for a better understanding of them.

For example, if an insurance company starts sending fitness-related messages to consumers who have recently bought Fitbit devices, those people won't always welcome them.

"We see a huge amount of risk for companies to go blindly into using the data," Duncan said. "The data is amoral -- there is no good or bad, it just is. It's the human choices we then make that make the difference, and that's what data ethics is."

Much of it is still a gray area, and that's largely because the legal rules haven't yet caught up.

Ethics are "the substantive principles that inform our laws," said Neil Richards, a professor of law at Washington University in St. Louis.

"The problem is, the law inevitably lags," Richards said. "We pass laws when we find a problem, but we don't usually pass laws to deal with problems that haven't happened yet."

Regarding big data, the law doesn't say much yet about what businesses can do, he said. At the same time, there are areas where people frequently say "'that's creepy,' or 'unfair' or 'sleazy.'"

 

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