User Data: Are Israeli Companies Doing It All Wrong?

Guest post by  Eli Greenbaum & Noam Pratzer of Yigal Arnon Law Firm
As each of us goes through our day, data about our every movement and activity is tracked and reported to a vast array of digital networks. Steps are traced by fitness trackers and digital maps, interests are tracked by web-browsers and online stores, and social activity is monitored by Twitter, Facebook, and Tinder. Although this may conjure up images of the Soviet era KGB, today’s corporate information collectors are interested in your cash rather than your political allegiances.
The commercial Internet is buoyed by a flood of user data. That torrent of information presents companies with a basic strategic question: how can this data be converted into a profit? Many companies monetize the data by exploiting it – either using it for product marketing or selling it to other companies that will. Did you consider purchasing that book? Advertisements for it will follow you across the Internet. Do you walk to work every day? These great walking shoes are sold right next to your office! For these companies, the monetary value of data correlates with the degree to which it can be used to target consumers.
Although this kind of exploitation may be the quickest way to turn data into cash, it is not always the best way to build customer loyalty and brand confidence for long term success.
Increasingly, consumers and enterprises are concerned about protecting their privacy. This is especially true for sensitive categories, such as health, medical or financial data. Given this trend, companies may be better positioned for long-term growth by branding themselves as guardians of their customer’s privacy, rather than turning a quick dollar and  ignoring privacy concerns. Firms that gain a reputation for being loose with customers’ personal information risk being branded as villains of the digital age.
Some companies have recognized the mounting privacy concerns of consumers and enterprises, making the strategic business decision to position themselves as privacy protectors. This strategy prioritizes long term positive brand recognition and customer loyalty over the immediate exploitation of personal consumer data.
Notable among such companies are technology giants Apple and Microsoft. Apple touts its commitment to privacy, most notably with encrypting messages and personal information. Microsoft changed the default settings of its most recent browser, marketing it, with limited success, as the least intrusive web-surfing option.
Israeli tech companies that recognize this trend can benefit from the increasing alignment between corporate and consumer interests in the protection of personal data. Israel is considered one of the world’s leaders in cybersecurity technology. In fact, investors allocated $520 million to Israeli cyber startups in 2015 (IVC), seeking similar exits like the IPO of CyberArk in 2014 and Microsoft’s $320 million acquisition of three-year-old Adallom. Worldwide, businesses and governments are looking to Israeli companies for the technology and know-how to protect privacy and prevent hacking and data breaches. As increasing numbers of technology companies look to brand themselves as privacy protectors, rather than traffickers in personal data, the demand for cybersecurity technology and software will continue to grow. Israel, as a leader in cyber technology, is well positioned to lead the charge in changing the way corporations perceive their relationship to consumer data, yielding both economic and moral benefit to Israel's high-tech sector. 
Eli Greenbaum
of Yigal Arnon Law Firm will be discussing Data Privacy in Healthcare at the mHealth Israel conference, February 18th in Tel Aviv