Blog posts by John Tolbert

Ignorance is Risk

#RSAC2019 is in the history books, and thanks to the expansion of the Moscone Center, there was ample space in the expo halls to house vendor booths more comfortably. In fact, there seemed to be a record number of exhibitors this year. As always, new IAM and cybersecurity products and services make their debut at RSAC.

Despite the extra room, it can be difficult for the security practitioner and executive to navigate the show floor. Some plan ahead and make maps of which booths to visit, others walk from aisle 100 to the end. It can take a good deal of time to peruse and discover what’s new. But most difficult of all it is digesting what we’ve seen and heard, considering it in a business context, and prioritizing possible improvement projects.

Security practitioners tend to hit the booths of vendors they have worked with, those with competing products, and others in their areas of specialty, including startups. For example, an identity architect will likely keep on walking past the “next gen” anti-malware and firewall booths but will stop at the booth offering a new identity proofing service. If a product does something novel or perhaps better than their current vendor’s product, they’ll know it and be open to it, even if it’s a small vendor and it means managing another product or service.

Executives gravitate toward the stack vendors in the front and middle, ignoring the startups on the sides and back. [It’s also increasingly likely execs will have meetings with specific vendors in the hotels surrounding Moscone, and not even set foot in the halls.] Why? IT execs and particularly CISOs are concerned with reducing complexity as well as securing the enterprise. A few stack vendors with consolidated functionality are easier to manage than dozens of point solutions.

Who is right? Well, it depends. Sometimes both, sometimes neither. It depends on knowing your cyber risk in relation to your business and understanding which technology enhancements will decrease your cyber risk and by approximately how much. Oftentimes practitioners and executives disagree on the cyber risk analysis and priorities set as a result.

Risk is conjunction of consequence and likelihood. At RSAC and other conferences we hear anecdotes of consequences and see products that reduce the likelihood and severity of those consequences. Executives and practitioners alike have to ask, “are the threats addressed by product X something we realistically face?”. If not, implementing it won’t reduce your cyber risk. Or, if there are two or more similar products, which one offers the most possible risk reduction?

The biggest risk is that the decision-makers don’t truly understand the threats and risks they face. There are cases where SMBs have built defenses against zero-day APTs that will never come their way yet have neglected to automate patch management or user de-provisioning. In other cases, a few big enterprises have naively dismissed the possibility that they could be the target of corporate or foreign state espionage and failed to protect against such attacks.

The riskiest time for organizations is the period when executive leadership changes and for 12-18 months afterward, or even longer. If an organization brings in a CIO or CISO from a different industry, it takes time for the person to learn the lay of the land and the unique challenges in which that organization operates. Long-held strategies and roadmaps get re-evaluated and changed. Mid-level managers and practitioners may leave during this time. That org’s overall cybersecurity posture is weakened during the transition time. Adversaries know this too.

Risk is a difficult subject for humans to grasp. No one gets it right all the time. Risk involves processing probabilities, and our brains didn’t really evolve to do that well. For an excellent in-depth look at that subject, read Leonard Mlodinow’s book The Drunkard’s Walk.

External risk assessments and benchmarks can be good mechanisms to overcome these circumstances; such as when tech teams and management disagree on priorities, when one or more parties is unsure of the likelihood of threats and risks, and when executive leadership changes. Having an objective view from advisors experienced in your particular industry can facilitate the re-alignment of tactics and strategies that can reduce cyber and overall risk. For information on the types of assessments and benchmarking KuppingerCole offers, see our advisory offerings.

Thoughts on the Acquisition of Janrain by Akamai

2019 started off with a very noteworthy acquisition in the identity and security space: the purchase of Janrain by Akamai. Janrain is a top vendor in the Consumer Identity market, as recognized in our recent Leadership Compass: https://www.kuppingercole.com/report/lc79059. Portland, OR-based Janrain provides strong CIAM functionality delivered as SaaS for a large number of Global 2000 clients. Boston-based Akamai has a long history of providing web acceleration and content delivery services. Last year, they entered into a partnership whereby Akamai provided network layer protection for Janrain assets.

Akamai has lately been focusing on increasing its market share of web security services in order to grow revenue. This acquisition will add identity layer functionality and increase visibility for the infrastructure company.

New account fraud and account takeover fraud are two of the chief concerns that companies in many industries, particularly finance and retail, must guard against. Bot management has been one of Akamai’s fastest growing services. The further integration of Akamai’s threat intelligence capabilities with Janrain’s CIAM solution has the potential to enhance consumer security for their clients.

As with all such acquisitions, there are two major possible routes their combined service roadmap can take:

  1. Integrate Janrain's CIAM functionality into Akamai services in a purely supportive way, or
  2. Integrate Janrain's CIAM functionality into Akamai services while continuing to promote and sell the CIAM services as a standalone solution

In many cases, purchasers in the IT business take the first option. The second option is more difficult to execute, but often offers a better long-term investment for both the purchaser and their clients. Akamai has a defined, well thought-out plan to pursue option 2, to extend the Janrain solution and continue to market it as a CIAM SaaS branded under Akamai.

Given the size of the CIAM market, KuppingerCole expects to see additional M&A activity as well new entrants in this space in the next 12-18 months. Keep up to date with the latest developments and research in cybersecurity and identity management by watching our blog: https://www.kuppingercole.com/blog.

Trends in Consumer Identity for 2019

2018 was a year of sweeping changes in Consumer Identity Management products and services. CIAM continues to be a fast-growing market. Research indicates that about half of all CIAM deals are still originating outside the tent of the CISO and IAM support organizations. More vendors entered the market and there were some noteworthy acquisitions. Lastly, many innovative improvements occurred across most all solutions, due in part to GDPR.

What is driving CIAM growth? Businesses are realizing that efficient and effective digital identity solutions lead to more consumer engagement and a better consumer experience, which in turn generates additional revenue. CIAM deployments will continue to outpace IAM deployments in 2019.

GDPR took effect on May 25th this year. The response by CIAM vendors in the run-up to GDPR was mixed. Some were proactive, seeing it as a competitive advantage. Others played catch-up. However, by the end of 2018, most vendors offer consent management features that can allow industrious customers to comply with GDPR in terms of consent collection, data export, and data deletion. There is still a wide variety in the approaches taken, and some CIAM services are more advanced and easier to administer in this regard. Meanwhile, the world waits to see if and how GDPR will be enforced.

Consumer identities are a top target for cyber criminals. Consumers are phished for their credentials. Banking trojans are a leading form of malware. Account takeover fraud is growing and is eating into bank profits. Fraud of all types is a growing concern, and not just for the financial sector. Customer loyalty programs (one of the many drivers for deploying CIAM) are increasingly under attack. The recent Marriott/Starwood breach netted 500M accounts for the perpetrators. Airlines’ frequent flyer programs are also regularly stolen. In short, any online asset that is convertible to cash or cryptocurrency is a target. Fortunately, some CIAM vendors put an emphasis on fraud risk reduction by including user behavioral analytics and by real-time processing of compromised credential and other threat intelligence sources. The need to reduce fraud spurred innovation in CIAM in 2018. Biometrics, mobile apps/SDKs, and risk adaptive authentication are “must have” functions within CIAM solutions for 2019.

The need to associate IoT device identities with consumer identities is an expanding and evolving use case within CIAM. Not enough has been standardized in this field, so there is a lot of variation in IoT device identity support still. Look for additional growth and perhaps standardization in the years ahead.

From a market perspective, the year started out with a major acquisition of Gigya by SAP. As an independent company, Gigya was a leader in CIAM. The acquisition was beneficial for SAP, which was missing a fully functional CIAM capability. SAP, now powered by a rapidly-integrated Gigya, has become a major player in the consumer identity market. Later in the year Exostar acquired Pirean. This transaction will give Exostar, a secure business collaboration service provider, stronger IAM and CIAM features. The move also serves to increase the reach of both companies. More companies entered the CIAM market as well, and gained prominence in the field. No doubt there will be more acquisitions and entrants in 2019. For the latest information on this market, including technical details on how the solutions differ, see our just-published Leadership Compass.

Cybersecurity Leadership Summit Berlin 2018 - Review

This month we launched our Cybersecurity Leadership Summit in Berlin. A pre-conference workshop entitled “Focusing Your Cybersecurity Investments: What Do You Really Need for Mitigating Your Cyber-risks?” was held on Monday. The workshop was both business-oriented and technical in nature. Contemporary CISOs and CIOs must apply risk management strategies, and it can be difficult to determine which cybersecurity projects should be prioritized. Leaders in attendance heard the latest applied research from Martin Kuppinger, Matthias Reinwarth, and Paul Simmonds.

Tuesday’s opening keynote was delivered by Martin Kuppinger on the topic of User Behavioral Analytics (UBA). UBA has become both the successor and adjunct to SIEMs, and as such are link between traditional network-centric cybersecurity and identity management. Torsten George of Centrify pitched the importance of zero-trust concepts. Zero-trust can be seen as improving security by requiring risk-adaptive and continuous authentication. But trust is also a key component of things like federation architecture, so it won’t be going away altogether.

Innovation Night was held on Tuesday. In this event, a number of different speakers competed by describing how their products successfully incorporated Artificial Intelligence / Machine Learning techniques. The winner was Frederic Stallaert, Machine Learning Engineer/ Data Scientist at ML6. His topic was the adversarial uses of AI, and how to defend against them.

Here are some of the highlights. In the social engineering track, Enrico Frumento discussed the DOGANA project. This is the Advanced Social Engineering and Vulnerability Analysis Framework. They have been performing Social Driven Vulnerability Assessments and have interesting but discouraging results. In a recent study, 59% of users tested in an energy sector organization fell prey to a phishing training email. Malicious actors use every bit of information about targets available to them, regardless of legality. Organizations providing anti-phishing training are encumbered by GDPR.

In Threat intelligence, we had a number of good speakers and panelists. Ammi Virk presented on Contextualizing Threat Intelligence. One of his excellent points was recognizing the “con in context”, or guarding against bias, assumptions, and omissions. Context is essential in turning information into intelligence. This point was also made strongly by John Bryk in his session.

JC Gaillard posed a controversial question in his session, “Is the role of CISO outdated?”. He looked at some of the common problems CISOs face, such as being buried in an org chart, inadequate funding, and lack of authority to solve problems. His recommendations were to 1) elevate the CISO role and give it political power, 2) move the purely technical IT Security functions under the CIO or CTO, and 3) put CISOs on the level with newer positions such as CDOs and DPOs.

Internet Balkanization was a topic in the GDPR and Cybersecurity session. Daniel Schnok gave a thought-provoking presentation on the various political, economic, and technological factors that are putting up barriers and fragmenting the Internet today. For example, we know that countries such as China, Iran, and Russia have politically imposed barriers and content restrictions. GDPR is limiting the flow of personal information in Europe, and in some cases, overreaction to GDPR is impairing the flow of other types of data as well. The increasing consolidation of data under the large, US-based tech firms is also another example of balkanization.

In my final keynote I described the role that AI and ML are playing in cybersecurity today. These technologies are not merely nice-to-haves but are essential components, particularly for anti-malware, EDR/MDR, traffic analysis, etc. Nascent work on using ML techniques to facilitate understanding of access control patterns is underway by some vendors. These techniques may lead to a breakthrough in data governance in the mid-term. AI and ML based solutions are subject to attack (or “gaming”). Determined attackers can fool ML enhanced tools into missing detection of malware, for example. Lastly, Generative Adversarial Networks (GANs) serve as an example of how bad actors can use AI technologies as a means to advance attacks. GAN-based tools exist for password-cracking, steganography, and creating fake fingerprints for fooling biometric readers. In short, ML can help, but it can also be attacked and used to create more powerful cyber attacks.

We would like to thank our sponsors: iC Consult, Centrify, Cisco, One Identity, Palo Alto Networks, Airlock, Axiomatics, BigID, ForgeRock, Nexis, Ping Identity, SailPoint, MinerEye, PlainID, FireEye, Varonis, Thycotic, and Kaspersky Lab.

We will return to Berlin for CSLS 2019 on 12-14 November of next year.

Consumer Identity World (CIW) USA 2018 - Report

Fall is Consumer Identity Season at KuppingerCole, just in time for holiday shopping. Last week we kicked off our 2018 tour in Seattle. The number of attendees and sponsors was well up over last year, indicating the significant increase in interest in the Consumer Identity and Access Management (CIAM) subject. CIAM is one of the fastest growing market segments under IAM, and with good reason. Companies that deploy CIAM solutions find that they can connect with their consumers better, delivering a more positive experience, and generating additional revenue. CIAM can also aid with regulatory compliance, such as those for privacy (GDPR, CCPA, etc.) and finance (AML, KYC, PSD2, etc.).

Some of the big topics last week were authentication methods for CIAM, particularly biometrics, GDPR and privacy regulations around the world, consumer preferences for identity, and blockchain identity. 

CIAM requires thinking “outside-in” about authentication. The FIDO Alliance held a workshop on Wednesday. FIDO was a particularly relevant topic for CIW, as there were many discussions on the latest authentication methods and techniques. The turnout was excellent, and attendees heard from some of the leaders and active members of the organization.  I believe that FIDO will play a key role in modernizing authentication technology, especially for consumer-facing applications. FIDO specifications have been maturing rapidly. Version 2.0, and the W3C WebAuthN and CTAP protocols are exactly what has been needed to speed adoption. Expect to see FIDO deployments increasing as the major browsers fully support the standard. We can also expect to see higher consumer satisfaction as FIDO rolls out widely, due to ease of use, and better security and privacy. For an overview of how FIDO works, see Alex Takakuwa’s presentation.

Mobile biometric solutions are enjoying popularity, many companies want to find out how to reduce friction for consumers in the authentication process. We considered risk-adaptive and continuous authentication as means to right-size authentication to specific use cases, such as finance and health care. 

I noted that the “C” in CIAM can also apply to “citizens” as well as customers and consumers. State and local government agencies are exploring Government-to-Citizen (G2C) identity paradigms, and in some cases CIAM solutions are a good fit.

Privacy is an ever-present concern for consumer-facing systems. GDPR is in effect in Europe, and companies around the world must now abide by it when processing personal data of European persons. Tim Maiorino gave an update on the state of GDPR. The subject of California’s upcoming privacy law arose in some panels. Will the California model be adopted across the US? Probably not at the federal level, at least not in the foreseeable future. However, other states are likely to enact similar privacy laws, leading to discrepancies and possible difficulties in complying with similar but different regulations. We learned from Marisa Rogers that there is a call for participation for an ISO group on privacy by design for consumer services.

There were several speakers and panels addressing consumer wants and preferences with regard to CIAM.  We had a few sessions on blockchain and identity. Didier Collin de Causabon gave a good example of how blockchain may be able to aid with KYC.  Sarah Squire, co-founder and vice-chair of IDPro, gave a great talk on role of identity professionals in business. Her keynote also contains a lot of practical advice on IAM/CIAM implementations and where we as an industry can go from here.

Our European CIW event will take place on October 29-31 in Amsterdam, followed by our Asia-Pacific CIW in Singapore on November 20-22.

We are already actively planning on CIW for 2019. Join us at the Motif Hotel in Seattle next September 25-27 for the next edition.

Thanks to all of our speakers and panelists for sharing their knowledge. Also thanks to our event sponsors Gigya – SAP Customer Data Cloud, WSO2, Radiant Logic, Nok Nok Labs, Trusted Key, iWelcome, Auth0 and Uniken

 

Entrust Datacard Acquisition

Entrust Datacardfounded in 1969 and headquartered in Minnesota, announced today that it is making a strategic investment in CensorNet and acquiring the SMS Passcode business from CensorNet (originally a Danish company). Entrust Datacard is a strong brand in IAM, with card and certificate issuance, and financial and government sector business. 

CensorNet was founded in 2007 in the UK. Their original product was a secure web gateway. It now includes multi-mode in-line and API-based CASB service. It also has an email security service, which utilizes machine learning algorithms to scan email looking for potential malicious payloadsEntrust Datacard already has substantial capabilities in the adaptive and multi-factor authentication areas, and the SMS Passcode product line will add to that. With this investment and acquisition, Entrust Datacard plans to move beyond digital transformation to realize continuous authentication and enhance its e-government offerings. 

The results of the acquisition will be reflected in product roadmaps, likely starting in 2019. Entrust Datacard products and services will continue to handle initial authentication, and CensorNet’s capabilities will be able to add user activity monitoring through the CASB piece. The integration of identity-linked event data from CensorNet CASB will help security analysts to know, for example, which files users are moving around, and who and what are users emailing. This functionality will help administrators reduce the possibility of fraud and data loss.  

"Archive != Delete": Bring Back the Delete Button

Why does it seem to be getting harder to delete information online? GDPR will take effect in just a few days. GDPR empowers EU people to take control of their personal information. When in force, GDPR will mandate that companies and other organizations which control or process personal information must comply with delete requests. Users around the world are more cognizant of the data they create and leave online. Even outside the EU, people want to be able to delete data which they deem is no longer useful.

Enter the “archive” button. On some social media sites and other popular applications, the archive button appears to have replaced the old familiar “delete” button. Why? It is ostensibly to make it easier for users to retrieve information that they want out of sight. App makers reason that you don’t always want to delete something once you hit delete. Sometimes, they’re right. But most of the time, “delete” should mean delete. If one searches hard enough, one can usually find ways to actually delete data, even though the top-level UIs only show options to archive.

Another reason “archive” has replaced “delete” is that all information has some value, or at least that is the guiding principle in Big Data circles. Just because a user wants data removed doesn’t mean that it doesn’t have value for others. Social network operators make money off user data, so they believe it must be retained for historical analysis.

Turbulence in the markets and bad press for social media companies may be a leading indicator as to the importance of personal data control for an increasing number of users worldwide. In advance of GDPR, and for the benefit of all users, we urge app makers to bring back the delete button.

Will Your Security Solutions Violate GDPR?

As the May 25th, 2018 GDPR enforcement date approaches, more and more companies are actively taking steps to find, evaluate, and protect the personally identifiable information (Personal Data) of EU persons. Organizations that do business with EU persons are conducting data protection impact assessments (DPIAs) to find Personal Data under their control. Many are also asking “do we need to keep the data?” and putting into practice data minimization principles. These are good measures to take.

IT and privacy professionals are inventorying HR, CRM, CIAM, and IAM systems, which is reasonable since these likely contain Personal Data. Administrators should also consider performing DPIAs on security solutions.

Security solutions such as SIEMs, EMMs, and Endpoint Security/EDR tools collect lots of data, including Personal Data, for analysis. Many of the following types of Personal Data (as defined by GDPR) are routinely harvested for ongoing security and risk analysis:

  • Username
  • Email address
  • User attributes, including organizational affiliations, citizenship, group membership
  • IP address
  • Geo-location
  • User-created data files

Most security solutions allow options for on-premise analysis or cloud-based analysis. As an example, most anti-malware products "scoop up" files for deep inspection at the vendor's cloud, which may be outside of EU. Some vendor solutions are configurable in terms of what attributes can be collected and/or sent elsewhere for analysis; some are not.

Any processing of Personal Data is controlled under GDPR. The definition of processing is so wide that it likely includes these forms of scanning and analysis

In light of GDPR, one question administrators should ask “Is this information collected with user consent?” In some cases, user consent will be required. However, according to GDPR Article 6, personal information collection may proceed for the following purposes:

  • for the performance of a contract or legal obligation;
  • to protect the vital interests of the data subject;
  • for a task in the public interest;
  • or where processing is necessary for the legitimate interests of the controller.

Moreover, there will be situations in which Personal Data may be processed by more than one Data Processor. In these joint-processor scenarios, all entities involved in processing share responsibility for ensuring that the use of Personal Data is authorized under one of the GDPR-specified purposes above.

Security administrators should work with their DPOs and legal team to address the following additional points:

  • Determine which of your deployed security solutions collect which kinds of data; in effect, do DPIAs on security solutions.
  • Ascertain where this data goes: local storage? Telemetry transmitted to the cloud? If so, does it stay in the EU? Could it go outside the EU? GDPR defines the notion of data protection adequacy with regard to countries and organizations outside the EU. The Official Journal of the EU will publish and maintain a list of locations for which no additional data transfer agreements will be required.
  • If the security scanning or analysis is performed by a third party or cloud provider, irrespective of wherever this is done there must be a written legal agreement as set out in Article 28 (3).
  • Do your security solutions permit Personal Data anonymization? GDPR Recital 26 states that data which is sufficiently masked to prevent the identification of the user will not be subject to the data protection mandates. However, SIEMs and forensic tools sometimes need to be able to pinpoint users. Specifically, IP addresses and user credentials are almost always necessary and serve as “primary keys” on which security analyses are based. Within your security solutions, is it possible to mask user data at a high level for external analysis, but leave details encrypted locally, so that they can be unmasked by authorized security analysts during investigations? This is a difficult technical challenge, which is not supported yet by many security vendors. Regardless, even local processing of data elements such as IP address falls under the jurisdiction of GDPR.

In summary, don’t forget your security solutions when running DPIAs. Check with vendors about what information they collect and how it is treated. Work closely with your DPOs and legal counsel to plan the best course of action if you find that remediation or some re-design is needed.

Without Prosecution, There Is No Protection

The Equifax data breach saga continues to unfold. In late 2017, the company admitted it had suffered significant data loss starting in March of last year. There were likely multiple data theft events over a number of months. At some point in May, they notified a small group of customers but kept mostly quiet. Months later the story went public, after Equifax contacted government officials at the US federal and state level. The numbers and locations of consumers affected by the breach keeps growing. As of March 1, 2018, Equifax is reported to have lost control of personally identifiable information on roughly 147 million consumers. Though most of the victims are in the US, Equifax had and lost data on consumers from Argentina to the UK.

Perpetrators made off with data such as names, addresses, Social Security numbers, and in some cases, driver’s license numbers, credit card numbers, and credit dispute files. Much of this is considered highly sensitive PII.

The breach and its effects on consumers is only part of the story. Equifax faces 240 class action lawsuits and legal action from every US state. However, the US Consumer Financial Protection Bureau is not investigating, has issued no subpoenas, and has essentially “put the brakes” on any punitive actions. The US Federal Trade Commission (FTC) can investigate, but its ability to levy fines is limited. On March 14, 2018, the US Securities and Exchange Commission (SEC) brought insider trading charges against one of Equifax’ executives, who exercised his share options and then sold before news of the breach was made public.

Given that Equifax is still profiting, and the stock price seems to have suffered no lasting effects (some financial analysts are predicting the stock price will reach pre-breach levels in a few months), fines are one of the few means of incentivizing good cybersecurity and privacy practices. Aiming for regulatory compliance is considered by most in the field to be the bare minimum that enterprises should strive for with regard to security. A failure to strictly enforce consumer data protection laws, as in the Equifax case so far, may set a precedent, and may allow other custodians of consumers’ personal data to believe that they won’t be prosecuted if they cut corners on cybersecurity and privacy. Weak security and increasing fraud are not good for business in general.

At the end of May 2018, the General Data Protection Regulation (GDPR) comes into effect in the EU. GDPR requires 72-hour breach notification and gives officials the ability to fine companies which fail to protect EU person data up to 4% of global revenue (or €20M) per instance. If an Equifax-like data breach happens in the EU after GDPR takes hold, the results will likely be very different.

Regulators in all jurisdictions must enforce the rules on the books for the good of consumers.

2018 – the Turning Point for Social Networks

The Facebook data privacy story continues to be in the headlines this week. For many of us in IT, this event is not really a surprise. The sharing of data from social media is not a data breach, it’s a business model. Social media developers make apps (often as quizzes and games) that harvest data in alignment with social networks’ terms of service. By default, these apps can get profile information about the app users and their friends/contacts. There are no granular consent options for users. What gives this story its outrage factor is the onward sharing of Facebook user data from one organization to another, and the political purposes for which the data was used. Facebook now admits that the data of up to 87 million users was used by Cambridge Analytica. If you are a US-based Facebook user, and are curious about how they have categorized your politics, go to Settings | Ads | Your Information | Your Categories | US Politics.

But data made available through unsecured APIs, usually exported in unprotected file formats without fine-grained access controls or DRM, cannot be assumed to be secure in any way. Moreover, the Facebook - Cambridge Analytica incident is probably just the first of many that are as yet unreported. There are thousands of apps and hundreds of thousands of app developers that have had similar access to Facebook and other social media platforms for years.

CNBC reports that Facebook was attempting to acquire health record data from hospitals, but that those plans are on “hiatus” for the moment. Though the story says the data would be anonymized, there is no doubt that unmasked health care records plus social media profile information would be incredibly lucrative for Facebook, health care service providers, pharmaceutical companies, and insurance companies. But again, according to this report, there was no notion of user consent considered.

It is clear that Facebook users across the globe are dissatisfied with the paucity of privacy controls. In many cases, users are opting out by deleting their accounts, since that seems to be the only way at present to limit data sharing. However, the data sharing without user consent problem is endemic to most social networks, telecommunications networks, ISPs, smartphone OSes and apps developers, free email providers, online retailers, and consumer-facing identity providers. They collect information on users and sell it. This is how these “free” services pay for themselves and make a profit. The details of such arrangements are hidden in plain sight in the incomprehensible click-through terms of service and privacy policies that everyone must agree to in order to use the services.

This is certainly not meant to blame the victim. At present, users of most of these services have few if any controls over how their data is used. Even deleting one’s account doesn’t work entirely, as a Belgian court found that (and ruled against) Facebook for collecting information on Belgian citizens who were not even Facebook users.

The rapidly approaching May 25th GDPR effective date will certainly necessitate changes in the data sharing models of social media and all organizations hosting and processing consumer data for EU persons. Many have wondered if GDPR will be aggressively enforced. As a result of this Facebook – Cambridge Analytica incident, EU Justice Commissioner Vera Jourova said “I will take all possible legal measures including the stricter #dataProtection rules and stronger enforcement granted by #GDPR. I expect the companies to take more responsibility when handling our personal data.” We now have the answer to the “Will the EU enforce GDPR?” question.

It is important to note that GDPR does not aim to put a damper on commerce. It only aims to empower consumers by giving them control over what data they share and how it can be used. GDPR requires explicit consent per purpose (with some exceptions for other legitimate processing of personal data). This consent per purpose stipulation will require processors of personal data to clearly ask and get permission from users.

Other countries are looking to the GDPR model for revamping their own consumer privacy regulations. We predict that in many jurisdictions, similar laws will come into effect, forcing social networks and consumer-facing companies to change how they do business in more locations.

Even before the Cambridge Analytica story broke, Facebook, Google, and Twitter were under fire for allowing their networks to spread “fake news” in the run-up to the US election cycle. Disengagement was growing, with some outlets reporting 18-24% less time spent on site per user. Users are quickly losing trust in social media platforms for multiple reasons. This impacts commerce as well, in that many businesses such as online retailers rely on “social logins” such as Facebook, Twitter, Google, etc.

To counter their growing trust problems, social network providers must build in better privacy notifications and consent mechanisms. They must increase the integrity of content without compromising free speech.

Facebook and other social media outlets must also communicate these intentions to improve privacy controls and content integrity monitoring to their users. In the Facebook case, it is absolutely paramount to winning back trust. CEO Mark Zuckerberg announced that Facebook is working on GDPR compliance but provided no details. Furthermore, he has agreed to testify before the US Congress, but his unwillingness to personally appear in the UK strengthens a perception that complying with EU data protection regulations is not a top priority for Facebook.

If social network operators cannot adapt in time, they will almost certainly face large fines under GDPR. It is quite possible that the social media industry may be disrupted by new privacy-protecting alternatives, funded by paid subscriptions rather than advertising. The current business model of collecting and selling user data without explicit consent will not last. Time is running out for Facebook and other social network providers to make needed changes.

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