By Walter Frick
The online economy—from search to e-mail to social media—is built in large part on the fact that consumers are willing to give away their data in exchange for products that are free and easy to use. The assumption behind this trade-off is that without giving up all that data, those products either couldn’t be so good or would have to come at a cost.
But a new working paper by Lesley Chiou of Occidental College and Catherine Tucker of MIT suggests that the trade-off may not always be necessary. By studying the effects of privacy regulations in the European Union, they attempted to measure whether the anonymization and de-identification of search data hurts the quality of search results.
Most search engines capture user data, including IP addresses and other data that can identify a user across multiple visits. This data then allows search companies to improve their algorithms and to personalize results for the user. At least, that’s the idea. To determine whether storage of users’ personal data improves search results, Chiou and Tucker looked at how search results from Bing and Yahoo differed before and after changes in the European Commission’s rules on data retention.
The researchers looked at data from UK residents’ Web history before and after the changes. To measure search quality, they looked at the number of repeated searches, a signal of dissatisfaction with search results. In all three cases, they found no statistically significant effect on search result quality following changes in data-retention policy. In other words, the decision to anonymize or de-identify the data didn’t appear to impair the search experience. “Our results suggest that the costs of privacy may be lower than currently perceived,” the authors wrote, though they note that previous studies have come to different conclusions.
Walter Frick is a senior editor at Harvard Business Review.