Economic Barriers to the Deployment of Existing Privacy Technologies (Position Paper)

Internet-based commerce provides great opportunities for merchants, consumers, and business aÆliates, but it may seriously threaten users' privacy. Some of the paths to loss of privacy are quite familiar (e.g., mining of credit-card data), but some are new or much more serious than they were in earlier regimes. We present two points about the economics of electronic commerce: There are economic barriers to the adoption of privacy-enabling technology; furthermore, it is unclear that most of the privacy-enabling technology studied by the cryptology R&D community would address users' actual privacy concerns even if it were widely adopted. More details can be found in [2], which focuses on digital rights management (DRM) systems. Twentyve years of cryptographic research has yielded a vast array of privacy-enabling technologies that support many types of two-party and multi-party interactions. Thus, cryptographic researchers might wish to believe that user privacy in e-commerce and content distribution is a solved problem. You pay for content or services with anonymous electronic cash. You connect to content or service providers via an anonymizing mixnet. You authenticate yourself with anonymous credential schemes or zero-knowledge identication protocols. You download content via private information retrieval or oblivious transfer. You use secure function evaluation when interacting with services that require some information. Despite the fact that many of the impressive techniques in the cryptographic research literature have been extensively and rigorously analyzed, and some have even been commercially developed, few are in widespread use. It is our thesis that there are straightforward economic and business reasons for this apparent contradiction. The major constituencies involved in a privacy-enabling protocol or system must be willing to sacri ce the information that could be collected about the other parties or their inputs. In the absence of legal requirements { that are generally understood, technologically feasible, and consistently enforced { use of such protocols and systems must be voluntary and bilateral. However, in e-commerce transactions, these constituencies have con icting interests and asymmetric power. Why should a powerful content/service provider wanting to learn information about his users agree to run a protocol that deprives him of this very information? Industry is likely to the follow the \Know your customer" mantra. Many of the problems facing privacy-technology adoption can be framed in microeconomic terms, e.g., network externalities, asymmetric information, and moral hazard. See Anderson [1] and Shapiro and Varian [3] for similar arguments about related domains.