July 28, 2023
Estimated reading time: 3 minutes
Social media and alt data compliance
Technical operations manager and cybersecurity enthusiast, Manish Shivanandhan, shares his insights about the current cybersecurity landscape and how to ensure operational readiness against emerging cyber threats to your business.
Social media has transformed how people connect, share information, and engage with businesses. Concurrently, the rise of alternative data (alt data) generated and sourced via these public platforms has become a game-changer for various industries.
According to a recent report by the Alternative Investment Management Association (AIMI), around half of all investment firms mine social media for customer insights, while a survey by the group revealed around 34% of US hedge funds are investing in technologies to help leverage alt data to help with insights into consumer behaviour and market trends.
However, as with most things social media, privacy concerns have escalated, leading to calls for tighter regulations.
How alt data is collected
Social media platforms are virtual gold mines of information, hosting a wealth of personal data on users. Through interactions, posts, likes, shares, and comments, these platforms amass vast amounts of alt data, offering valuable insights into consumer preferences, sentiment, and trends.
Businesses can use this data to fine-tune marketing strategies, enhance customer experiences, and make data-driven decisions, giving them a competitive edge.
The collection of alt data through social media is raising significant privacy concerns, however.
Users often unknowingly share personal information, making them vulnerable to data exploitation and misuse.
Unrestricted collection and utilization of alt data could lead to unauthorised profiling, targeted advertisements, and potential breaches of individuals’ rights to privacy, experts have warned.
Privacy regulations and alt data collection
To address privacy concerns, several existing regulations attempt to safeguard personal data. The two most prominent examples are the General Data Protection Regulation (GDPR) in the European Union and the California Consumer Privacy Act (CCPA) in the United States.
GDPR grants individuals greater control over their data and mandates companies to handle personal information responsibly. Similarly, CCPA provides Californian residents with the right to know how their data is used and allows them to opt out of the sale of their personal information.
The applicability of these regulations to alt data collection from social media platforms is not always straightforward.
Since alt data often contains aggregated anonymized data, it might not always fall under the scope of existing privacy laws, opening regulatory grey areas.
Recent high-profile data breaches on social media platforms have intensified the urgency for stronger regulations.
Popular short-form video platform TikTok has faced heavy scrutiny over its data collection practices and potential ties to foreign governments, and the app has been banned internally by governments and several private companies.
Such incidents highlight the need for transparency, accountability, and stringent data protection measures to prevent data breaches and unauthorized access to user data.
As alt data continues to gain prominence in business decision-making processes, companies need to prioritise data ethics and compliance and ensure they are in lockstep with emerging regulations on data collection.
This means implementing robust data protection measures, being transparent with users about data collection and usage, and obtaining explicit consent when handling personal information.
Furthermore, strengthening data governance frameworks and carrying out periodic assessments of data practices can help identify and mitigate potential privacy risks.
By striking a balance between leveraging alt data for insights and safeguarding user privacy, businesses can build trust with their customers, foster brand loyalty, and stay ahead in an increasingly data-driven world.
As the regulatory landscape evolves, companies must remain vigilant and adapt their practices to uphold the principles of responsible data collection and usage. Only through a collaborative effort between businesses, policymakers, and social media platforms can we strike a harmonious balance between innovation and data privacy in the digital age.