Information Privacy in the Marketspace: Implications for the Commercial Uses of Anonymity on the Web

Abstract

While there is no question that the commercial development of the World Wide Web is still in its infancy and growing rapidly, this development faces a serious barrier to ultimate commercialization. In this article we develop the argument that the primary barrier to the successful commercial development of the Web is the current lack of consumer trust in this new commercial medium. This lack of trust is engendered primarily by the industry's documented failure to respond satisfactorily to mounting consumer concerns over information privacy in electronic, networked environments. We examine how such concerns are affecting the growth and development of consumer-oriented commercial activity on the World Wide Web and investigate the implications of these concerns for potential industry response. In the short run, the commercial development of the Web depends on giving consumers the opportunity to be anonymous when engaging in information exchanges and online transactions. Ultimately, however, commercial Web providers must come to realize that the Internet dramatically shifts the balance of power between a business and its customers, and therefore, radical new business strategies will be required for long-term success. Because the Web offers unprecedented opportunities for interacting with customers, strategies that take advantage of the medium's unique features are likely to reap important rewards in customer satisfaction, loyalty, and retention. Therefore, in the long run, the most effective way for commercial Web providers to develop profitable exchange relationships with online customers is to gain consumer trust by allowing the balance of power to shift toward more cooperative interactions between firms and their customers.