Page 324 - DMGT308_CUSTOMER_RELATIONSHIP_MANAGEMENT

Unit 12: Customer Privacy

the first electronic computers being the impetus as part of national security work, and spread to Notes
civilian computer applications. Encryption became popular with the release of the Data Encryption
Standard (DES) to the public in 1977. DES is a 56 bit single key algorithm. To send a message to
B using DES, A needs to encrypt it. This leaves open the risk that the key is intercepted, and
anyone knowing the key can decrypt the transaction.
Dual key systems solved this problem. In this system, anyone who wants to receive a message
has a “public” key. If A wants to send information to B in a secure way, he can encrypt it using
B’s public key. But the encrypted message can be decrypted only by using B’s “private” key.
Thus, there is never a need for the risk-laden transmission of private keys.

Dual-key encryption software has appeared with the spread of the Internet: Pretty Good Privacy
(PGP) employs dual key cryptography and is distributed free of charge for private use. Business
users pay. Privacy Enhanced Mail (PEM) uses DES encryption along with a dual key algorithm
to secure mail transmission.
According to International Resource Development, the U.S. data encryption market has grown
from $384 million in 1991 to an estimated $946 million in 1996.
Where information is protected by encryption it is more marketable. Ironically, the U.S.
government, for reasons of law enforcement and national security, has opposed easy and fully
secure encryption, thus reducing the ability of individuals to control access to their information,
to establish property rights, and to create the foundation for markets.
Present encryption, however, does not solve the problem of information resale to a third party
C, once decrypted by the second party B. Solving that problem in the future would be a god-send
to every owner of information and copyright, but it is hard to conceive how it might be done
securely. A buyer of information cannot be stopped from memorizing and or photographing
the decrypted information on his screen and then reselling it.
Even so, giving A protection vis-a-vis B already goes a long way. It permits, for example for
property rights in information about transactions between A and B to be held jointly. Both A and
B hold keys to it, and therefore need each other’s permission for their release. This would
enable, for example A (a consumer) to require compensation from B (a credit card company) for
releasing transaction information. It is true that B could copy information once it accessed it for
one purpose, in other says that were not authorized. But to do this in a systematic way to
thousands of customers would be a foolish business practice.
The dual-key systems would permit also individuals to sell information about them directly,
instead of letting various market researchers and credit checkers snoop in their demographics,
personal history, and garbage cans. Individuals would define a set of access rights: their doctor
only would be allowed to view medical records. Other categories of information would have
free access, while others would be costly. Presumably, the more valuable information is to the
buyer, and the more negative it is to the seller, the higher the price. Some information would be
priced too high for voluntary exchange. This system would also allow an individual to keep
track of who asked for the information. And, the reselling of the information would be authorized
only by agreement of both key holders.

12.2.6 Selling the Right of Privacy

So far we have analyzed the role of markets in the provision of privacy in a largely pragmatic
way – will it work? Yes, in some cases. No, in other cases. But at least as important is the
normative question – should privacy be part of a market? While the market approach could be in
many instances efficient on economic grounds and would differentiate according to needs,
efficiency is not the only value to be concerned about. Just as there are economic trade-offs, so
are there non-economic ones.

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