The Data Ownership Geolocation Quicksand

The ability of a retailer to know precisely where any mobile-phone-using consumer is at any given moment—coldly dubbed geolocation—has always been a delicate and dangerous issue, with perceived privacy problems never straying far from the conversation. But what happens when the nature of the service requires that the retailer or service provider know the exact location of the consumer?

In those mandatory situations, who owns that data? Given that there are no laws or even strict guidelines today about such capabilities, what's to stop a retailer from using the data for one legally mandated purpose—such as collecting state taxes—and then using it for an unrelated purpose, such as marketing or sales?

As a practical matter, the most problematic of these issues are those dealing with digitally downloadable content, including software, music, videos, E-books, games and even pornography.

(Sidenote on pornography. In the very early days of the Web—it was late '95—I was working at a large business-to-business publisher and a very senior editorial strategist was analyzing the best and more intelligent content on the Web, across a wide range of verticals. When she discovered that a handful of pornographic sites in those days had Web traffic that obliterated most of the top news sites put together, she included the most succinct and analytical slide I've ever seen. The slide analyzing that fact had only three words: "Men Are Scum.")

Because much of mobile commerce will deal with physical items that are shipped to the consumer or delivered to a store near the consumer, no great geolocation magic will be needed to determine where the customer is when obtaining the product. But with products that can be sent directly to the phone, the legal ground has barely been walked on. A few examples to consider of when geolocation may be needed:

  • Sports Live Streaming And Blackouts
    Mark Rasch, the former head of the U.S. Justice Department's high-tech crimes group who today is in training to become a Master Curmudgeon, wrote in to describe his experience with an iPhone and a Major League Baseball app that allows subscribers to watch non-blocked-out games in their entirety.

    "Until the new app surfaced however, MLB could tell what your 'home' city was based upon the zip code of the credit card you used. So clever baseball fans in New York would 'swap' their subscription with fans in Nebraska so they could mostly watch the home teams. Not any more," Rasch wrote in an E-mail. "The new app uses the iPhone’s GPS and compass (or cell tower information for older iPhones) to determine precisely where you are when you try to watch the game. If you are too close to Fenway Park, no Red Sox games for you."

    Rasch's point was who owned the data after the game authorization was completed? Who could that data be sold to?

  • How Fast Are You Mobile-ing?
    "At an accident scene, your cell carrier could tell your insurance company how fast you were traveling before the accident," Rasch wrote. "In fact, every time your cell phone showed that you were traveling in excess of the speed limit, a citation or fine could be issued -- much like rental car companies use GPS built into their cars to enforce the contractual provisions prohibiting taking the car out of the country."

  • Age Restrictions
    The most common age-restricted products—tobacco, alcohol, some contraceptives, etc.—won't apply. But what about downloadable adult videos? Different states—and, for that matter, cities, counties and municipalities—can pass different laws determining what ages are needed for various products. A retailer may need to know what jurisdiction that call is coming from to determine what rules to apply.

    We then get into the thorny question of "What happens if the consumer's cell phone travels from one jurisdiction to another during the transaction?" Someone will need to decide the precise point of a transaction that will be used to determine jurisdiction for that purchase.

  • Taxes
    This is similar to Age Restrictions. State tax collection is often dictated by whether the retailer has a significant facility in that state. That cellphone moving from one state to the next might cause all kinds of issues.
  • Export Restrictions On Encryption
    Some software—sophisticated encryption is an easy example—can not legally be exported. With shipping, that's easy. Online, a question is simply asked. But with mobile, does the retailer have an obligation to check?

    For almost any of these examples, retailers would have a legitimate reason—far beyond a consumer opting in for customization—to capture location. Indeed, not only is opt-in not necessary for these data grabs, they can't be sought because the data capture is mandatory. Does that change the game rules? Should the line be drawn at "If the consumer didn't opt in, we must use it for the original purpose and then delete?"

    Who would enforce such a rule? For that matter, should it even be enforced?

    For those instances where the consumer does voluntarily opt in, is that forever? Is that for any company to use that data for any purpose?

    Much needs to be worked out—legally, politically and morally—before retailers should aggressively start thinking about leveraging geolocation. But wrestling with these kinds of questions is probably a decent place to start.