How Do Companies Use Personal Data: What You Need to Know

With many tech giants reaping huge profits from monetizing billions of users’ data, it’s abundantly clear that the cost of these free platforms is our personal information and engagement. In other words, it is your data and continual activity that allows any free website or app you use to stay in business. There’s no such thing as a free lunch, it would seem – even in the digital age. Tech giants, like social media companies, rake in much of their profits by placing adverts in front of you (delivered by third-party advertising partners), with the complex algorithms used for this mine-analyze-advertise business model rarely disclosed.

Let’s explore how and why companies collect and monetize our data, along with the steps you can take to enhance your privacy online.

What Data Do Companies Collect?

While strict data laws restrict companies from collecting certain types of data, people are often surprised when they find out what can actually be gathered and profited from via personalized ad campaigns.

You often grant websites and apps permission to do this when you accept their legal agreements, like Terms & Conditions and Cookie Consents. Once you’ve accepted, a company may be able to gather:

Personal Data

Personal data includes anything related to your identity or device, and is typically collected to classify users into different demographics based on certain parameters. For instance, your name, gender, social security number, device IDs, browser cookies and IP address.

Once acquired, advertisers can analyze site traffic ad interactions, and work out how best to optimize their future targeted ad campaigns.

Usage Data

Usage data is recorded and built to create an accurate consumer profile, which can be used to better predict what kind of content (and importantly ads) you are more likely to engage with, and even how long you’ll spend doing so.

Online activities and interactions with a company’s website or app, emails, text messages, emails and paid ads, are types of usage data.

Behavioural Data

Behavioural Data is collected to help websites determine your favourite/preferred types of purchases and interactions, allowing them to suggest similar content and products of interest.

Qualitative data, including purchase histories, interaction times, repeated actions, movements and overall platform navigation is classed as behavioural data.

Attitudinal Data

Attitudinal data, collected to measure brand and user experiences using data on consumer satisfaction, buying decisions and product desirability, is later used by marketing agencies for direct consumer research and creative analysis.

The Big Issue of Data Privacy

With so many people entrusting companies with so much of their personal info, and also allowing their tracking cookies (often with vague ideas about how it will all be used), it’s no wonder why data privacy has become a major concern.

The fundamental issue regarding today’s tech titans gathering so much data to both improve user experience while profiting from advertising is that it’s become hard to discern what exactly our personal info is being used for.

In other words, what is being used to improve your user experience (website/app functionality and enjoyment), and at what point is it also being used to fuel the personalized advertising machine?

With high profile firms having faced legal troubles in more recent times, such as Meta which has been accused of mishandling user data, it would appear that the harvesting of our data will likely remain a controversial topic for years to come.

Some of the biggest data-collecting companies in the world include Google, Facebook, Amazon, X (formally Twitter) and Apple.

How Do Companies Use Your Data?

As we’ve already touched on, companies typically purpose the info you provide to build an accurate user profile. This can reveal specific browsing and buying characteristics, highly valued by third-party businesses that can use it to target your individual interests.

Here are some examples of how companies can collect your data:

By Placing Cookies on Your Device: These can track online activity, such as your purchase history, payment methods, pages visited, browsing session times, content engaged with/scrolled past, and shopping cart items added
By Collecting Data When You Interact: With social media content, for instance, such as when you enter profile info, like and share posts and comments, and follow other users
By Requesting Access to Phone Features: Like contacts, location data, gallery, microphone and camera usage, which may feel unnecessary from some more basic-seeming apps

Why Do Companies Use Your Data?

Most of today’s prominent tech companies gather users’ personal data (both manually entered and tracking-collated) so they can use it to improve user experience, optimize marketing, and also sell it to brokers and advertisers.

Here are several examples of why many companies use your data:

To Serve You Personalized Content: Such as prioritized posts and videos (very common on social media and streaming platforms) and products, courtesy of powerful engagement-learning algorithms
To Learn More About You: Through customer marketing campaigns, surveys, feedback, product reviews and ratings to improve the overall user experience of a platform
To Remember You: Such as your individual account and logins, preferences and shopping cart contents while you navigate the platform, helping to streamline its fundamental services and offer special discounts to maintain customer loyalty
To Serve You Relevant Ads: Which occurs once your data has been sold to third parties like data brokers, advertisers and research organizations who will have analyzed your unique profile in order to deliver targeted ads to your browser
To Understand User Behaviour: Through analytics data so that products/services can be developed and improved, current trends monitored, and future ones predicted

The Risks of Data Collection

With so much profit to be made from monetizing online identities, including our interests, behaviours and buying habits, today’s tech giants are mining tremendous amounts of data to satisfy data brokers and advertisers’ increasing demands.

Here are some key risks associated with companies collecting and sharing so much of their users’ data:

Loss of Basic Privacy: The most obvious issue with the massive collect-analyze-sell business model is that it involves your precious data, which can reveal a great deal of information about your identity, including interests and even opinions
Data Breaches: With so much personal and financial data stored on tech giants’ servers, hacking groups, who have been responsible for some of the world’s largest data breaches, remain a constant threat to cyber security and data theft
Profiling & Discrimination: In some instances, your data could be used to build profiles that inadvertently lead to discriminatory practises like denied services and biased pricing
Hyper-Focused Content: While prioritized content (such as posts and videos) can be helpful, algorithm-fuelled, never-ending-loop recommendations can also feel manipulative, biased and addictive, capable of gradually leading users toward unrelated – and even potentially dangerous – content

How to Protect Your Data & Identity

With so much data being mined, so many invasive tracking technologies following us, and so much uncertainty about when the next major data breach will hit the headlines, it’s never been so crucial to proactively safeguard your online privacy.

Here are several actionable measures you can take to help keep your personal data and identity protected online:

Review Privacy Policies: Prior to creating a website account or installing an app, reviewing (or at least skimming through) its data collection and usage policies/permissions is always worth it
Opt-Out of Data Sharing: Instead of resigning to the usage of third-party cookies, you can disable them instead (usually by visiting the Privacy/Security section in your browser)
Adjust Privacy Settings: Whenever possible, especially on social media/networking apps, limit who can see your publicly available info, such as your posts and profile, and also disable ad personalization and location tracking
Limit Data Sharing: Don’t give platforms like social media networks any more data than is necessary, remove app permissions you’re uncomfortable with, and consider using dummy emails for account sign-ups
Clear Your Cookie Cache: Over time, websites can overload your device with tracking cookies, so it’s wise to periodically manage/clear your browser’s cookies to reduce privacy breach risks; AntiVirus software, such as the Award-Winning TotalAV, can perform extremely thorough scans capable of detecting dubious files like reappearing (Persistent) cookies
Use a VPN Service: When you browse using a VPN (Virtual Private Network), such as Total VPN, your online activities are masked by an encrypted connection, granting you the freedom to browse anonymously, protecting your device, data and purchase transactions from hackers and invasive trackers
Use Browser Protection: Browser protection tools, like Total WebShield, can enhance your security as you browse and shop, blocking invasive tracking cookies, keeping your browser history private, and alerting you to various data-stealing threats like blacklisted websites and phishing scams.