Within the large data exhaust resulting from usage of free mobile apps, location data is perhaps the most personal, as this record of day-to-day movements essentially creates a diary of one’s life. But more than just dots on a map, location data gives third parties the ability to infer where someone lives (based on where their smartphone lies dormant for hours each night), their hobbies and preferences (based on frequent visits to certain types of places), their health issues (based on repeated visits to specialists) and much more.
It’s no surprise, then, that a number of companies, from data brokers to hedge funds, are all too eager to not only get their hands on location data but to edge out competitors by finding new ways of maximizing its utility.
Before getting into specifics, it’s important to understand how location data makes its way across the app economy. Developers of apps that require location data to function as intended — think mapping, weather and ridesharing — have a few ways of making money off of raw location data. Commonly, a developer will embed a software development kit (SDK) into their app that essentially siphons location data directly to a data broker or advertising platform. Some SDKs even include the ability to track users’ locations through public Bluetooth beacons, which enable fine-grained tracking indoors. Embedding SDKs is a popular practice because it saves development work and creates a predictable stream of income that grows bigger as more people use the app. Alternatively, app developers can keep location data in-house or sell it in bulk to a data broker.
In the hands of a data broker, the data is analyzed and often combined with users’ other information to create detailed audience profiles. The repackaged data is then sold to any number of third parties, perhaps even to another data broker.
The most popular landing spot for location data is the most obvious: an advertising platform like the ones operated by Google and Facebook. Such networks use the data to attract advertisers willing to pay higher ad rates for the ability to micro-target audiences. Advertisers can target you based on your current location, perhaps showing you an ad for a retailer whose location you happen to be near. They can also target you based on your habits — if you frequently go to the gym, you may be shown an ad for sneakers. And they can target you with ads for an establishment you recently visited.
Always on the lookout for an information edge, hedge funds are a growing constituency for location data. A number of companies specialize in cleaning up (and often analyzing) location data for use by these investment firms. Data scientists within hedge funds will take a closer look at the data to find signals in the noise, using any insights gained on a company’s production or sales side to inform investment decisions.
One way in which this is done is by using the number of visits to a consumer establishment as a proxy for sales activity. In 2016, the location data company Foursquare showed the power of this approach when it correctly predicted that Chipotle’s sales would drop by 30 percent in the wake of the restaurant chain’s E. coli scare. Similarly, hedge funds can use the number of hours worked in a factory or at a loading dock as a proxy for production. Thasos Group, another location data company, demonstrated this in 2018 when it used smartphone location data for Tesla’s production site in Fremont to show that the overnight shift increased 30% over the course of four months. In both of these examples, hedge funds could have used the data to make informed bets on the future value of each company’s stock.
For firms that invest in real estate, location data can be instrumental in identifying the best properties to buy. Aggregated foot traffic patterns can illuminate areas that are trending upward in terms of popularity, and the changing demographics of an area can be analyzed by looking at the locations of visitors’ inferred homes and frequently visited establishments.
Location data is also a boon for retailers in a number of ways. Thanks in large part to Bluetooth beacons located within retail stores, retailers can analyze browsing behavior on an individual or aggregated basis. For example, a retailer can identify popular clusters within the store and study dwell time in certain areas in order to inform merchandising and layout decisions. Retailers can also get insights on which customers made it to the fitting room but not the cash register.
Location data is also a key component of measuring the real-world efficacy of a retailer’s advertising. A retailer can tie your online purchase to a billboard you drove past on the freeway or verify whether you entered a store after seeing an ad on your phone, in effect blending the online and offline worlds. With these insights, the company can then double-down on its more effective ads and tweak or discard those that aren’t as effective.
Of course, a retailer isn’t limited to looking at their own locations but can just as easily analyze the competitive landscape. A retailer can, for instance, analyze how a competitor’s traffic has increased as a result of a new product or promotion. They can also analyze other locations visited by the competition’s customers to gain insight into their preferences and behavior in the hopes of winning their business.
Lastly, tech companies are big consumers of location data, albeit in a more transparent way, by using the data to improve their own products. One way this is done is through the aggregation of location data. This approach allows Waze to provide robust traffic information in real time, for example, and also lets Google display popular visiting times for businesses. Location data is also used to personalize services — if your calendar app and map app are owned by the same company, your phone can notify you when it’s time to leave for your scheduled event based on your current location and real-time traffic patterns. In each case, location data is used to maximize engagement and product stickiness, in effect allowing tech companies to make more money in the long term through yet more data capture and enhanced ad targeting.
Long story short, your location data is a valuable asset to shadowy data brokers and trillion-dollar corporations alike. For many of us, the benefits of “free” apps simply don’t justify the privacy costs. And yet, many of these apps provide vital services that allow us to access the information, connection and entertainment we need, when we need it.
Thankfully, there are a few things you can do to keep your location data private while using free apps. At a minimum, make sure to only allow your smartphone’s location to be used by apps that you trust, and only when the request is necessary for desired app functionality. If the use of location is necessary, only allow the app to access your location while you’re actively using the app. And if precise location isn’t necessary, as is the case with a weather app, choose to share only your approximate location.
Beyond app permissions, when traveling you can disable your device’s location services, which uses GPS, nearby cell towers and known Wi-Fi networks to determine your location, and you can shut off any radios that can be tapped for location data, including cellular, Wi-Fi and Bluetooth. For extra protection or simply as a convenience, you can employ a Faraday case to shield out any such radio signals when on the go.
As long as the monetization of location data is the fuel that drives much of the app economy, it’s important to know the value of our day-to-day locations and movements, in terms of both privacy and profit. Only then can we make informed choices about whether and how we share our location data.
Source: https://www.securitymagazine.com/articles/96557-the-unforeseen-risks-of-sharing-smartphone-location-data
