11/03/2012 19:20 GMT | Updated 11/05/2012 06:12 BST

Data Privacy and Profiling - How 'Big Data' is Used to Create Your Online Identity

The world is watching this important investigation. I believe that European enforcement agencies should stand firm and apply the severest sanctions at their disposal if Google's actions are found to violate EU law.

Last week I was a panelist at a series of events that took place across Europe titled "Data Privacy and Profiling - How 'Big Data' is used to create your online identity." Hosted by ICOMP, I took part in a lively series of discussions with pan-European influencers ranging from MEP Alexander Alvaro, to the UK Information Commissioner Christopher Graham, to Georgina Nelson from Which?

Consumers are starting to realise that the online world is all about consumer data: data about consumers' preferences, likes, dislikes, and proclivities are being utilised by a vast ecosystem of companies that are looking to target consumers with advertising (Terence Kawaja, Ecosystem of Data, (2010 video) located here). The entire user-experience and business models of the leading internet companies (e.g, Facebook, Twitter, and Google) all rely on data about users.

The vast amount of consumer data being captured online and used in various surprising ways has been the focus of the Wall Street Journal's award-winning series What They Know, which illustrates the value of data to these companies, as well as the privacy implications of using such information.

Google has been in the headlines frequently for its practices relating to consumer data, and most of these practices can be explained by Google's stated intention to "organise the world's information and make it more universally accessible and useful."

In order to organise the world's data, Google must first acquire it. Google reportedly has been collecting that data in ways that seem questionable but certainly consistent with statements demonstrating a lack of concern for user privacy. Quotes in the media such as these in the Daily Telegraph and here in Network World, illustrate the fact.

The more data points on a consumer, the more effectively advertisers can target ads - and the more Google can charge advertisers to target and deliver those ads. In my opinion, Google probably already has the most consumer data and thus can dominate and charge top dollar for its advertising services. To Google, users of its products are not consumers, they are the product. The data Google collects on you leads directly to the higher rates it charges its real customers - advertisers.

As of 1 March, Google's Privacy Policy states that personal data provided by users of almost all of its services can be co-mingled across its portfolio.

By consolidating its privacy policies, Google can now aggregate consumer data across 60 of its products and services, providing detailed 360-degree views of users' personal information, thus improving the quality of its product for advertisers. This insatiable appetite for more complete consumer data can also explain Google's continued promotion of Google+. It can also explain Google's recent conduct of placing tracking cookies on Apple Safari and IE9 devices, as well as the reported use of Android to pass data on to advertisers.

It is understandable therefore that European Data Protection Authorities are very concerned about Google's new privacy policy. They asked Google twice to delay the roll-out of its new policy so that they have time enough to determine the impact of the changes on E.U. consumers. Incredibly, Google has rejected both requests. In the E.U. in particular, Google lacks significant competitors, illustrating that dominant firms can, indeed, abuse privacy protections. This means Google has no market incentive to offer better privacy protections to consumers.

A company that is genuinely concerned about privacy protections would not ignore E.U. regulators' concerns - especially when the CNIL's preliminary analysis shows that "Google's new policy does not meet the requirements of the European Directive on Data Protection."

The world is watching this important investigation. I believe that European enforcement agencies should stand firm and apply the severest sanctions at their disposal if Google's actions are found to violate EU law. For its part, Google should think hard about listening to the wishes and concerns of the users it serves and respect their privacy.