Are Concerns About Security and Privacy Threatening the Future of Online Commerce?

If no one trusted the Internet, what would that mean for online business—or even for business in general? Even as so many consumers and businesses rely on the web to conduct all kinds of transactions, fears about data breaches and loss of privacy has many people spooked about sharing personal information online.

That should be a big concern for companies that rely on multiple channels for selling their products and services. With every headline about a major data, doubts rise about the safety of sharing data.

In a May 2016 post, the National Telecommunications & Information Administration (NTIA), part of the U.S. Department of Commerce, points out that lack of trust in Internet privacy and security might deter economic and other online activities.

“Every day, billions of people around the world use the Internet to share ideas, conduct financial transactions, and keep in touch with family, friends, and colleagues,” Rafi Goldberg, policy analyst, Office of Policy Analysis and Development at NTIA, writes in the post. “Users send and store personal medical data, business communications, and even intimate conversations over this global network. But for the Internet to grow and thrive, users must continue to trust that their personal information will be secure and their privacy protected.”

Security and privacy, main concerns

The NTIA’s analysis of recent data shows that Americans are increasingly concerned about online security and privacy, at a time when data breaches, other cyber security incidents, and incidents related to the privacy of online services have become more prominent.

These types of concerns are leading some to restrict their online activity, according to data collected for the NTIA in 2015 by the U.S. Census Bureau. The survey of more than 41,000 households showed that 19% of Internet-using households—representing nearly 19 million households—had been affected by an online security breach, identity theft, or similar malicious activity during the 12 months prior to the survey.

Security breaches seem more common among the most intensive Internet-using households, the NTIA notes. For instance, while 9% of online households that used just one type of computing device (desktop, laptop, tablet, Internet-connected mobile phone, wearable device or TV-connected device) reported security breaches, 31% of those using at least five different types of devices experienced breaches.

NTIA asked households what concerned them most about online privacy and security risks and by far the most common concern, cited by 63% of online households, was identity theft. Other common concerns mentioned include credit card or banking fraud, data collection or tracking by online services, loss of control over personal data and data collection or tracking by government.

It’s clear that many consumers have serious concerns about privacy and security on the Internet, NTIA concluded. Some 45% of online households said their concerns about security and privacy stopped them from conducting financial transactions, buying goods or services, posting on social networks, or expressing opinions on controversial or political issues via the Internet.

All of this even though companies are spending more money on security technology. Research firm MarketsandMarkets has projected the global cyber security market, including products and services, will grow from $106.32 billion in 2015 to $170.21 billion by 2020, at a compound annual growth rate (CAGR) of 9.8%.

The main trigger of growth

North America is expected to be the largest market on the basis of spending and adoption of cyber security solutions and services, the firm said. It expects North America to retain its position as the highest revenue generator for the cyber security market during the entire forecast period, while significant revenue growth is expected from Latin American and Asia-Pacific regions.

Industry research also shows increased demand for managed security services. For example, a new study from Technavio Research predicts worldwide managed security services market will grow at a CAGR of nearly 12% until 2020.

So the question is, are organizations spending on the right areas within cyber security to help quell the concerns of so many consumers and business customers? Are they protecting themselves and their customers against the types of attacks that have plagued major businesses over the past few years?

To be truly effective in delivering strong security in the current cyber security environment, enterprises need to ensure at least two things: that they’re doing all they can to secure endpoints throughout the organization, and that they are safeguarding the data itself in the event of a breach.