Introduction
Consumers are increasingly concerned about how companies collect and use their personal data, and they’re even willing to change their spending habits because of it. Meanwhile, data protection authorities are ramping up enforcement of privacy laws.
This has led to renewed focus on privacy by design, a framework that enables organizations to deliver better and more trusted user experiences long term, achieve and maintain privacy compliance, and ensure the critical flow of data to drive revenue.
First introduced in the 1990s, the concept of privacy by design” gained significant attention with the EU’s key data protection legislation, the GDPR, where it is the basis of Art. 25. The core principle is that privacy should be built into companies’ processes, products, and services at every stage of development, from conception through implementation to usage.
In other words, privacy should be a central consideration right from the design stage, rather than being thought about and added retroactively when companies get worried about privacy compliance.
We explore what privacy by design is, why it’s important, and how you can build its core principles effectively into your business.
What is privacy by design?
Privacy by design is a concept that advocates for user privacy and data protection compliance to be embedded into just about all ways companies function and deliver products and services, including directly into the design specifications of technologies, business practices, and physical infrastructures.
As a framework for privacy protection, it requires thinking about and implementing privacy measures right from the onset of projects that involve the processing of personal data, from planning and design through to deployment, maintenance, and updates.
How is privacy by design implemented?
Building privacy by design into processes like software development seems obvious, but it can be equally important to include it in projects like user persona development. During this process, you should ask yourself questions like:
- Which groups need to be protected?
- What data of theirs will be requested, for what purpose, that needs protecting?
- How can we best minimize the data we need and best secure it in our operations?
- How do our customers view and approach their data privacy?
- What experiences do we want to provide them and how does privacy affect that?
Privacy by design should be integrated into numerous aspects of projects and operations and not limited to website cookie use or designing forms or databases. This helps you achieve better UX and privacy compliance and update rollouts.
Outside of active building, as with software development, privacy by design also needs to be included in day to day operations like customer support, advertising, and partnership building.
Why is privacy by design important?
Privacy by design enables businesses to build data protection practices into product offerings, which is part of what makes it so important. This helps safeguard potentially sensitive user information and helps ensure regulatory compliance in a way that’s streamlined, scalable, and fully aligned with other areas of the business.
Here are six key reasons privacy by design is so important for businesses.
1. App monetization and privacy go hand in hand
More and more, large advertisers will rarely invest in publishers that fail to collect consent strings in accordance with the latest privacy principles. Even programmatic advertising, the most lucrative way to use real-time data, requires consent from end users. Publishers that want access to premium ad inventory need to prove they collect valid consent.
Data privacy is an increasingly relevant topic to app developers, with three key driving factors:
- Regulatory bodies are pushing for stronger regulation in the app industry.
- Premium advertisers increasingly won’t buy inventory where consent hasn’t been collected in a compliant manner.
- App developers and companies are realizing that their current business model isn’t sustainable or scalable without a privacy strategy from the start of application development.
Getting consent without disrupting the user experience (UX) is also crucial. This is particularly important for mobile games and applications developers since these users have smaller screens and tend to be more impatient compared to those using desktop web browsers, for example.
As such, core data privacy features should blend seamlessly with your app’s design and functionality and not negatively affect performance to avoid interfering with UX.
2. Get your project off on the right foot
Design conception is where privacy by design takes center stage. Developers must align data collection to the specific purpose the data is needed for, and then communicate that purpose to mobile app and website users. This helps ensure that data controllers, including joint controllers, implement appropriate technical and organizational measures so that data processing complies with relevant regulations.
Art. 5 GDPR states the principles for lawful processing of personal data:
(i) Lawfulness, fairness, and transparency
(ii) Purpose limitation
(iii) Data minimization
(iv) Accuracy
(v) Storage limitation
(v) Integrity and confidentiality
(vi) Accountability (must be observed in the design and implementation of these systems)
3. It helps you establish a strong brand reputation
81 percent of adults in the US are concerned about how companies use the personal data they collect, according to a 2023 Pew Research report.
According to the Global System for Mobile Communications Association (GSMA), “Even applications that legitimately access and use personal information may fail to meet the privacy expectation of users and undermine their confidence and trust in organizations and the wider mobile ecosystem.”
So what happens when businesses invest in data privacy and users trust that their data is used legally and ethically? The results are clear. In the Cisco 2024 Data Privacy Benchmark Study, 80 percent of businesses reported increased customer loyalty as a result of their investment in privacy.
The return on that investment typically ranged from 60 to 100 percent. In other words, prioritizing transparency and user privacy means higher customer lifetime value (CLV).
4. Liability can be an organizational hurdle
Data privacy liability broadly falls on the company in general, but it can also fall on specific departments. According to the GDPR, if you play a role in determining “the purpose or means” of data processing, you are a joint responsible party (data controller) for the data processed by any third party.
For example, if your website or app has monetization functionality, analytics, or reporting SDKs, you can be held accountable for a lack of sufficient user consent. This makes clear accountability essential for developers.
5. It helps you grow with a global outlook in mind
Online, your customers and users can be located pretty much anywhere. Publishers must ensure global privacy compliance on their websites and/or mobile applications if they collect personal data from users in jurisdictions protected by privacy regulations, which at this point is most of them.
This refers to processing financial transactions, collecting email addresses at account signup, settings cookies, and transmitting data to other apps.
The GDPR applies to websites and mobile apps that collect and process the personal data of EU citizens. It doesn’t matter if your business is based outside of the EU — if you process data from EU residents, the GDPR still applies to you.
Many other global data privacy laws are also extraterritorial in this way, so it’s important to be familiar with the laws of regions where you do business, and to know where your audience and customers are.
6. You likely collect vast amounts of data
If you think you don’t need to develop a privacy strategy simply because your app doesn’t use cookies (or you think it doesn’t), think again.
According to a Trinity College Dublin study, a significant amount of user data is transmitted to third parties without any option to opt-out, largely as a result of pre-installed apps like Google, Facebook, and LinkedIn.
On the positive side, the vast amounts of data gathered can provide a lucrative revenue stream. On the negative side, the information collected by cookies, trackers, and third-party SDKs will gradually become of little to no use if valid consent isn’t collected and signaled to important partners and vendors, especially as global privacy regulations become more stringent.
What are the 7 privacy by design principles?
Privacy by design has seven generally accepted foundational principles. Following them will help you achieve a design that’s enjoyable for the user while prioritizing privacy.
Principle 1: Proactive not reactive; preventative not remedial
Anticipate and prevent privacy-invasive events before they happen. Don’t wait for privacy risks to materialize, and don’t offer remedies for resolving privacy infractions once they’ve occurred. Rather, prevent them from occurring in the first place.
Principle 2: Privacy as the default setting
Deliver the maximum degree of privacy by ensuring that the minimum amount of personal data is collected and that it is automatically protected in any IT system or business practice. An individual’s privacy should be protected even if they do nothing to ensure it, as it’s built into the system by default.
Principle 3: Privacy embedded into design
Embed privacy into the design and architecture of IT systems, website and app functions, and business practices rather than bolting it on after the fact. Make privacy an essential component of the core functionality being delivered, integral to the system without diminishing functionality.
Principle 4: Full functionality — positive-sum, not zero-sum
Accommodate all legitimate interests and objectives in a “win–win” manner. Don’t make unnecessary trade-offs because of dated beliefs or practices. Achieve goals with privacy, not in spite of it. Avoid false dichotomies like privacy vs. security, and demonstrate that it’s possible and desirable to have both.
Principle 5: End-to-end security — full lifecycle protection
Embed privacy long before data is collected, and manage it securely throughout the entire lifecycle of the data. Strong security measures are essential from start to finish, so ensure that all data is securely retained only as long as needed and securely destroyed or anonymized in a timely manner at the end of the process.
Principle 6: Visibility and transparency — keep it open
Assure all stakeholders that all business practices and technology involved operate according to stated objectives and contractual requirements, subject to independent verification. Component parts and operations should be visible and transparent to users and providers alike as much as possible.
Principle 7: Respect for user privacy — keep it user-centric
Architects and operators are required to prioritize the interests of individuals by offering strong privacy defaults, providing appropriate notice, and ensuring user-friendly options are available.
How to implement privacy by design on websites and apps
To implement privacy by design, organizations that collect and process personal data via websites or apps should abide by the following best practices. These recommendations parallel the “principles relating to processing of personal data” in Art. 5 GDPR.
Data minimization
Collect only the personal data that’s necessary for the specific, stated purpose. This helps to reduce the risk and potential harm from unauthorized access in the event of a breach. Users are also more likely to trust organizations that only ask for data that’s necessary to provide the experience, product, or service they offer.
Transparency
Provide clear and easily accessible information about the types of personal data being collected, why it’s being collected, and who will have access to it, among other relevant information.
While some privacy laws don’t require consent prior to personal data collection, such as US-based laws like the California Consumer Privacy Act (CCPA), all of them require you to notify users of relevant information via a privacy policy, consent banner, or combination of solutions.
It’s also necessary to ensure this information is kept up to date — for instance when there are changes in regulations or the technologies your site or app uses. To avoid noncompliance, it’s best to automate these functions with a consent management solution.
Security
Implement appropriate physical, technical, and organizational measures to protect personal data from unauthorized access, theft, modification, or destruction.
After all, it’s safer to prevent violations than to deal with their consequences. Repairing your company’s legal status, finances, and reputation is always much more challenging than preventing security incidents in the first place.
User control
Ensure users can control the collection and use of their personal data, ideally at a granular level. For example, provide options to opt out of data collection or sale and the ability to request corrections or deletion.
Many privacy laws actually require these functions and outline them as consumers’ rights, but it’s better to go beyond the basic legal requirements and put users in control. This can also include going further and asking customers for their preferences so that communications, offers, and data used for personalization, etc. is explicitly provided by them, so of optimal quality and fully consented.
This promotes trust and willingness for your customers to provide more data over the long term. However, ensure you present all options equally to avoid dark patterns or other manipulative practices.
Privacy by default
Build privacy into the design and default settings of your products and services. For example, use privacy-enhancing technologies, such as encryption and pseudonymization by default.
Additionally, consult qualified legal counsel and/or data privacy experts to fully understand your ongoing responsibilities under relevant data privacy laws for the regions where you do business, and what you can do to stay compliant throughout the user and data journey.
Third-party relationships
Evaluate the privacy practices of third-party service providers, such as analytics and advertising companies, and ensure that appropriate contracts and agreements are in place to protect personal data. Also regularly audit data collection practices as the tools used by third parties and the data they collect change over time.
Under most privacy laws, the data controller — not the processor (e.g. the advertising partner) — is legally responsible for data protection and held liable if there is a violation.
Regular review
Regularly review and assess the current legal landscape of relevant regulations, as well as privacy impacts of products, services, and processes, to ensure that privacy by design remains an ongoing focal point. Audit data operations, employee access, and training competence regularly as well so your people are as secure as your technical systems.
It’s generally best practice to review privacy practices and notifications every six to 12 months, and some laws actually require you to do so.
Using a consent management platform (CMP) enables you to regularly analyze user interactions, scan for the cookies and other trackers in use, and update your data processing information. This helps optimize messaging and UX and ensures users are informed, privacy is protected, and consent rates are maximized.
Privacy by design and marketing
A 2022 Google/Ipsos report found that a positive privacy experience for users increases brand preference by 43 percent. As marketers want to build great customer relationships, adding privacy by design into their strategies and operations is an effective way to do so while still getting the business-critical data they need to run those operations effectively.
Privacy by design can significantly impact marketing operations by shifting data strategies away from third-party data toward more controlled and targeted methods of collecting and using higher quality personal data, such as first-party and zero-party data.
This approach is crucial for popular marketing functions like preference management and server-side tagging, where user consent is vital throughout the data lifecycle.
The GDPR and privacy by design
The GDPR’s requirements are fairly extensive, making privacy a vital consideration in all aspects of process, product, and service design involving personal data. Art. 25 GDPR specifically addresses privacy by design and by default.
According to the GDPR, data controllers are responsible for managing risk and ensuring data protection from development through to daily operations.
US privacy laws and privacy by design
The CCPA and other laws require businesses to implement reasonable security measures to protect personal information and to consider privacy risks when developing and implementing new products and services.
Industry-specific federal laws also address data privacy and security, like the Federal Trade Commission’s Gramm–Leach–Bliley Act, which applies to financial institutions, and the Health Insurance Portability and Accountability Act (HIPAA), which covers healthcare.
There’s not yet a comprehensive federal privacy law in the US that requires privacy by design across all industries, so interpretation and implementation will likely vary for the foreseeable future. However, increased scrutiny and enforcement by data protection agencies may lead to standardization.
How does privacy by design protect data and user privacy?
The core purpose of privacy by design is to protect user data and privacy, while still providing great user experience, with an emphasis that both privacy and security are achievable and desirable.
Privacy by design anticipates and helps prevent data breaches and helps ensure personal information is automatically protected. This approach shifts responsibility for privacy protection away from users and reduces risks.
Transparency remains a central value, as users are kept notified about privacy and data use at all stages and retain control.
Entities that access personal data hold responsibility and liability for their actions and for any third-party entities that access the data. If anything goes wrong, they face a loss of trust, reputational damage, fines, and other penalties — even if they didn’t directly cause the issue.
Privacy by design helps guarantee that data and privacy are protected automatically, as these protections are designed and built into all systems from the start. This helps ensure strong security throughout the entire data lifecycle, eliminating weak points where data privacy measures might otherwise be “bolted on” as an afterthought.
Privacy by design and consent management
Consent management solutions offer a smart and reliable way to implement privacy by design at the point of personal data collection. A tool like Usercentrics CMP enables you to notify users about data collection and its purposes. It also securely records and stores consent preferences, as required by regulations or best practices, and enables seamless signaling of consent information via the Google Consent Mode integration.
This not only helps ensure privacy compliance but also keeps a detailed trail of consent requests, which can be used in the event of regulatory inquiry. These tools also enable users to update or revoke their consent choices at any point in the future.
Usercentrics helps facilitate privacy by design by enabling businesses to gauge, track and control which third-party sites are loading cookies to collect user data. By demonstrating respect for user privacy and consent, our software can help increase trust and user engagement and establish long-term customer relationships. Speak to a Usercentrics expert today.
