We are reaching an inflection point in the market where privacy control is becoming a decision-making factor for users. It is fairly easy to integrate location-based data and behavioral advertising into your mobile application, and there is certainly value to the data.  So what privacy concerns should you be aware of when developing an application?

Privacy is Becoming Increasingly Important to Users

According to a survey by the GSM Association, 81% of mobile users surveyed claimed safeguarding their personal information was very important and 76% said they were very selective about whom they gave their information to.  While studies have conflicted on whether users actually read privacy policies, it seems that users tend to view trusted and popular applications as an acceptable proxy for a privacy policy. This is dangerous for consumers and even more dangerous for the developers that feel the same way.

Health, Wealth, and Kids Are Bad

If your application contains anything related to health/medicine, financial data, or children, you better be extremely careful. If you believe your application could fall under one of these three categories, be sure to seek the advice of competent counsel and familiarize yourself with the FTC’s guidance as well as applicable laws (i.e. the Gramm-Leach-Bliley Act, HIPAA, and the Children’s Online Privacy Protection Act (COPPA)). The FTC recently proposed an amendment to COPPA requiring parental permission when mobile apps track children using anonymous cookies or identifiers.

User Data

The majority of applications are passing data on to 3^rd parties such as ad networks or analytics companies.  Most developers are unaware that the FTC has made clear that developers carry 1^st part accountability. That being said, you have a responsibility to let your users know not only what you are doing with their data, but also what 3^rd parties are doing with their data. It is also important to be careful about collecting personal data that you don’t use. Keep your policy realistic, and you can reserve the right to change your privacy policy if a need to collect such data arises. Keep data only as long as you need it and default privacy controls need to be rationalized to the user. Defaults are powerful (i.e. Scandanavian opt-out organ donor system), so developers must find a way to implement opt-out mechanism while still encouraging sharing.

It’s a Balancing Act

I recently attended a panel on mobile privacy and Union Square Ventures partner, Albert Wenger, advised startups to go with trusted 3^rd party advertising and analytics tools such as Flurry and AdMob. From a liability standpoint, Wenger believes widespread analytics tools will likely be targeted by the FTC over the developers that implement them. Wenger also recommended using privacy policies that honestly inform the user of data use, but at the same time, don’t drive yourself out of business because you are too private.

A great resource for developers is PrivacyChoice, which informs developers of various privacy concerns and helps generate privacy policies for applications.  Make sure to include the right to change your privacy policy from time to time, and ask yourself which business models you want to keep when writing your policy.

Disclaimer: This post discusses general legal issues, but it does not constitute legal advice or an attorney/client relationship in any respect.  No reader should act or refrain from acting on the basis of any information presented herein without seeking the advice of counsel in the relevant jurisdiction. InfoCures and the author expressly disclaim all liability in respect of any actions taken or not taken based on contents of this post.

Google was first to market with its’ release of Google Wallet on September 19^th, an exciting innovation in the mobile payment space. Consumers with Google Nexus S phones on the Sprint network can load their MasterCard onto their device (and other cards in the near future), and pay for goods and services by tapping the device against an NFC terminal. The user interface is simplistic and clean, with the added benefit of carrying in-app loyalty cards. Google Shopper is a nice in-app feature as well, which helps users find local deals. You don’t have to open the app to use Google Wallet. Simply place your phone near the terminal, enter your password, authorize the amount and pay.

Being a first-mover is not always a golden ticket. Remember MySpace, Atari, Apple’s Newton PDA, Charles Stack Online Bookstore? How about Facebook, Nintendo, Palm Pilot, and Amazon? What do you use Yahoo for besides fantasy football and spam email? First-mover advantage generally occurs when there is a scarcity of resources, thus delaying or restricting competitors from entering the market. As NFC technology has been around since 2002 and an estimated 50 million NFC-enabled devices will enter the market in the next few years, scarcity of resources is not an issue. So what are the issues surrounding Google Wallet becoming ubiquitous?

Credit Card Companies are Self-Motivated

Credit card companies will license their NFC payment terminals to all the major competitors. Visa just licensed PayWave to Google, because they want to give cardholders every possible outlet to use their card. Credit card companies are less concerned with what NFC wallet is better, and why would they be? They make money off the transactions regardless of the carrier or device. While this will lead to a more fractured device marketplace, it will ultimately lead to better products and a strong investment in NFC terminals worldwide.

Brand Image is Paramount

“When companies are willing to challenge the functional-emotional orientation of their industry, they often find new market space…Swatch transformed the functionally driven budget watch industry into an emotionally driven fashion statement.”

Kim & Mauborgne, Blue Ocean Strategy

A sustainable brand strategy will create significant barriers to imitation through operational advantages or unique emotional connections with users. At the end of the day, consumers are generally uninformed about NFC technology and credit card fraud is inevitable. Therefore, Google will have to instill feelings of trust to meaningfully connect with consumers.

How can Google Wallet appeal to customers’ trust when the competition will likely include companies where users have already trusted their financial information with the brand (i.e. Apple’s iTunes, PayPal)? A survey by Ogilvy & Mather concluded that more consumers trusted PayPal with mobile payments than Google (34.3% vs. 19.5%). One strategy is for Google to procure partnership/co-branding agreements with as many banks as possible. Think about the loyalty most people have to their bank. By branding Google Wallet as a value-add for personal banking, Google will appeal to the trust of consumers and gain added visibility.

Assume Apple Will Be a Player From Day One and Differentiate

With the ability to leverage existing iTunes users who have already trusted Apple with their credit card information, Apple is in an obvious position to compete in the mobile payment space. It’d be surprising if Apple doesn’t come out with an iWallet in the near future. With several strong competitors in the market, how can Google Wallet’s value proposition differentiate itself?

Product Integration

Between Google Maps, Google Offers, Google +, and all of Google’s other services, Google Wallet is an excellent position to exploit existing products to add value to Google Wallet. Every YouTube user is a potential user of another Google service. Leveraging existing products through integration and cross-promotion could help Google Wallet pull ahead as a market leader. Product integration will yield a tremendous amount of consumer data that Google can exploit, but they will have to be very careful to use this data in a way that does not compromise user security.  When consumer trust is gone, Google Wallet will quickly falter.

Better Deals

Google has partnered with Subway, Walgreens, CVS, and many other merchants. Subway has approximately 24,000 locations in the US, more than any other American merchant. While other mobile payment solutions will partner with the same merchants, times are tough and everyone loves a deal. Therefore a key to Google Wallet’s success will be adding value to mobile payments that far exceeds convenience. In my opinion, that value will come from integrating Google’s current services and providing BETTER AND MORE CONVENIENT DEALS. Google Wallet currently gives users a $10 credit, which I think is a good start. However, the frequency, quality, and relevance of Google Wallet deals will be a key differentiating factor in its’ success.

Conclusion

Lets face it – Credit cards, the current mobile payment solution, are pretty simple. A mobile payment system will not be disruptive technology simply because it helps George Castanza thin out his wallet. In-app loyalty cards are convenient, but we still have to carry our driver’s license and cash for non-participating merchants. In order to gain market share, Google Wallet will have to be carefully branded as a secure application with significant monetary benefits. As we haven’t seen much advertising for Google Wallet yet, it will be interesting to see what direction they take.  

Whether you are a seasoned entrepreneur, hacker, or newbie to the mobile app community, a key aspect of your personal and professional growth is building and nurturing relationships.  I know this sounds obvious, but I also know that serendipity plays a major role in business development. By putting yourself in places where you are more likely to get lucky, you will be amazed at the opportunities that present themselves. A lot of successful people have built careers and business partnerships because they were in the right place in the right time. So can you. This post will describe a number of great summer events for the mobile-preneur that will help facilitate business partnerships, client leads, and general mobile brainstorming.

Internet Week – June 6-13 – New York, NY

Mark this event on your calendar, as it is a tremendous networking and business opportunity.  If you can’t attend all of the events, here are some of the mobile events worth checking out:

Monetizing a Social Audience – June 7 – 3PM

As this blog has recognized, mobile payment systems will be huge in 2011. While Amazon, Visa, and Apple are all making social payment plays this year, there are many opportunities for startups to get some market share. Hill Ferguson, the VP of Product Management for Zong (a startup that provides carrier billing for virtual goods bought through mobile apps) will discuss monetization techniques for your application as well as virtual currency strategies and best practices.

OMMA Mobile – June 7 – 8AM to 5PM

This full day event focuses on mobile marketing and will be the most worthwhile mobile marketing event of Internet Week NYC.  From IBM to Starbucks, this event will draw thousands of interactive advertising professionals who will discuss their experiences and outlook on mobile’s position as a vital marketing channel, as opposed to just being a strategy. The event will also focus on how mobile customers differ from traditional web customers, and how companies and brands can embrace these differences to generate a profit.

NY Tech Meetup – June 7 – 7PM

One of my favorite monthly events in NYC, the NY Tech Meetup is sponsored by the venture capital firm DFJ Gotham and typically sells out within 30 minutes of releasing tickets due to its’ popularity.  An array of interesting web and mobile startups typically give short presentations of their technology followed by a Q&A session with the audience.  The beauty of this event is the wide range of people it draws, so you could easily be sitting next to your future business partner or investor. The next batch of tickets go on sale on May 31^st at 1PM so mark your calendar.  This Internet Week meetup will be epic! Don't miss it!

MobileBeat 2011 – July 12-13 – San Francisco, California

Bringing in the brightest mobile minds from around the country, this 4^th annual event will focus on 4G and the factors that will drive the mobile industry in the coming years.  Popular mobile startups, industry leaders such as Google, Facebook, Zynga, and Apple, as well as many other innovators and investors will convene to discuss new opportunities and developments.  This event conveniently runs at the same time and location as GamesBeat 2011, given the congruent aspects of mobile and gaming.

NSA Mobile Technology Forum 2011 – June 14 – Ft. Meade, MD

The Mobile Technologies Forum is sponsored by the National Security Agency, which specializes in protecting U.S. government information. This event will draw government officials and technologists who are interested in mobile technologies that will benefit national security and foreign affairs. Given the nature of this event, it is advised you apply early as security screening is a prerequisite. 

Want to go to the doctor? There’s an app for that.  Well, sort of.

Great Connection, a company that places X-rays and ultrasounds in the cloud, just launched a service called Mobile Baby. With support from Qualcomm, Mobile Baby allows doctors to perform remote diagnostics on pregnant women. Pilot programs have begun in Saudi Arabia, Sweden, and Egypt.  In many foreign countries, maternity clinics are not staffed with full-time doctors, and midwives do not have the authority to diagnose.  For example, Egypt has one doctor for every 1,900 people while the United States have one doctor for every 400 people. Mobile Baby could have a profound impact on rural communities with limited access to medical care.

Ultrasounds and X-rays are stored in proprietary medical image formats that are understood by Great Connection’s software, and personal information such as social security numbers are encrypted and authenticated. The reach of mobile ultrasound extends past maternity medical issues, as the technology can be used at accident scenes to determine if there is internal bleeding, thus necessitating an immediate transfusion.

On February 4^th, the FDA approved the first diagnostic radiology application for mobile devices in the United States, titled Mobile MIM. Mobile MIM allows doctors to measure distances on medical images, make annotations, and transmit the information back to a hospital or into medical records.  The FDA evaluated the image luminance, resolution, and noise, and determined that it met international standards. The application works on the iPhone and iPad, and it will be available in 14 languages and 34 countries.

Google Goggles, Google’s new augmented reality application which allows users to search by taking a picture, is now available on the iPhone. Goggles has been available for about ten months in the Android store. Now iPhone users can use Goggles’ visual search feature to identify book covers & DVDs, landmarks, logos, business cards, artwork, businesses, products, barcodes, and text.

Google explicitly states that Goggles does not currently identify animals, furniture or apparel, but it seems as though that functionality could be impending.  While the text translation feature still has limited accuracy, an improved optical character recognition (OCR) engine could allow Goggles to help travelers navigate foreign countries and converse without hastily flipping through a translation book.

For those who aren’t familiar with augmented reality, Wikipedia describes it as “…a field of computer research which deals with the combination of real-world and computer-generated data (virtual reality), where computer graphics objects are blended into real footage in real time." Sounds complicated, but the idea is pretty simple. Think of that episode of The Simpsons where Homer jumps in the computer. Except you’re Homer.

Augmented reality applications have become more prevalent in mobile app stores, and for good reason. As the geo-location and camera capabilities of smartphones become more advanced, developers are taking advantage of the unique user experience that augmented reality applications can provide. A holiday application by Metaio, called Virtual Santa, allows users to interact with and send greeting cards with a computer-generated santa.  Developers will be happy to know that Metaio has recently released their Unifeye Mobile SDK (2.1) and their free augmented reality browser, Junaio. So if you’re a developer, please let us know what you think. Layar is the most prominent augmented reality application out there right now, as the app simply shows what is around you.  In the last six months, 1.6 million people used Layar at least once with an active user base of around 700,000 a month. Layar’s platform has layers in every country around the world.

What makes augmented reality so interesting is the user’s ability to interact in real-time with the environment around them. While augmented reality applications are in their incipiency, the advertising opportunities behind these applications are robust.  Product placement and full brand emersion app experiences become more interactive, like this first person shooter game that uses Skittles as part of the experience.

Augmented reality applications, while ripe with potential for monetization, are not free from privacy concerns.  Will facial recognition or product placement apps create a need for regulation? Striking a balance between capitalism and ethics has been a dilemma as the social web continues to develop. What do you think?

In two weeks, I will follow up with a post on Augmented Reality Business Models and look forward to reading your comments about AR apps below, or in our forums.