The following is a guest post from Simon Bates, Senior Advisor, Policy & Initiatives at MEF.

Have you ever wondered why something as simple as a flash-light app requests your location when you boot it up? It’s not out of curiosity or even necessarily to be helpful – although if you are lost in the dark, letting someone know your location might be a good thing. It is the hallmark of a mobile app economy that’s based on a simple value-exchange: you get a useful app for free or next to nothing and in return the app provider collects your user data to monetise it in some way.

In the Iron Age, people thought that exchanging goods for little round bits of metal was nothing short of a con. Bartering was the order of the day. Of course today currency makes the world go round, but there’s an argument that suggests we’re going through a similar transition with mobile data.

Instead of exchanging digital goods for currency we are increasingly exchanging them for our personal information. There is absolutely nothing wrong with this model but the mobile industry needs to ensure this value-exchange is transparent to all parties.

Consumers are clever enough to recognise that if they can play the world’s most sought after game for 49 cents (when its console edition costs a hundred times as much) then there is likely something else going on. However, only the savviest consumers will understand why an app is asking for their user data. Fewer still will know exactly how that data is being used.

Against this backdrop MEF, the global community for mobile content and commerce, has released a Global Privacy Report supported by AVG Technologies to establish exactly what consumers think and how it affects their behaviour. It is the only survey to date that has comprehensively analysed consumers worldwide (10 countries with 9,500 respondents). The findings go right to the heart of the problem and frame what should be a wake up call to the app economy.

What emerges is a yawning gap between the assumptions we as an industry make about consumers and what they actually think. 70 per cent of respondents think that it’s important to know exactly what data an app is collecting and why. This says very clearly that consumers understand the impact of apps on their privacy and that they want to know how their data is being used.

The wake-up call to app developers should be that that only 37 per cent of consumers are comfortable sharing information. 33 per cent are not at all comfortable. That means either 33 per cent of all consumers are avoiding apps because they don’t trust them, or they are happily downloading and using apps unaware that they are sharing their personal information.

Neither of these scenarios is satisfactory, but the second is much worse. It means that at some stage there will be a backlash. Consumer trust is a company’s most valuable asset and not easily regained regardless of whether or not app providers clean up their act and become more transparent.

There have been plenty of high profile misuses of personal mobile information. Social networking app, Path, for example, has just agreed to a hefty $800,000 fine with the Federal Trade Commission for collecting consumers’ personal information without their consent.

As an industry we have a limited window of opportunity find a way to make the value-exchange sustainable and show consumers that we are capable of protecting their privacy.

At the moment it’s not uncommon for a privacy policy of an app to be nothing more than a link to a site (want to read 65 pages of legalese anyone?).  While this disclosure may be legally correct, its not helping the consumer to build trust in the developer.

While some of the principles of trust are already established at a legislative level, what’s missing is how developers and app stores take practical measures to establish transparency by introducing these privacy principles in to their day-to-day workflow.

MEF’s report shows that the mobile community shouldn’t take consumer understanding for granted. We need to take consumers with us by making them an equitable partner.  Otherwise free may not be so attractive after all and perhaps we’ll all revert back to buying actual flash-lights with good old fashioned currency.

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