The Growing Business of Privacy

Privacy is becoming big business, reports The Wall Street Journal. Privacy flubs by AT&T, Facebook, Apple Inc. seem to have fanned the interest.

"There are at least a dozen [online privacy companies] now in various stages of making the rounds in the venture world," said Theresia Gouw Ranzetta, a venture capitalist at Accel, which backed Truste and is also a major investor in Facebook. "We're actively looking for more [privacy] deals."

But like past Internet-related businesses, the investment risk is high, the Journal points out:

Yet despite the surge of privacy investments, venture capitalists and start-ups still face a challenge in getting people to pay for confidentiality and discretion, say analysts. A recent study by think tank Ponemon Institute LLC found that identity theft victims still don't behave differently online from others on social networking sites such as Facebook. Only 13 percent of the general public and 19 percent of identity theft victims said they are responsible for protecting their own privacy on social-media sites, according to the study.

Investors acknowledge the privacy market is nascent and will evolve as regulations are introduced. Still, the venture investments are an early look at the solutions emerging to help combat privacy incursions.

The operative phrase there may be "will evolve as regulations are introduced." Some of the bills on the Hill have some provisions that could make that more likely.