Groupon controversy heightens as company alters privacy policy to track more customer data

by Knowlton Thomas

Groupon recently updated its ToS and privacy statement. The changes reflect new ways in how the company intends to collect and share consumer data. There are two changes worth paying attention to.

First, Groupon will now track users' locations when they opt-in for Groupon Now. Via the Groupon mobile app, the company will now track user location data and share it with numerous other parties. The second change redefines the term "personal information" from Groupon's perspective, and how it shares this information. Essentially, the company plans to collect more of your data and share it with more sources.

The world's fastest growing company, as dubbed by Forbes, is no longer a daily deals site at its core. It is an advertising and marketing firm. Topix CEO Chris Tolles said recently that Groupon is all about advertising, calling its business model from a merchant's view as "buying marketing opportunities on credit." The credit aspect is reinforced by Rocky Agrawal who wrote a series of guest posts on TechCrunch about Groupon, calling it a "loan shark." And the marketing aspect is reinforced by ReadWriteWeb, which described the company as "fundamentally a marketing firm."

Marketing firms thrive on maximizing their ability to collect user data. And a daily deals site is an ideal avenue for this. As for the merchants, they don't roll with Groupon to profit. At best, the smart ones hope to break even. But many will lose money—and that's okay. Because it's like an advertisement, and advertising costs money.

Still, the complaints department seems a little busy at the Chicago company. Maybe it's just because the rotten eggs get more publicity than the shiny ones, but Groupon has a less than stellar reputation at this point. In fact, the company is at the heart of what many call the next great tech bubble. While LinkedIn, Twitter, Facebook and others have achieved valuations just as ludicrous as Groupon, it is this company's bleeding red ink and controversial business model that has people screaming for an implosion—and knowing that if Groupon collapses, all hell may break loose.

It doesn't help that the daily deals space is one of the most overly saturated in the tech world. Domino effect, anyone? 

Groupon still has a chance to pull a rabbit out of a hat, but as its IPO looms, many wonder: How much more stable would things be if CEO Andrew Mason accepted Google's generous $6 billion acquisition bid months ago?

Chicago, Illinois, United States

Launched in November 2008, Groupon features a daily deal on the best stuff to do, see, eat, and buy in a variety of cities across the United States. We have about 200 wonderful people working in our Chicago office (a handful of whom you can see to your right), along with a smattering of people in Groupon's other cities. Our company philosophy is pretty simple: we treat our customers the way we... more

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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes and author of Tempest Bound. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys hiking, tennis, and martial arts. more

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