Data Privacy vs. Data Protection: What’s the Difference?

Data privacy refers to a customer’s personal preferences regarding how businesses collect their sensitive data. Data protection, on the other hand, is a term used to describe the suite of methods whereby a business endeavors to protect said data. 

Data privacy and data protection are discrete albeit interrelated terms. The former is a concept, desire, or even a demand; the latter is how that demand is met (or isn’t). 

Discover more about the similarities and differences of data privacy and data protection, as well as their advantages and disadvantages.

Data privacy

Data privacy advocates believe that people would want to have a say in how third-party companies collect, retain, and utilize their personal information. Many companies respond to such concerns with sensitivity and implement measures to protect the sensitive customer data they collect. 

The data such companies collect is, indeed, highly sensitive. It includes customers’ information, such as: 

• Contact information

• Credit card numbers

• Biometric data

Many companies rely on user data such as these to perform consumer research, understand consumers, and develop targeted ads. In today’s information economy, data is key. 

What is data privacy used for?

Individuals and collectives use data privacy concepts to protect themselves against identity theft and other forms of exploitation. Data privacy is highly important to users like these. 

Hackers use poorly protected customer data to harm people, companies, and even governments, financially and socially. Government databases are routinely at risk of raids by cybercriminals working on behalf of hostile governments that might threaten to release, for example, the identity of spies or the precise nature of battle plans that depend on surprise for success. Civilian identity theft remains an ongoing cause for concern. 

Data privacy is so important to some that it’s become a matter of law: 

The California Consumer Privacy Act (CCPA) grants residents of California the following [1]: 

• The right to know about the personal information a business collects about them and how it is used and shared

• The right to delete personal information collected from them (with some exceptions)

• The right to opt out of the sale or the sharing of their personal information

• The right to non-discrimination for exercising their CCPA rights

As of 2023, California residents also have the following rights under the CCPA: 

• The right to correct inaccurate personal information that a business has about them

• The right to limit the use and disclosure of sensitive personal information collected about them

Advantages of data privacy

Companies that take consumer privacy seriously may have an advantage in the marketplace. Organizations that work hard to keep data private actually encourage people to be willing to consent to broader data collection. 

Furthermore, data privacy adherence can affect a company’s bottom line. Any company caught violating the Children’s Online Privacy Protection Act (COPPA) may face enormous fines. For example, Epic Games faced a fine of $275 million for COPPA violations in 2022 [2]. 

Disadvantages of data privacy

Some argue that insisting too much on data privacy rights will hinder companies from gathering the amount of data they need not only to excel in their business objectives, but to help develop a more equitable world. 

Placing hard limits on data collection can, theoretically, harm human rights. Some argue that widespread data collection may assist in reducing violent crime when utilized by large-scale surveillance operations. 

Data protection

Data protection, which includes data security, refers to the way companies protect customers’ sensitive information from those who shouldn’t have access to it. Data protection encompasses: 

• Hardware

• Software

• Administrative procedures and controls

Sophisticated and well-developed data protection practices help secure companies from all manner of cybercrime, including that caused by honest human error. 

What is data protection used for?

Companies use a variety of data protection techniques in order to keep sensitive customer information out of the wrong hands. Data protection methods include: 

• Encryption: This is a technique whereby sensitive information is “scrambled” into a secret code that another end-user can only unlock if they possess a unique digital key.

• Data masking: This is a way of hiding sensitive information by modifying it with structurally similar data. The original data would then be untrackable. 

• File redaction: This involves removing information from files that would help hackers identify customers or their sensitive information. The idea is the same as that of paper redaction of government files. 

• Automated reporting: This involves installing an always-on cybersecurity framework that constantly scans your business’s data in search of threats. Theoretically, this allows for faster threat detection and response. 

Advantages of data protection

The average cost of a data security breach in 2024 was $4.88 million—the highest amount ever, up by 10 percent from the previous year [3]. 

Businesses don’t necessarily need to hire a third-party firm to run their cybersecurity framework. Cost-effective data protection measures include: 

• Cybersecurity awareness training among employees

• Phishing simulation campaigns

• Password managers

• Firewalls

Disadvantages of data protection

Disadvantages of data protection include the cost of implementing meaningful security measures. Small businesses can expect to spend between 10 to 20 percent of their total IT budget on cybersecurity [4]. 

The advent of data protection regulations has an effect on user experience (UX): when users opt out of having their data collected, their browsing experience is less personalized and theoretically less informative. And many customers want a highly personalized browsing experience. 

Many websites require customers to accept cookie preferences before they can browse. This in itself may represent a UX demerit to customers who want to use a site but want to protect their data, too. 

Discover more about data privacy vs. data protection with Coursera

It’s important to understand how data privacy and data protection work, as well as how they are similar and different. 

Discover more with Coursera. Northeastern University’s course, Data Privacy Fundamentals, is a good starting place. The University of Pennsylvania offers a helpful course, Regulatory Compliance Specialization. Then, learn about the data protection side of things with Cisco’s Data Security course.