Why privacy-preserving data sharing is gaining momentum
Privacy-preserving distributed computing is in high demand across several data-intensive and regulated industries. The IT and telecommunications sector currently leads in adoption (holding about 33% of the market share in 2024), as tech and telecom firms seek to secure massive data flows and cloud environments. Financial services (BFSI) and healthcare are two other key sectors driving demand. These industries handle highly sensitive information under strict regulations (e.g. banking data under GDPR/CCPA, patient records under HIPAA) and thus have strong incentives to adopt privacy-preserving analytics. In fact, the finance and health care sectors are at the forefront of exploring techniques like homomorphic encryption to enable data collaboration without exposing raw data. Government agencies (public sector) also represent a significant segment, as they need to share intelligence and public health data securely. Overall, any industry facing strict privacy regulations or confidentiality concerns – from retail and manufacturing to media and advertising – is beginning to explore privacy-preserving data sharing to unlock data value while managing risk.
Growth Drivers & Pain Points
Multiple factors are propelling the adoption of privacy-preserving data sharing solutions across these industries:
- Regulatory Compliance Pressure: Stringent data protection laws (GDPR, CCPA, HIPAA, etc.) and the threat of heavy fines are forcing organizations to find new ways to use data while protecting privacy . Privacy-enhancing computation allows analytics on encrypted or anonymized data, helping companies comply with regulations and avoid legal penalties – a major driver for adoption.
- Cybersecurity & Trust Concerns: High-profile data breaches and sophisticated cyber threats have made organizations wary of sharing or pooling sensitive data in plain form. The pain of potential breaches is driving investment in technologies that keep data encrypted even during use. By mitigating the risk of exposure, these solutions address a core pain point and build inter-company trust for collaboration.
- Data Siloes Limiting Insights: Companies are sitting on troves of data that could deliver insights or enable AI models if combined with other datasets – but traditional sharing is blocked by privacy and IP concerns. Privacy-preserving tools promise to unlock these “frozen” data assets, allowing organizations to gain new insights (fraud detection across banks, research breakthroughs across hospitals, more personalized services, etc.) without revealing underlying data. The desire to monetize data and leverage external datasets for competitive advantage is a strong growth driver.
- Competitive and Market Pressure: Early adopters of secure data collaboration are gaining a leg up in innovation and analytics, which in turn pressures others to follow suit. For example, companies that join data-sharing ecosystems to combat fraud or improve marketing see tangible benefits, creating an “adapt or fall behind” scenario for competitors. This competitive dynamic is accelerating interest in privacy-preserving data sharing as a strategic capability.
- Digital Transformation & AI Initiatives: As organizations embrace big data and AI, they need ways to combine data from different sources (internal or external) without violating privacy. This need has fueled development of privacy-enhancing technologies (from federated learning to multiparty computation) as enablers of broader digital transformation. In surveys, over 70% of data and analytics leaders report plans to expand use of external data, indicating robust demand for technologies that make such data collaborations safe and feasible.
In summary, privacy-preserving data sharing is gaining momentum because it offers a solution to a convergence of pain points – regulatory risk, data breaches, and data silo limitations – while unlocking new growth opportunities. Industries like finance and healthcare (with both high risk and high potential reward) are leading adoption, and overall market interest is rapidly growing as organizations recognize that data can be a shared asset rather than a liability if proper privacy safeguards are in place.