Collaborative filtering (CF) is valuable in e-commerce, and for direct recommendations for music, movies, news etc. But today's systems have several disadvantages, including privacy risks. As we move toward ubiquitous computing, there is a great potential for individuals to share all kinds of information about places and things to do, see and buy, but the privacy risks are severe. In this paper we describe a new method for collaborative filtering which protects the privacy of individual data. The method is based on a probabilistic factor analysis model. Privacy protection is provided by a peer-to-peer protocol which is described elsewhere, but outlined in this paper. The factor analysis approach handles missing data without requiring default values for them. We give several experiments that suggest that this is most accurate method for CF to date. The new algorithm has other advantages in speed and storage over previous algorithms. Finally, we suggest applications of the approach to other kinds of statistical analyses of survey or questionaire data.
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