May 19, 2014
With Responses From
May 19, 2014
3 Min read time
It is hard to disagree with any of Reed Hundt’s prescriptions. More government transparency, wider use of encryption, greater respect for the rule of law: these are all reasonable and badly needed steps that can help regain some of the trust—between citizens and the state but also between users and the tech industry—that has evaporated in the wake of Edward Snowden’s revelations.
But will this agenda suffice to shift the balance of power toward citizens—Hundt’s goal? I suspect not, thanks to one crucial transformation that is not addressed by his otherwise insightful essay: the growing commodification of our personal data and the emergence of full-blown, real-time markets around it.
The implicit assumption that underpins Hundt’s argument is that the personal data collected by Silicon Valley has value only in as much as it enables better advertising. For now, this is the case among giant companies such as Facebook and Google. However, this is clearly not so for many smaller players who are finding other, more creative uses for such data, from predicting traffic to assessing applicants for payday loans. Big players from other industries are waking up to these possibilities as well. Insurance companies and banks, for example, would love to obtain more data about their current and prospective customers for reasons that have to do with their core business—prediction of risk—rather than with their marketing and advertising activities. And Google, etc. may diversify into other data-intensive areas.
If users have incentive to sell their data, encryption won't help.
Where could these companies get the data? One possibility is to establish a direct relationship with their users—by offering them some data-intensive gadget or service—which is a complicated and expensive option. Another possibility is to purchase the data in bulk on the secondary market. Such data exchanges are currently dominated by giant firms such as Acxiom and Experian, but it is reasonable to expect that, with the rise of the “Internet of things” and the embedding of sensors and connectivity into previously “dumb” devices, we will see more data collected and more exchanged, without relying on a few big clearinghouses.
There may soon come a day when we obtain many of our household objects for free and “pay” for their use with the data we generate. Several startups are at work on apps that enable secure capture and exchange of such data. There is some populist flair to their rhetoric, for they are essentially calling on users to stop letting Google and Facebook use their data to make a profit—and, instead, make a profit themselves by collecting and selling the data on their own.
How does this trend fit into Hundt’s argument? Alas, not very well. First, if individuals are incentivized to share their personal data, there is a good chance some of this data will be reassembled by the very government agencies we seek to regulate—only they would be purchasing it from the secondary market (with our tax money) rather than taking it directly from Google, Facebook, and their ilk. Second, if individuals are prepared to sell their data, it is not obvious how encryption tools would help. They surely could protect those who refuse to sell their data. But would these data refuseniks be in the majority? Third, I am not sure if the legal avenue Hundt proposes would be of much help regulating the use of purchased data. Given that purchased information is, in some sense, already “public,” can we really expect that intelligence and law enforcement agencies would not exploit it to its fullest potential?
I do think Hundt’s framework—examining how the distribution of information affects power—is the right framework for us to work with. But I also think the problem is not exhausted by the world of Google, Facebook, and advertising data. The liquidity and portability of data about all aspects of our everyday lives are increasing, raising new questions about the distribution of power not just between citizens, the state, and tech companies but also between citizens and the market. To grapple with these new challenges we will need to enrich our analysis by locating this debate not just in the domains of national security, law, and technology but also in that of economics.
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May 19, 2014
3 Min read time