A Blog by Jonathan Low


Jul 26, 2019

Calls Mount To Ease Big Tech's Grip On Users' Data

The concern is that big tech companies virtually free use of consumer data may be distorting the way tech's benefits are delivered, which could be impacting the overall economy, including employment, profit margins, market share and other indicators. JL

Steve Lohr reports in the New York Times:

“Imagine if General Motors did not pay for its steel, rubber or glass, its inputs. That’s what it’s like for the big internet companies. A sweet deal.”  How much personal data is worth is a calculation involve several factors including the falloff in online advertising when people opt out of data collection. The study estimated that the corporate payoff to big tech companies from collecting the personal data of Americans online was $76 billion in 2018. The consumer benefit from free internet services was estimated to be $100 billion in the United States.
The market for our digital data can seem like a lopsided bargain.
We all create valuable data points with every tap on a screen or keystroke — clicks, searches, likes, posts, purchases and more. We hand it over willingly for free services. But the biggest economic windfall goes to the tech giants like Google and Facebook. Their corporate wealth is built on harvesting and commercializing the information supplied by the online multitudes.
“Imagine if General Motors did not pay for its steel, rubber or glass — its inputs,” said Robert J. Shapiro, an economist who recently did an analysis of the value of data. “That’s what it’s like for the big internet companies. It’s a sweet deal.”
But there is a growing collection of people seeking ways to alter that arrangement. As a disparate group of academics, economists, technologists and lawmakers, their politics range from moderately liberal to free-market conservative.
They are pursuing different paths. Some have done research to put a value on personal data, as a way to inform public debate on how to broker a better deal for the online proletariat. Others propose recognizing the data as a tradable asset or as labor, to help create an efficient market for the data and return more digital wealth to individuals and society.
Last month, Senator Mark Warner, Democrat of Virginia, co-sponsored a bill that would require the big internet companies to regularly inform users of what personal data they collect and to disclose the value of that data.
“I’m not sold on what the approach should be,” said Mr. Warner, a former technology investor and a frequent critic of the tech giants. “But the status quo — this massive imbalance of power — cannot stand.”
The rising calls for a better data bargain come during an intensifying backlash against Big Tech and its handling of user data. Lawmakers and regulators in several countries are investigating the companies’ market power, their role as gatekeepers of communication and their handling of data, especially in failing to protect users’ privacy.
On Wednesday, Facebook agreed to new layers of oversight and a record fine to settle privacy violations. It also acknowledged that it was under investigation from the Federal Trade Commission for antitrust concerns. And on Tuesday, the Justice Department said that it would begin examining the internet giants’ domination over the market to determine whether they had sought to stifle competition.
Not everyone agrees that free services paid for with advertising and data are a bad bargain for consumers. The consumer benefit from free internet services was estimated to be more than $100 billion in the United States alone, according to a 2012 paper co-written by Erik Brynjolfsson, an economist at the M.I.T. Sloan School of Management.
That figure would be far higher today, given the growth of online offerings. “Consumers do get a huge amount of value from those services,” Mr. Brynjolfsson said.
But the advocates for a new deal on data are gaining momentum as more is known about how the big internet companies use personal information.
Giving information to Google, Facebook or Amazon, for example, is not just a signal of interest or preference, but also the raw material for targeting ads, steering online behavior and training artificial intelligence systems like facial recognition.
Consumers are often unaware of the many uses of their data. So far, privacy concerns have been the main focus of scrutiny. But the attention of lawmakers is starting to turn to the concentration of data wealth in the hands of a few companies.
A goal of the legislation introduced last month by Mr. Warner and Senator Josh Hawley, Republican of Missouri, is “to give consumers some sense of the value of the data they are giving up,” Mr. Warner explained.
How much personal data is worth is a tricky calculation. Estimates vary widely, depending on assumptions. The recent study by Mr. Shapiro’s consulting firm took several factors into account, including the falloff in online advertising efficiency when people opt out of data collection.
The study estimated that the corporate payoff — mainly to big tech companies — from collecting the personal data of Americans online was $76 billion in 2018, and that it would rise sharply in the future.
If the government collected a 50 percent fee from companies using Americans’ personal data, Mr. Shapiro said, it could contribute significantly to rebuilding the nation’s infrastructure or supporting social safety net programs. If paid out to individual users, it would be a check for $122 a person last year. The study was done for Future Majority, a research center for the Democratic Party.
Policymakers are struggling with how government action and market forces might be employed to check the power of the data-fueled technology giants.
In Colorado, Chris Hansen, a Democratic state legislator and a former energy consultant, brings an electrical energy perspective to the issue.
“These massive tech companies have close to data monopolies,” Mr. Hansen said. “Do we need something like data public utility commissions? I don’t know, but I do think it’s a question worth considering.”
In Canada, Michelle Rempel, a Conservative member of Parliament from Calgary, is doubtful that government regulators can ever keep up with the largest tech companies, with their far greater expertise and resources. Government, she said, will have to intervene, but more as a designer of basic rules than as a regulator. “The goal should be to help build a fair market for data,” Ms. Rempel said.
Those market-building rules, according to policymakers, include clear ownership rights so individuals control their data, and requirements that companies allow personal data to be easily sent to other services at a consumer’s request. Such steps, they say, could open the door to a flourishing community of data market makers, aggregating individuals’ data and negotiating sales.
Already, there are a few start-ups for voluntarily collecting, securing and selling personal data like Meeco and UBDI (Universal Basic Data Income). They typically employ blockchain technology for security and to control access to data. Though potentially promising, they are fledgling upstarts so far, without a lot of users or data.
Glen Weyl, an economist at Microsoft Research, who advocates uprooting “standard capitalism” with radical market-based solutions, is a leading proponent of valuing “data as labor” and nurturing market makers he calls “mediators of individual data.”
These organizations, Mr. Weyl said, might specialize in different kinds of data — buying, travel, health, hobbies, for example. They could, he added, negotiate a fair price for access to data provided by groups like patients with the same ailment or language translators whose work could improve artificial intelligence systems.
“This is about using market design and technology to shift the balance of power,” Mr. Weyl said.


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