Discover more from regs to riches
🏢 professionalizing the data economy
It worked for 🚬 + 🍷
🤡 Wildcard: We should do for data brokerage what we did with liquor and marijuana:
- legalize it under certain conditions;
- regulate its flows;
- And designate credentialled sellers.
Data purchasing is a murky and somewhat mysterious market.
What could it look like if we straight-up took the grey market of illicit intangibles mainstream?
The “big data” hype led to big privacy violations, which has spurred legislative reforms (CPPA, CCPA, GPR - you get it, you got it). These are important and overdue, but they won’t change the invisibility of the data economy.
By now, there is a general awareness and appreciation that our data exhaust is being leveraged - be it for advertising, surveillance, or just to improve your browsing experience. We generally know what data is being used for, but there is much to learn on the “buy” side in terms of whom, why, and when.
I personally think that data “buyers” are the most mysterious side of the transaction - what are they purchasing, when, and why? Whom, other than advertisers, insurers, and financial analysis are in acquisition mode?
The “sellers” (or “vendors”) are better known - some top-of-mind players:
While the data broker industry lacks comprehensive oversight, I wonder if the solution to this market asymmetry requires more than just stronger regulation of consent alongside new fines and enforcement powers.
One of the biggest challenges in protecting privacy is that many of the violations are invisible, and all of these large secondary markets for user information exist in a shadow economy that is largely unchecked - out of the sight of consumers, regulators, and lawmakers.
What would a more concerted effort to understand the buyers and sellers in the data economy look like?
🚗 1. Introduce an intermediary: license data brokers at the individual level
Make selling and buying data a regulated activity - professionalize it and set enforceable standards. This will necessitate new credentials and standards - it will support job creation and innovation in the post-secondary sector.
*While it tends to be hella harmful, in and of itself, data brokerage is not necessarily illegal. This would shift the transaction from shifting through company to company and clearly put humans in the loop.
🌞 2. Make all transactions public
We can do better than a baseline of something like annual disclosure - which, by the way, we should still have. Shouldn’t firms report out on their purchasing and selling of datasets as a general source of transparency?
Transactions in the real estate or stock markets are public and thus, tangible. They are both regulated markets where human professionals oversee buying and selling. Data trades would not be unlike a stock market of sorts, when it comes to the high transaction volume. Don’t worry, I’m not going to suggest a decentralized ledger.
🤷 Does professionalizing data brokers make us more permissive of their activities?
To date, we’ve let the burden of permission re: data sharing and any associated brokerage anchor squarely on the shoulders of the individual - individuals whom are receiving more power under new privacy regimes to move their data, see their data, delete their data - but whom must still engage in the labour of that consent management in order to obtain the gains/rewards. There may be diminishing returns to these new data rights, and the novelty of requesting your information from social media companies may soon wear off. As a next step, we should use market tools to make the buying and selling of data more familiar.
What is a data broker?
A data broker is defined as “a business that knowingly collects and sells to third parties the personal information of a consumer with whom the business does not have a direct relationship.”
Another definition is, “a company that exists purely to collect your information, package it, and sell it to another buyer.”
*According to Privacy Rights Clearinghouse, there are currently 270 data brokers in the world. These professionals collect all types of personal data (such as public data, loyalty cards, etc) and sell it.
I found this wicked 2014 report from the Office of the Privacy Commissioner of Canada (2014) - Data Brokers: A Look at the Canadian and American Landscape. It mostly weighs privacy concerns. A companion read from the U.S. Government is US Big Data and Differential Pricing (2015).
We would better understand the buyers and sellers of data if we actually talked to them. Do you remember the hilariously named StatsCan weed survey that launched ahead of legalization - StatsCannabis? It actually asked people how much they bought marijuana for. Instead of forcing some companies to share this info through regulation, we should clarify the entire market for data flows.
For instance, the CCPA requires companies to disclose the value that consumer data holds to their organization, the proposed regulations provide eight different factors that businesses can take into account in calculating the value of personal data.
So as a precondition of formalizing the data market, we should do more to understand the highly variable pricing of data in an under-regulated market. Last year, two US Senators introduced the Designing Accounting Safeguards to Help Broaden Oversight And Regulations on Data (DASHBOARD) Act, bipartisan legislation that will require data harvesting companies such as social media platforms to tell consumers and financial regulators exactly what data they are collecting from consumers, and how it is being leveraged by the platform for profit. The Bill also sought to amend the Exchange Act; setting up new rules for disclosures.
It just doesn’t seem like punitively compelling companies to share this data is going to get us anywhere.
Another recent intervention that some states have been experimenting with is a data broker registry. These registries rely on the proactive disclosure of companies themselves (which is…unlikely) and empowers governments to penalize companies for not complying. However, a state's ability to enforce these registration requirements is predicated on the data broker self-identifying and registering. Why would a company - other than one that already has the highest standards and best practices - do that?
The State of Vermont recently enacted legislation [H.764] that regulates data brokers who buy and sell personal information. Vermont is the first state in the US to enact this type of legislation.
If passed, [AB 1202], one of the amendments making its way through the California legislature will: Require data brokers to register w/ the California Attorney General and provide some information, and impose penalties on the failure to register.
The federal Liberal Party of Canada has proposed a national advertising registry where companies would have to report with whom your data is being shared or sold, with the ability to withdraw consent at any time.
What about a National Data Broker Registry?
Apple's Tim Cook has called for the Federal Trade Commission FTC to establish a data-broker clearing house, requiring all data brokers to register, enabling consumers to track the transactions that have bundled and sold their data from place to place, and giving users the ability to delete their data on demand, free, easily and online, once and for all.
Last year, there were calls in the US for a National Data Broker Registry. It seems unlikely that all the companies in this space will want to put their hands up and pay to register. I also wonder if such a registry would need to be international. I mean, you could try to crowd-source one, and that would rely on a mix of self-disclosure and whistleblowing and might be onerous to maintain.
Formalizing the buying and selling of data would treat it as a commodity of sorts - similar to a natural resource that is traded, like mining or forestry. And data is *being* commodified. Fantasies of “owning” your data - still place the burden on you/us to manage that asset.
Clarifying the market for data is a precursor to other aspirations, like a universal basic data income or data dividends.
It feels unlikely that we will be in a position to meaningfully profit from the data economy (*which could be taxed) without entertaining what a comprehensive, regulated marketplace for data would look like.