The Root of the Matter: Data and Duty

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November 1, 2018, 5:28 pm

Rules for the New Digital Economy Should Look to Old Common Law Traditions

By Tom Wheeler, Senior Research Fellow, Shorenstein Center on Media, Politics and Public Policy and Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School. 31st Chairman of the Federal Communications Commission (FCC), 2013-2017

There are 39 million books in the Library of Congress. This impressive analog measurement pales in comparison, however, with the realities of the digital world. Every day connected computers create the data equivalent of three million Libraries of Congress! This startling fact defines the economics of our time. Serving as the foundation for many beneficial outcomes, the aggregation of this torrent of data also menaces the public wellbeing with threats as diverse as election interference and non- competitive markets.

It is important to recognize we are only at the beginning of the data aggregation era. Market intelligence firm International Data Corporation (IDC) forecasts that by 2025 the amount of data created and collected globally (both personal and machines talking to machines) will be over five times greater than today. This startling forecast leads to two conclusions: (1) if we are concerned about the collection and manipulation of data today – get ready for even more, and (2) developing rules for handling this data and its impact on privacy and marketplace competition is a sooner-rather-than-later priority.

The time has come for a new set of guardrails for information capitalism that protect citizens and promote marketplace competition.

Much like the early days of the industrial era, when Rockefeller, Carnegie, Vanderbilt and other industry barons imposed their will, the companies driving today’s digital economy are making their own rules. A century ago civic and political leaders stepped up to establish guardrails for industrial capitalism’s management of hard assets, including protections for competitive markets, consumers and workers. The internet simply allows a new iteration of capitalism built on the soft assets of data-driven algorithms. The time has come for a new set of guardrails for information capitalism that protect citizens and promote marketplace competition.

The framework for such policies already exists and is embedded in the principles of common law. Companies have responsibilities: a “duty of care” to not cause harm, and a “duty to deal” to prevent monopoly bottlenecks.

The harvesting of personal information – often without the individual’s knowledge – infringes on the sovereignty of the individual and their personal privacy.Just as government once established rules to protect the collective good by assuring pure food and drugs, and clean air and water, we now have a collective interest in overseeing how the internet allows companies to collect and exploit personal information. Internet companies – both service platforms and the networks that deliver them – should have a “duty of care” as to the effects of their actions on personal privacy.

The subsequent use of that personal information has been cartelized to create new market-dominating anti-competitive forces. The data economy is no different from earlier economies where human nature and economic instinct created market- controlling bottlenecks. The dominant digital companies have a “duty to deal” so as not to block the competitive functioning of the marketplace.

We cannot overlook the many remarkable developments made possible by the companies of the digital economy. At the same time, however, it is time to reassert old truths and reestablish traditional duties to protect citizens and the competitive market. Such rules can ultimately benefit the companies and internet capitalism in the same way that past public policy decisions permitted industrial capitalism to flourish.

To read the full paper click here to view the PDF.