Towards a safe data economy: insights from Kimberly Houser and Susan Aaronson

Despite coming from different academic backgrounds, both experts agreed on the notorious lack of trust in the current data economy, which hinders innovation and limits the public good potential of data. Indeed, despite numerous efforts to increase transparency and accountability in data markets, particularly in the EU, there is still very little information on how our data is being used in the digital age, which has led to growing concerns among users. Citizens fear for their privacy and security, as their information has sometimes been used for targeted political advertisements and intrusive surveillance campaigns, while businesses, who need users’ data to make informed decisions and deliver new products and services, often face a complex regulatory environment, where they are subject to strict data protection requirements and hefty fines and penalties for failure to comply. As a result, there is a critical mismatch between data supply and demand, with data scarcely being applied to the economic, social, and political problems it could help solve.

In this regard, both Houser and Aaronson point to the thin line separating personal and industrial data, that limits our ability to effectively regulate this burgeoning world. We tend to think of the two as easily distinguishable, but the truth is that much industrial data is actually personal data that can be linked or derived to make inferences about individual users. For example, a lot of environmental data comes from people’s water usage or temperature readingscould theoretically be used to know when someone is at home or taking a shower, thus invading their privacy. This tension is problematic, as we need more environmental data to make informed decisions to fight climate change. But individuals often choose not to share their data as a precaution, just as businesses can sometimes choose not to release users’ data, even to harmless third parties, to avoid public backlash.

“I would like environmental data to be made available immediately to every scientist working on the matter. However, there is concern that this data could reveal personal information. We should make strides to classify data accordingly, or at least provide exceptions to how some types of data are treated.” – Kimberly Houser

So how do we build trust among participating stakeholders to increase data flows and unlock the latent potential of data? As Aaronson points out, “You build trust through repeated accountability; by showing that you can be counted on to take responsibility for your actions.” In her view, we need more transparency about when and how data is being used, and that requires better policies. In that sense, the GDPR was “spot-on,” she says. “However,” she continues, “we also need to talk about incentives, as it is very hard to change behaviors without proper incentives.” These could include both monetary and non-monetary rewards, such as “renting” datasets to compensate for the costs of collecting and generating data, as well as granting reciprocal access to other companies’ datasets or compute infrastructure to enhance their ability to make new data-driven decisions. A final aspect that Aaronson warns about is the controversial role of data brokers, entities that act as middlemen in data markets but often have vast supplies of data about which we know very little.

"Data brokers don’t have data subjects’ interests at heart. They could be more regulated or audited more strictly, but I think in general it is a very slimy industry”. – Susan Aaronson

Finally, Houser goes one step further and discusses a new type of stewardship model to unlock the potential of data to increase innovation and promote social good, while at the same time protecting data subjects: data trusts. In essence, data trusts allow individuals to pool their data in a granular and secure way, choosing what data to share and for what purposes, while giving organizations confidence that this data will comply with data sharing and data protection laws, thereby increasing trust among all stakeholders involved. Unfortunately, there are a number of legal barriers standing in the way of data trusts with respect to both upstream and downstream data flows, so Houser proposes a regulatory sandbox scheme to allow companies to test this solution without fear of fines and litigation and to give policymakers more information about potential regulatory frameworks around this novel form of data sharing.

“By allowing the testing of data trusts in the EU under appropriate national competent authorities, enormous value could be gained by regulators in understanding how regulations should be crafted to better balance the rights of data subjects with the need for data sharing.”- Kimberly Houser

Regardless of the solution, however, what is certain is that we need more data flows to boost innovation and confront future challenges. The prerequisite for that is to have a data economy that is fair, competitive, and safe – open to participants of all shapes and sizes. If we are to make the best of the digital revolution, we need a new social contract and an enabling regulatory framework to put people at the center and allow the most ambitious public and private sector organizations to succeed.

Kimberly Houser is a Visiting Scholar at the Ostrom Workshop on Data Management and Information Governance at Indiana University, an Advisory Board Member for the Digital Democracy Lab at William & Mary Law School, and a Fulbright Specialist on Cybersecurity and Data Protection at the University of Lisbon Law School

Susan Aaronson is a Research Professor of International Affairs and Cross-Disciplinary Fellow at the Elliott School of International Affairs at George Washington University, Director of the Digital Trade and Governance Hub at GWU, and Senior Fellow at the Center for International Governance Innovation