The Private market in online privacy services and the emergence of data as an asset class

One of the most common concerns arising out of the use of the internet is privacy. The use and interaction with online materials provides opportunities for marketers to surreptitiously collect data and sell it to advertisers looking to target certain consumer groups. A recent Wall Street Journal article highlighted efforts to cash in on these privacy concerns. Some businesses propose to provide basic protection services like encryption of Facebook posts.  While other entrepreneurs hope to capitalize on a proposed “do not track system” for the internet, akin to the do not call list which regulates telephone based solicitation.  One of the more interesting ideas mentioned in the article was to convert online data into an asset class. The concept which was proposed at the most recent Davos conference and sponsored by the World Economic Forum aims to facilitate the creation of data as an engine of economic growth. As the report produced by WEF notes the current data “ecosystem” is inadequate because it fails to align the incentives of the various parties involved into creating an online “ecosystem” which facilitates the creation and trade in data. That is to say, currently, the internet is not structured in such a way so as to incentivize the creation and use of data. One key point relates to property rights. The report notes that,

“Who owns the data” and “What rights does ownership imply” are two of the most complex issues related to personal data. At first blush, these questions seem simple. Most people would intuitively assert that they own data about themselves and that therefore, they should control who can access, use, aggregate, edit and share it. However, even a cursory look at the issue quickly reveals that the answers are much less clear. Individuals do not “own” their criminal records or credit history. Medical providers are required to keep certain records about patients, even as those patients are allowed to access and share that information with others. Do companies such as Google and Amazon, which aggregate search and purchase histories across millions of users, own the proprietary algorithms they’ve built upon those click streams?”

The point being made, is that, as it stands the lack of clarity concerning who owns what as it relates to data, results in the diminished production of that data. The report is only forty pages but it highlights a number of concerns arising over the allocation of the ownership of such data. The report advocates for a balanced approach which will allow private market funds to allocate sufficient capital to develop and collect data, while protecting the privacy rights of individual users. Regardless of one’s opinion on how property rights should be allocated, what is clear is that the data economy has only just dawned and that policies will have to be developed in order to facilitate the growth of this new market.