Well-designed data markets could curb gatekeeper power, protect privacy and pay users for sharing data, while preserving ad-supported digital services.
The European debate over personal data trading has become trapped between two unworkable extremes: the status quo of allowing platforms unfettered access to user data, or making data sharing so difficult it is effectively banned. Neither position serves consumers’ interests. Personal data sharing can create substantial value – enabling relevant advertising and powering digital services – but currently this value is captured almost entirely by gatekeepers, while users surrender control of their commercial, location, social network and even sensitive medical data without meaningful consent or compensation. The critical policy challenge is to enable beneficial data sharing while protecting users’ fundamental privacy rights and ensuring they are fairly compensated for data they choose to share.
The solution lies in creating well-regulated data markets. European Union regulators should establish a system that prohibits trading of personal data that is sensitive, sets a default that is both safe and gives users bargaining leverage, and mandates transparent and effective choice architectures to ensure users are informed. When a default allows users to access a platform’s free service in a more private way, the platform will have a financial incentive to encourage more data sharing. Platforms will need to compensate users to make active and informed choices to share more data. Platforms may also offer paid options to users who want to opt out of data sharing and to see no ads. This menu of three options – free, subsidised and costly – will allow users to make individual choices about sharing personal data in a safe and regulated environment.
Such regulation would allow platforms to continue advertising-supported business models, while giving consumers genuine control and economic benefit from their data. Without functioning data markets, Europe faces two poor outcomes: either personalised advertising collapses and valuable digital content disappears, or courts permit platforms to continue exploiting users without consent, delegitimising privacy law. Well-designed data markets would enable fairness and contestability by allowing smaller digital competitors to obtain data on the same terms as big ones, and by sharing with users some of the hundreds of billions earned annually by platforms such as Google.
Source : Bruegel
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