The system is rigged against users: Another reason why getting compensated for data is not a good idea
By Beatriz Botero Arcila
Time and again, we hear that users should get compensated for the data tech companies collect from them. This should fix many of the privacy and power asymmetries problems we see in the digital information economy. Former Democratic presidential candidate 2020 Andrew Yang, for example, suggests that individuals should have certain rights about how their data is used and individuals should be able to waive these rights “for the companies’ benefit (…) but then you should receive a share of the economic value generated from […] your data.”
There are plenty of proposals like this. One of the most sophisticated ones is in Radical Markets, a book by economists Eric Posner and Glen Weyl. Posner and Weyl propose a series of strategies to create well-functioning markets to reduce inequality and increase prosperity, and in doing so fix many of the “social rifts” that are tearing society apart today. Among their proposals is that people should be given rights to demand compensation from the collection and use of their personal data for profit as if data was a form of labor. In the world Posner and Weyl imagine, platforms are open and transparent about how it uses data and pays for the value it receives with money. The income users receive is the marginal cost of their data.
There are many reasons why these proposals miss the point, and many others have warned about them. My colleagues Elizabeth Renieris and Elettra Bietti have argued that selling data could compromise human dignity and that privacy is a fundamental human right that shouldn’t have a price tag. Formalizing property claims over information would inject enormous friction into the free flow of information. Data markets would tend to harm low-income individuals, turning privacy into a luxury legitimizing data-harvesting and analytics activities by pricing it. Indeed, in many supply chains, raw-material producers rarely get a significant return on the resources they harvest.
I agree with the idea that recognizing property rights over information is problematic, and comes with delicate trade-offs about how information flows in society. It will also do too little, if anything, to protect the privacy interests of users. Here, however, I want to focus on the inequality argument: Why would granting users a right to be compensated for data not be a good way to redistribute fairly the financial gains of the digital information economy?
The reason is, in reality, quite simple: In the imaginary bargain that would take place between users and platforms for user data, users are very badly positioned. Indeed, the price of goods is determined by a variety of factors shaping their market value: How much the good adds to production (marginal product of the input), how scarce it is, whether the “seller” or worker can go and sell his goods or labor elsewhere for a better price, or whether the buyer can get an equivalent product for a lower price, for example. These elements of economic organization and context shape the bargaining power of the different actors in a particular time and place.
In labor markets, workers and capital owners struggle and bargain over the distribution of the surplus generated by production. In a scenario where we would use some form of compensation to distribute the financial surplus generated by data-monetization, the bargain would be between users and companies. In the contemporary economic and institutional setting, however, users are badly positioned for that bargain: User data is not “scarce” and rarely unique, so companies have little incentives to compensate individual users highly. Users are not organized to demand higher compensations and, too often, they are unaware of why they should demand better treatment for their information. Companies are not obliged to provide equivalent services if users don’t want to consent and the ubiquitous presence of digital technologies makes them hardly escapable: Oftentimes they capture information in public spaces or many of us use them for work. Digital architectures give companies leverage over the data they collect because they store it. Let’s not even get into the possibility that some platforms may be capable of manipulating us. Finally, there are the many legal reforms that have shaped an economy where too many people face economic stress and corporations are significantly powerful. Many people who are vulnerable already would thus be willing to be compensated for data to make some extra income regardless of the ways in which the data will be used; not because they’re free to do so, but because they are in need.
This leaves us with a scenario where users would take the companies’ offering price, which given how badly positioned we are would be a low one. Just take a recent example: Facebook will now pay users who make voice recordings to help the giant improve its speech recognition technology. Users, however, won’t be able to earn more than 5$.
This is why “data as labor” or property would reinforce current patterns of inequality, perhaps aggravate them, and legitimize some of the uses of personal data that we today find concerning, as companies would be able to say “but I paid for it.”
In this sense, if what data as labor proponents seek to do is to address how “our data is collected, used, and abused by companies” or curve the staggering inequality we see today, we should focus legal reform efforts elsewhere: Consider the rules that govern data collection and analytics and permit abuse to begin with, the lack of options we as users have online if we don’t consent and in general the policies that have lead to a socio-economic arrangement that favours the interests of corporations over those of individuals way beyond their fair share. What about some redistributive taxes, for example.
I bet if we did some of that, we wouldn’t talk at all about giving people money for their data to make them better off; we’d be better off already.
