Data as a Resource? A Simplistic Metaphor and its Policy Implications

December 16, 2019

The global economy has begun to move away from the hegemony of fossil fuels and in the direction of digital data. In 2011, six of the 10 largest corporations were petrochemicals, while in 2019 only one remains. Instead, seven of the top 10 owe a large part of their market capitalization to the creation of value from personal data.[i] This shift has led commentators to conceptualize data as “the new oil,” meaning a new, highly profitable natural resource.[ii] This metaphor, while underscoring the growing importance of the digital economy, has theoretical shortcomings and problematic policy implications. The data-as-oil metaphor also potentially distracts from the reality that fossil fuel extraction rates continue to grow, with all of the accompanying environmental consequences it implies.

There are important material differences between data and oil. As an economic good, data is non-rivalrous (i.e. it can be used more than once, and for different purposes) and can be copied at marginal cost. Clearly, the same cannot be said for oil. Personal data does not just spring out of the ground, more or less waiting to be filled in barrels and sold by whoever controls the ground in question. Instead, it emerges only when one or more persons inside a socio-technical system (inter-)act. Thus, it would be virtually impossible to assign exclusive property rights on data, comparable to patents or copyrights, to individuals or companies.[iii]

The complexity of many interactions often renders data ownership difficult to determine. Consider a Facebook conversation between several individuals, sensor data from a Smart City, or the code of the human genome. In such cases, it is hard to determine the scope of the data’s subjects, let alone its owners. Even without a full-fledged legal property right, both data subjects (e.g. Facebook users) and data holders (e.g. Facebook) have some degree of technical control over such data.

A large part of the digital economy is based on an explicit market, where these two parties trade personal data against subsidized services. This trade is enabled by legal norms and institutions that are based on the assumption that both parties retain at least part of the bundle of rights normally associated with ownership. The EU’s General Data Protection Regulation, for example, allows almost any data transactions on the basis of informed consent.[iv] In practice, however, there are strong information and power asymmetries between the involved parties, and data is therefore extracted rather than transacted upon. The underlying belief behind the General Data Protection Regulation is that resource ownership among informed equals allows for mutually beneficial exchange and enables cooperation.

On the other hand, data resources are also increasingly subject to national protectionism. One prominent case is the conflict around 5G networks, where both the US and EU have taken measures to limit the involvement of Chinese actors in their domestic construction projects. The Chinese government, in turn, has notoriously walled off its Internet channels from the rest of the globe. The Data Localization Policies that can be found in many EU member states[v] and in India,[vi] are likewise an attempt to prevent mainly US-based firms from extracting personal data from these countries.[vii] In some cases, American tech giants have even been accused of “data colonialism,”[viii] evoking one of the starkest available images of a form of injustice that is based on, among other factors, resource extraction.

National protectionist data policies illustrate that conflict, not cooperation, has become the dominant mode of international relations with regard to data. All players in this conflict seem to be guided by the same underlying notion of data as an “ownable” resource, from institutions that foster domestic market exchange, such as data protection laws, to the data subjects and owners. However, there are three problems with this notion.

First, in many cases where personal data is treated as individual property, it is unclear which individual(s) own the data. Second, even if an owner can be established, data ownership has highly undesirable economic consequences. Data markets tend to tip toward monopolization and unequal outcomes, as demonstrated by behavioral experiments[ix] and the dominance of personal data companies among the 10 largest companies in 2019.[x]

Third, there is an ethical problem to be considered when discussing the difference between personal data and other natural resources. Personal data is arguably part of a one’s personhood, and thus requires special protection. Just as I may choose to donate my kidney to my sister, for instance, but not sell it to an organ trader, users should have more control over who collects their data, where they store it, and how it is used. There should also be limits to what data can be sold, and some data should not be up for sale at all. This might include data that relates to third parties, or whose trading comes with negative externalities.[xi]

What follows may be stricter data protection laws that seriously limit the bundle of data ownership rights, and hence the extent to which data is treated as a resource. If the protection of privacy means a limitation of “cooperation” to voluntary market exchange, then such a policy would be a call for more conflict in the micropolitical domain.

In the macropolitical domain, the same argument would call for data protection beyond data protectionism. Privacy concerns can be effectively addressed by effective data protection laws, combined with more democratic data governance institutions where possible.[xii] In some cases, national digital champions may bear the cost of such policies, but there is no obvious justification for the sacrifice of fundamental rights on the altar of geopolitics.

Consequently, if the appropriate definition of “cooperation” does not include market transactions under the current conditions of power asymmetries, but is instead limited to voluntary collective governance on leveled global playing fields, then the appropriate policy in the macro-domain is one of more cooperation and less conflict.

The metaphor of data as a natural resource invites extraction on the micro-level and protectionism on the macro-level. Moving beyond it, understanding the economic and moral characteristics of personal data and reconceptualizing it – whether as labor,[xiii] as a collectively owned product, or as a part of personhood[xiv] – will help to recalibrate the relevant institutions and policies, and ultimately move towards a fairer digital global economy.

 

References

Picture by photographerpandora

[i] Wikipedia. List of Public Corporations by Market Capitalization 2011; 2019, https://en.wikipedia.org/wiki/List_of_public_corporations_by_market_capitalization#2011, accessed April 14, 2019.

[ii] The Economist, “The world’s most valuable resource is no longer oil, but data,” The Economist, May 6, 2017,https://www.economist.com/leaders/2017/05/06/the-worlds-most-valuable-resource-is-no-longer-oil-but-data.

Joris Toonders, “Data is the New Oil of the Digital Economy” Wired, https://www.wired.com/insights/2014/07/data-new-oil-digital-economy/.

[iii] Barbara J. Evans, “Much ado about data ownership.” Harv. JL & Tech. 25 (2011): 69.

[iv] Purtova, N. “Do Property Rights in Personal Data Make Sense after the Big Data Turn?: Individual Control and Transparency.” Journal of Law and Economic Regulation 10, no. 2 (2017)

[v]Nigel Cory,  “Cross-border data flows: Where are the barriers and what do they cost?” Information Technology & Innovation Foundation, May 1, 2017, https://itif.org/publications/2017/05/01/cross-border-data-flows-where-are-barriers-and-what-do-they-cost.
Many such policies that prohibit the flow of data outside of the EU continue to exist, even if data localization policies that prevent the free flow of data between member states have been banned by the EU. See Telecompaper, “European Parliament approves Bill prohibiting Data Localization Rules”, Telecompaper, October 4, 2018,  https://www.telecompaper.com/news/european-parliament-approves-regulation-banning-national-data-storage-requirements–1263534

[vi] Arindrajit  Basu, Elonnai Hickok, Aditya Singh Chawla,“The Localisation Gambit. Unpacking Policy Measures for Sovereign Control of Data in India,” The Centre for Internet and Society,  March 19, 2019, https://cis-india.org/internet-governance/resources/the-localisation-gambit.pdf

[vii]Blayne Haggart “New economic models, new forms of state: the emergence of the ‘info-imperium’state,” in Kritika: Essays on Intellectual Property, ed. Hanns Ullrich et al. (Cheltenham: Edward Elgar Publishing, 2018).

[viii] Jim Thatcher, David O’Sullivan, and Dillon Mahmoudi. “Data colonialism through accumulation by dispossession: New metaphors for daily data.” Environment and Planning D: Society and Space 34, no. 6 (2016): 990-1006.

[ix] Volker Benndorf, Dorothea Kübler, and Hans-Theo Normann, “Privacy concerns, voluntary disclosure of information, and unraveling: An experiment,” European Economic Review, 75, 43-59.

[x] Ibid.

[xi] Linnet Taylor, Luciano Floridi, and Bart Van der Sloot, eds. Group privacy: New challenges of data technologies. (Berlin: Springer, 2016), Vol. 126.

[xii] For one example of democratic data governance, see the DECODE project and its pilots in Barcelona and Amsterdam: https://decodeproject.eu.

[xiii] Imanol Arrieta-Ibarra , Leonard Goff, Diego Jiménez-Hernández, Jaron Lanier, and E. Glen Weyl, “Should We Treat Data as Labor? Moving beyond” Free”,” in AEA Papers and Proceedings, vol. 108, 38-42

[xiv] For some approaches in this direction, Linnet Taylor, Luciano Floridi, and Bart Van der Sloot, eds. Group privacy: New challenges of data technologies. (Berlin: Springer, 2016), Vol. 126

 

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Christopher Olk

After his undergraduate in Philosophy & Economics at Humboldt University Berlin, Christopher is currently pursuing a M.Sc. in Innovation Management, Entrepreneurship & Sustainability at IIT Madras, India and previously at the Technical University Berlin. There, he also taught a seminar on "Alternatives to Platform Capitalism", while interning at the ILO office in Berlin.