At FTC Hearing, Tech Groups Play Down Value of Data Collection
Two tech trade group representatives played down the value of consumer data during Tuesday’s FTC policy hearing (see 1810310052). Another industry official argued too much focus is on drawbacks of big-data collection, not enough on benefits.
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Data isn't essential, ideas are, said Computer & Communications Industry Association Competition and Regulatory Policy Director Marianela Lopez-Galdos, arguing innovation is more important than market positioning. Like brick-and-mortar entities, online platforms survive because they offer ideas and services consumers like, she said. Snapchat and Slack became successful with little data at the onset, she said. The value of search data diminishes rapidly, said Software & Information Industry Association Senior Vice President-Public Policy Mark MacCarthy, citing fast-changing consumer interests.
Avoiding data misuse is important, said ACT|The App Association President Morgan Reed, as is using data to benefit consumers. He and MacCarthy noted consumer medical data holds value longer than general search data. Mastercard Senior Vice President Andrew Reiskind said data collection lets credit card companies protect consumers against fraud.
Congress should think hard about limiting power of agencies that govern big data, said University of Maryland economist Ginger Zhe Jin, a former FTC Economics Bureau director. Trying to regulate data use by companies is like trying to monitor household electrical use per appliance, said Northwestern University marketing professor and big-data specialist Florian Zettelmeyer. There’s no way to measure all the useful and harmful ways firms use data, he said.
Protecting data increases consumer welfare by preventing targeted price discrimination, said Carnegie Mellon University information technology scholar Alessandro Acquisti, on a team that received a $400,000, two-year research grant from Google for unrelated research. Policymakers should consider levying data taxes on companies that use data “as currency,” said University of Chicago Law School economist Omri Ben-Shahar. Such a tax is one way to consider social costs and “negative externalities” of big-data collection, he said.
The EU’s general data protection regulation may be causing a decline in tech startup investment, said Illinois Institute of Technology economist Liad Wagman, citing research funded in part by Google and Facebook. Compliance costs disproportionately affect smaller firms, further cementing incumbents, he said, and smaller firms aren't able to raise as much money. Lopez-Galdos agreed large companies can comply more easily with GDPR.