This latest episode of the AIQ Podcast looks at what the European call for a ‘Magna Carta’ for data has led to, and explores the investment implications of the growing scrutiny over data privacy.
From Russian hackers interfering in foreign elections to high-profile corporate breaches, people are waking up to some harsh realities around data.
Exploring the investment implications of the growing scrutiny over data privacy.. Find out more in this episode.
Hello and welcome to the AIQ podcast, an audio series from Aviva Investors that explores the long term themes influencing investment markets and economies. In this episode, we venture into the great data debate from Russian hackers interfering in foreign elections to numerous corporate breaches. People are waking up to some harsh realities. Do we know who controls our personal data and who might be able to access it? Risk convenience. Just a little more critical. We'll be hearing from some leading industry players, academics and an investment specialist who'll take us through the data ground rules and look at what the European call for a Magna Carta for data has led to.
Tim Berners-Lee, credited with founding the Internet, has described himself as an optimist, standing at the top of a hill with the wind blowing in my face. When the founder of the Internet points out the challenges facing the worldwide web, it's wise to take note. One of his major concerns is that the Internet has simply not enabled a flatter society. Here is Berners-Lee speaking to the World Economic Forum.
We have a crisis of inequality. And so every time people put more powerful things on the web, we actually increase the gap between the haves and the have nots.
So although the Internet was built on a benevolent culture, a culture of sharing, it seems to have become less benign over time, a handful of large companies dominate their platforms. And now digital citizens are looking much more closely at the trade offs they're being asked to make online. On one hand, they benefit from the extraordinary convenience of free services, from messaging to maps. On the other, intensive tracking sustains the dominant business model. Free services are paid for in personal search and consumption data collected from users on a minute by minute basis. It's important to be alive to the way in which commercial companies are putting this information to work. According to Jason Bonanni, technology, media and telecom sector lead.
If he were investors, he should probably believe that if you're not paying for that or you're obviously being monetized one way or the other.
And despite rules to protect personal sensitive information with a shield of anonymity, for example, by scrubbing details or using numerical identifiers, not names, layering data from different sources is making it increasingly difficult for digital service users to act incognito. In fact, it's been described as laughable to believe that one's personal information can't be traced. According to one member of the US Federal Communications Commission, this is important because information is power. Data is an essential input in the information age, and there will inevitably be tensions between the rights of citizens and others interested in acquiring and analysing better information. With the Internet of Things, the volume, velocity and variety of information recorded will surge. A world defined by sensors and crisscrossed by g._p._s boundaries is always on and suggests quite specific problems of privacy and data security. It also raises much bigger questions of power and system design whose values are reflected here is included and who will benefit.
According to Dr. Jason Sadowsky from the University of Sydney, we understand data capital along with the data you collected. Understanding that the valuable dumping that to our raising questions around things like extraction.
So as private spaces shrink, where does this leave the rights of the citizen? The idea of privacy is tricky, culturally relative and shape-shifting, it is broadly agreed to mean the right to be left alone and free from unwanted intrusion. But what might be unwanted intrusion in some cultures is not the case in others. From talking about your pay to appearing in public naked. No two societies have the same level of comfort when the UN Declaration of Human Rights tried to establish some shared ground rules in 1948. It set out the idea that no one should be subject to arbitrary interference with their privacy, family and home or in correspondence. The world has moved on since 1948. Technology has become ubiquitous in domestic life, the workplace and on the move. Anyone happy to share the minutiae of life in a blog? Keep an open video link to chat to friends and post selfies with embedded location data might think the concept of privacy old hat. People are comfortable sharing information. According to Mark Zuckerberg back in 2010, Mark Zuckerberg's albeit formally relaxed view is not held by Professor Barry O'Sullivan, director of the INSIGHT Centre for Data Analytics at University College Cork. As data is an increasingly valuable currency for research and industry, he believes privacy and the need to ensure age appropriate content need much closer attention.
Moving into a world where people are very, very concerned about privacy, very concerned about the impact of technology. Other children I worry about other young faces, the pace of death. The thing that's enabling some of this is obviously sharing of personal data technology.
Post-Great Sneakiness is undermining potentially troubling for researchers seeking how to draw on troves of data to generate insights in a big data age. Analysing swathes of information might bring new insights to practical problems in medical diagnostics, in managing the flows of patients, in hospital admissions, in traffic and crowd control and so on. But if confidence breaks down over the way in which data is collected, stored and protected with disregard for cybersecurity and civil liberties, it could scupper positive developments in the future. Here's Jason Bonig again.
We have to have some confidence that the data is being used in a secure and reasonable way. Well, it doesn't really matter how good the offerings are or anything like that, because ultimately it'll just get stymied in game theory terms.
This is a classic Nash equilibrium problem. How will it be possible to create an optimal outcome for society based on what the individual players might do? Some important suggestions have flowed out of the predicament intended to rebalance interests in the data chain in the US. M.I.T. Professor Sandy Pentland proposed a new deal on data suggesting individuals should own their own data quite far removed from the current US regime in the UK. Berners-Lee's Magna Carta for data sought to crowdsource ideas to improve the nature of the Web. Ultimately reinforcing the idea established in 2015 that everyone should be subject to the law. It went on to inform the new EU General Data Protection Regulation GDP that came into effect on the 25th of May. One of the most significant changes in data privacy regulation for years GDP applies to any business that handles personal data for European residents, addresses, bank account details, web search histories and so on. At its heart is the idea that control over personal data lies with the citizen. The legislation includes a requirement for data keepers to maintain accurate records and keep information secure for European regulators. GDP is particularly important as it aims to establish a framework to future proof and formalized requirements for the data economy.
According to Professor O'Sullivan, most people vegetation frame technology and I think that's true to some extent, but not entirely. I actually today you are one of the world's first an artificial intelligence legislation because the housing industry today is very much dominated by access to funds in legislation. There's an inspection by ACSU, the world's first. He's hottest intelligence legislation.
GDP sits within a very specific ethical culture. If Europe is positioning itself at the conservative end of the scale in terms of personal data treatment, China is placing itself towards the other. China monitors its citizens closely and comprehensively from birth, and it seems likely data will be used in its own bid to become a global leader in A.I..
If one looks at the ethical cultures of Europe versus China, these are three very different cultures and how to use them in the US. How many have on one data? Personal data is always under the ownership of individual. Chris Nafisa We have a very solid base for developing technology bahat privacy, preserving the high divorce rate more so than those data on time. I think there will be a barcus for privacy business model around privacy and I think those three cultures, Hogg's industries.
Nevertheless, this is a highly contested area. For instance, US Republican Marsha Blackburn insists that following the European privacy model, we'll take information out of the information economy making innovations stall. GDP has been portrayed as a burden to companies that fall under the EU regime, possibly putting the nail in the coffin of European businesses harnessing third party data. An alternative view is that GDP could encourage higher standards of data management and a form of privacy arbitrage where consumers choose service providers in one regime over another. It could also influence investment decisions such as where companies locate their data centres. So what does this mean for the global incumbents? Firstly, regulatory risk is rising. Even Zuckerberg has conceded that more rules of the road for big tech seems inevitable. Meanwhile, privacy concerns are driving traffic towards companies whose strategies prioritise anonymity. Hence the 55 percent year on year growth for the 0 tracking search engine DuckDuckGo in 2017, for instance. However, the platforms whose business models have historically relied on tracking like Facebook and Google's parent company Alphabet, are not reporting impacts from consumers turning away. Quite the opposite. Both reported markedly higher revenue and profits in 2018. This suggests that the various calls for consumers to spend less time online to tune out in a digital detox are not being heard. Here's Jason Boni.
I don't think people are also stopped searching for things. And I think also people are going to start using that in translation.
And I think at this point, the digital infrastructure has become part of our everyday lives.
And I believe it's structurally here to stay with European moves afoot to reinforce respect for the ownership of personal data by the individual. The question that inevitably flows from that is who might benefit? At the moment, the value coming from the data harvested from billions of individuals is accruing to a relatively small number of companies. So while individual users have the benefit of online services for free, they are effectively sliced out of the value chain. Security expert and best selling author Bruce Schneier sees this model as futile. He likens it to tenant farmers who have the right to inhabit the digital space, but at a cost.
Increasingly, we're living in a computing world that I liken to feudalist, but the idea being if you pledge your allegiance to Apple and give them your e-mail and your calendar and your address spoke and your photographs, your life is easy. And they in turn, I guess they promise to protect you. A lot of us pledge some of our allegiance to Facebook, to Amazon, but all these companies that are increasingly controlling our data and controlling our end user devices.
But in the process, he believes users should have no illusions about where they sit in the hierarchy of power.
We are the peasantry. We are collateral damage.
One way to reimagine the feudal model would be to pay individuals directly for the right to access their information. This is what sites like citizen me envisage promising individuals and businesses cash for revealing specific preferences and pieces of information. It is early days, but O'Sullivan believes broking personal information with users giving their informed consent could eventually morph into a whole new industry. Another option for those who want to break free of feudal type data relationships is to opt out of free services and pay to play through subscription dedicated services like Netflix and Spotify. Should that subscription. Services can work, though, they are yet to be proven in search and social media. Meanwhile, it is still not entirely clear how companies will deliver privacy and data security at scale. One possibility would be to use blockchain the system of distributed ledgers. In theory, this would mean it would no longer be necessary for online service users to keep inputting sensitive information such as personal bank account details. Again and again, it would also cut the risk of fundamental systems failure as risks would be dispersed among multiple ledger keepers. The Privacy and Security Conundrum has been engaging minds at the Massachusetts Institute of Technology. IT specialists propose using a protocol that might sit on top of existing blockchains. The idea was to use secret contracts that could use data without ever actually seeing the data itself. The researchers suggest this might make it possible for users to lock in their own information, preventing it being monetized or analysed without their consent. Here's Barry O'Sullivan.
This could become a application to privacy, a part of me which isn't ecomony about privacy, monetization and trading and the opportunities implied by the torrent of information being generated in a closely connected digital world are immense, potentially extending the boundaries of what we know.
But there are a whole cluster of sensitive issues that need to be addressed before that point. Ethics among them companies who have followed grap all strategies are fully aware of the value that might accrue to them, but their rights to do so are now being challenged. At this point is perhaps interesting to review Mark Zuckerberg's own appetite to share the minutiae of his life. Here he is facing up to questioning from members of US Congress in April 2018.
Mr Zuckerberg, would you be comfortable sharing with us the name of the hotel you stayed in last night?
If you've messaged anybody this week, would you share with us the names of the people you've messaged?
Senator? No, I would probably not choose to do that publicly here. I think that may be what this is all about.
Privacy is the nexus of this debate, sharing and oversharing. Who draws the ownership lines? The government and the technology industry are still grappling over the ground rules to revert to burn is Lee's analogy. It's time to grab a coat button up.
Well, thank you for listening to the AIQ podcast to look out for future episodes.