Facebook-Cambridge Analytica scandal: Power to them who control data | Business Standard Column

At long last, the Facebook-Cambridge Analytica scandal might be the wake-up call forcing governments to devote to the social media companies the scrutiny they deserve. It has now been established that Cambridge Analytica — a firm working for the Donald Trump campaign — used unduly the personal data of 50 million Facebook users and the people they connected with on the social media platform to create “psychographic” profiles of voters, which were used by the Trump campaign to influence the outcome of the 2016 US presidential election. Coming after the revelations of the Special Investigator Robert Mueller on how Russian operatives used Facebook and other social media platforms in an elaborate scheme to polarise US public opinion and try to tilt the outcome of the presidential election in favour of Donald Trump, the Facebook-Cambridge Analytica scandal might hopefully be the straw that breaks the camel’s back. Leaving aside all the techno jargon, what the scandal has highlighted in the starkest way is the flawed nature of the arrangement on which social companies have been allowed to flourish, not only making inordinate amounts of profits but acquiring an undue influence on the mindset and habits of hundreds of millions of people — a significant percentage of them unsuspecting, naive, kids. Stripped of all the benign window-dressing of people being able to share pictures or whatever pass through their mind, this flawed arrangement boils down to a fool’s deal: People are enticed to use online services, seemingly free of charge, without fully understanding that by doing that they are providing in exchange — and giving up control of — their personal information; and this, without realising also that what they have relinquished has way more value than the kind of fee they would possibly have been paying for the services of the social media platforms and what they get from them. Because, quite simply, the amount of personal data collected from the use — or rather over-use — of social media is a treasure trove for marketing companies and political consultants. And, as such, it is valued in gold. It has now become conventional wisdom that data is to the 21st century economy what oil was for the 20th century economy. In fact, it is the essential feeder of the Internet of Things and Artificial Intelligence applications — the key drivers and components of the commanding heights of the 21st century economy. What is remarkable is how belatedly most governments — always prompt to regulate the most insignificant and irrelevant aspects of daily life — have been dealing with the strategic issues of data ownership, data privacy, data usage. And, in such a piecemeal way. In that respect, the US stands well among the laggards. The existing set of laws and regulations is full of loopholes that social media companies have become champions at exploiting. When Facebook was caught in another scandal in 2015, which illustrated the poor ethical practices of the company when it comes to the exploitation of the data of their online customers, it committed to observe stricter norms. But the appeal of higher profits was too great and the company has continued to launch new applications without fully developing the necessary safeguards to protect its customers. And, then it always waits until it is cornered before acknowledging the problems and its responsibilities. So far, Facebook and its likes have been claiming that regulations would just stymie technological development and the free flow of information; and they have been asserting that self-regulation by the companies would work best. They have been successful so far, thanks to their very efficient lobbying.
After the spectacular data breach at Equifax, a consumer credit-reporting agency, in May 2017 that impacted 145 million American customers, members of the Republican Party used the same kind of argument to block attempts in Congress to improve consumer privacy protections in the US. The fallacy and self-serving nature of this line of argument has today become just too obvious. While not all of the regulatory zeal of the European Commission — which sometime borders on the ridicule — is to be saluted, one needs to recognise that the new set of regulations coming into force EU-wide next May is the most comprehensive. This General Data Protection Regulation (GDPR) introduces among other things new rights for citizens to protect the privacy — and the use — of their data, new rules for the international transfer of personal data, and it requires companies to report breaches of their data systems within 72 hours. Needless to say, the new European system does not meet the favour of the US administration and US companies which would like to continue to have a free hand in using and leveraging the data of people beyond the US, not only in Europe but all over the world. However, the multiplication of revelations and scandals about the ways social media companies are taking advantage of the data their customers unwittingly provide them by using their platforms might now create the necessary pressure to address this crucial issue.
Illustration by Binay Sinha In that respect, a few basic facts are beginning to be recognised: First, the data about an individual, its social and consumption habits, is owned solely by this individual who should have a veto power about its use. Second, this data has a value — higher than most people imagine. And if this individual agrees to relinquish this data, then she/he should legitimately extract a price for it, in a context of transaction whose terms are clearly outlined. Third, the mass of data about the citizens of a country is, to a certain extent, part of the national assets of this country. It has to be protected against misuse — whether commercial or political — at the domestic as well as at the international level. Interestingly enough, there is a lot of common ground — although for very different reasons — between the EU and China which want to have a close eye, and control, about the ways other countries’ companies want to leverage the data gathered on the social habits, mindset and consumptions patterns of their citizens. Hence, for instance — and again for political as well as commercial reasons — the Beijing rule that any data collected on Chinese citizen has to be stored in China and cannot be transferred abroad. Back to the basic point that data is the oil of the 21st century economy. As such — in many ways — it has a strategic value and relevance not only for the economic future but also for the security and geopolitical standing of a country. Whether it is at the corporate level or at the level of countries competing for their place and role on the international scene, we have entered the era of the battle for the control of the data.

The writer is president of Smadja & Smadja, a strategic advisory firm Twitter: @ClaudeSmadja

via Facebook-Cambridge Analytica scandal: Power to them who control data | Business Standard Column

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