Essay by Marshall W Van Alstyne, Georgios Petropoulos, Geoffrey Parker, and Bertin Martens: “…Data portability sounds good in theory—number portability improved telephony—but this theory has its flaws.
- Context: The value of data depends on context. Removing data from that context removes value. A portability exercise by experts at the ProgrammableWeb succeeded in downloading basic Facebook data but failed on a re-upload.1 Individual posts shed the prompts that preceded them and the replies that followed them. After all, that data concerns others.
- Stagnation: Without a flow of updates, a captured stock depreciates. Data must be refreshed to stay current, and potential users must see those data updates to stay informed.
- Impotence: Facts removed from their place of residence become less actionable. We cannot use them to make a purchase when removed from their markets or reach a friend when they are removed from their social networks. Data must be reconnected to be reanimated.
- Market Failure. Innovation is slowed. Consider how markets for business analytics and B2B services develop. Lacking complete context, third parties can only offer incomplete benchmarking and analysis. Platforms that do offer market overview services can charge monopoly prices because they have context that partners and competitors do not.
- Moral Hazard: Proposed laws seek to give merchants data portability rights but these entail a problem that competition authorities have not anticipated. Regulators seek to help merchants “multihome,” to affiliate with more than one platform. Merchants can take their earned ratings from one platform to another and foster competition. But, when a merchant gains control over its ratings data, magically, low reviews can disappear! Consumers fraudulently edited their personal records under early U.K. open banking rules. With data editing capability, either side can increase fraud, surely not the goal of data portability.
Evidence suggests that following GDPR, E.U. ad effectiveness fell, E.U. Web revenues fell, investment in E.U. startups fell, the stock and flow of apps available in the E.U. fell, while Google and Facebook, who already had user data, gained rather than lost market share as small firms faced new hurdles the incumbents managed to avoid. To date, the results are far from regulators’ intentions.
We propose a new in situ data right for individuals and firms, and a new theory of benefits. Rather than take data from the platform, or ex situ as portability implies, let us grant users the right to use their data in the location where it resides. Bring the algorithms to the data instead of bringing the data to the algorithms. Users determine when and under what conditions third parties access their in situ data in exchange for new kinds of benefits. Users can revoke access at any time and third parties must respect that. This patches and repairs the portability problems…(More).”