Resolving the privacy issue regarding personal data.

The news …

The U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing today on privacy of data collected by data brokers.  Gartner defines data brokers as the following:

“[A] business that aggregates information from a variety of sources; processes it to enrich, cleanse or analyze it; and licenses it to other organizations. Data brokers can also license another company’s data directly, or process another organization’s data to provide them with enhanced results. Data is typically accessed via an application programming interface (API), and frequently involves subscription type contracts. Data typically is not “sold” (i.e., its ownership transferred), but rather it is licensed for particular or limited uses. (A data broker is also sometimes known as an information brokersyndicated data broker, or information product company.)”

The Committee and the hearing witnesses discussed the lack of knowledge most consumers have regarding the amount of personal data collected on them and how the data is used or disposed of.  Not only is sensitive data in the hands of third-parties not known by the consumer but there is the risk that data collected could be incorrect and create a negative impression of the consumer particularly as it concerns decisions regarding employment, access to colleges, or access to credit.

At least one senator is on to something …

One line of questioning I found insightful came from Senator John Kennedy, Republican of Louisiana.  He wanted to know the thoughts of the witnesses on licensing of data by the consumer herself.  What disclosure requirements would both sides have to meet in order to allow the consumer to license her data?

It wasn’t clear whether Senator Kennedy discussed disclosure requirements in anticipation of a transaction model where parties need as much transparency as possible in order to negotiate licensing agreements for the exchange of personal data.  If that is the case, then licensing could help build a platform for a market solution to the privacy issue.

An autonomous market approach would keep government out of negotiating a data exchange between consumer and broker.  The parties could choose to have courts settle any contract disputes or issues arising out of tort where misuse of data resulted in some civil harm. Or, parties could choose arbitration, further minimizing government involvement in settling disputes.

Right now, the political power belongs with Congress …

But we are ahead of ourselves.  We still need to identify where the political power is sitting in this privacy debate.  So far the greatest ability to shape and control the political behavior of stakeholders appears to lie with the government.  Data broker LiveRamp Holdings, Inc., formerly known as Acxiom, acknowledges that the fallout from Cambridge Analytica’s treatment of data it received from Facebook has resulted in increased scrutiny of the “shadow industry.”

Congress may feel further emboldened to implement America’s own version of the European Union’s General Data Protection Regulation as more members of the electorate become familiar with data broker business models and the perception as to how data broker use of private data could negatively impact consumer lives.