Legislation recently introduced by two senators could upend online data practices by requiring large websites to tell consumers the value of their personal data.
The Designing Accounting Safeguards to Help Broaden Oversight And Regulations on Data, or DASHBOARD, Act, introduced June 25 by Sens. Mark Warner, a Virginia Democrat, and Josh Hawley, a Missouri Republican, requires commercial data operators with more than 100 million monthly active users to disclose the types of data they collect and regularly provide users with assessments on the value of the data.
The bill would also require these large data collectors to file annual reports detailing the total value of user data they have collected and disclosing their contracts with third parties involving data collection.
The sponsors said the bill is necessary to inform consumers about the value of the data they’re giving up in exchange for using free online services.
“For years, social media companies have told consumers that their products are free to the user,” Warner said in statement. “But that’s not true — you are paying with your data instead of your wallet.”
A lack of transparency in online data collection “made it impossible” for consumers to understand what they’re giving up to use free online services and know what other companies their data is being shared with, Warner added. The bill will encourage competition and allow antitrust enforcers to identify anti-competitive data collection practices, the sponsors said.
For years, some privacy advocates have been calling for more transparency in the online data collection market. Some praised the DASHBOARD Act for giving consumers more information about their data.
“When consumers fully understand how much their personal data is worth, they are likely to begin more closely examining the services they use and understanding that the services they believe they use for free are actually being paid for with their personal information,” said Ray Walsh, a digital privacy advocate at ProPrivacy.com.
Still, the bill doesn’t actually stop websites from collecting personal information, Walsh added.
The bill would help people better understand the internet economy because data is its currency, added Stafford Palmieri, president of Palmieri Partners, a boutique growth consulting firm with a privacy by design practice that focuses on implementing privacy and data security compliance programs. “The problem is that we don’t know how much that currency is worth because there is no market clearing price,” she said. “Whereas I can decide whether I think a $70 pair of shoes is worth not spending that $70 on something else, I don’t have a mechanism to value, let’s say, Google Maps.”
However, one recent study from the Massachusetts Institute of Technology put the annual value of a search engine at $17,530, of email at $8,414, and of online maps at $3,614. “If Google slapped that price tag on any or all of their currently free services, would people really pay, or even be able to pay, $17,530 per year to use Google Search?” Palmieri asked.
In addition to the data value disclosures, the DASHBOARD Act would allow users of online services to ask that their personal data be deleted in many circumstances, potentially leading to changes in online services. Palmieri said that if consumers are more easily able to opt out of data collection, some formerly free services may end up behind paywalls, and smaller services may fail.
“Regulating data means a fundamental shift in the monetization strategy of the internet,” she added. “If app developers who were previously monetizing through ads now have to charge because consumers are opting out of sharing their data, a lot of consumers may decide that that free app is no longer worth paying for. This could entrench the large incumbents as well as create an access barrier for those least able to pay.”
The new bill seems based on the assumption that consumers are getting a “rotten deal” by trading their personal data for free online services, said Daniel Castro, vice president of the Information Technology and Innovation Foundation, a think tank focused on tech policy.
The sponsors “are arguing that consumers are giving up too much data in exchange for free services, and if consumers only knew the value of their data, they would have sticker shock and stop sharing so much personal information,” he added.
But paying for a service with personal data is not the same as paying with money, he added. “Unlike money, consumers do not have less data after sharing personal information, and they can share that same data with other services as well,” Castro said. “On the contrary, for most commercial services, consumers always come out ahead by sharing data in exchange for a free service.”