Sunday, March 23, 2014

Privacy and Big Data

Guest Blogger

Tal Zarsky

For the conference on Innovation Law Beyond IP at Yale Law School

At the upcoming conference, I will discuss a paper I recent wrote, titled the "Privacy/Innovation Conundrum". Here is a brief summary:

The age of Big Data is upon us. The analysis of personal data is generating greater opportunities for privacy breaches as well as innovative progress. We might be entering the golden age of innovation in data analysis, and the dark age of information privacy.  Governments worldwide are striving to establish a proper response to the ongoing practices of personal data collection, analysis and usage. This regulatory discourse immediately leads to a discussion of the relation between privacy rules and the broad and complex concept of innovation. In this provocative article, I strive to closely examine the linkage between these two abstract notions, and draw out several conclusions.

Privacy laws could be understood as both enabling and impeding the flow of information in the digital society. Availability and access to such data can enhance innovation. Access to such information allows knowledge generation, and the development of technologies for analyzing the data as well as business models to utilize the derived information. On the other hand, the availability of personal information flows might chill various innovative initiatives.

The linkage between privacy and innovation could be articulated, therefore, in a variety of ways, while noting several theories. First, privacy could be understood to promote innovation. This article noted four theories articulating this point, yet concludes they are all unconvincing. It therefore turns to closely examine the provocative notion that privacy protection inhibits innovation. At first blush the argument seems absurd or intentionally manipulative. Yet a deeper examination finds it to be with merit in some specific instances, while acknowledging that, at times, peripheral privacy rights are potentially uncertain or over-broad.

After this initial discussion, the article takes an additional step by trying to link the theoretical analysis and policy debate to the empirical realm. Here we must confront the possible causal connection between lenient privacy laws in the US and the success of US firms in the internet/ICT environment, as opposed to strict privacy and failure in Europe. It is fair to assume that when privacy-related cross-Atlantic policy debates unfold, this uncomfortable correlation lurks in the background. Note, however, that there are several alternative reasons to explain the disparity between the US and the EU regarding ICT innovation. When examining these issues, I also note several test-cases of failed ICT innovations in Europe, and the lessons they might provide. 

Finally, I try to explain what the policy implications of recognizing a causal linkage between privacy and innovation in the US and the EU might be. One course of action would be to change the existing EU Data Protection scheme and to assure the persistence of lenient privacy laws in the US, so to promote innovation. However, other theories and policy steps, which account for the way laws shape technologies in a global setting, might recommend the adoption of a strict global privacy regime. After further consideration, this final recommendation is rejected. I conclude that the risk of stalling internet-related innovations which this option entails is too great, especially given the huge social benefits to free speech, democracy and freedom. 

Tal Zarsky is a senior lecturer in law at the University of Haifa, in Israel. He can be reached at tzarsky at

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