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Big Data Is an Economic Justice Issue, Not Just a Privacy Problem

03/16/2015 09:12 am ET | Updated May 16, 2015

The control of personal data by "big data" companies is not just an issue of privacy but is becoming a critical issue of economic justice, argues a new report issued by the organization Data Justice>, which itself is being publicly launched in conjunction with the report. I am the director of this new effort and wanted to outline why we see this as a critical issue for progressives.

This steady loss of data by individuals into the hands of increasingly centralized corporate hands is helping drive a large portion of the economic inequality that has become central to the political debate in our nation.

Big data platforms collect so much information about so many people, details the report, that correlations emerge that allow individuals to be slotted into hiring and marketing categories in unexpected and often unwelcome ways that usually leave them at a distinct disadvantage in negotiations. This enables advertisers to offer goods at different prices to different people, what economists call price discrimination, to extract the maximum price from each individual consumer. Such online price discrimination raises prices overall for consumers while often hurting lower-income and less technologically savvy households.

Data crunchers were key to manipulating financial markets and securities throughout the financial industry, and big data platforms were critical parts of the marketing machine that used various forms of consumer profiling and price discrimination to push subprime financial products out to the most vulnerable members of the American public. Notably, by the mid-2000s, the lion's share of the online advertising economy was being driven by subprime and related mortgage lenders, highlighting the ways the profits of big data platforms have often come at the expense of consumer welfare.

At the same time, big data is fueling economic concentration across our economy. As a handful of data platforms generate massive amounts of user data, the barriers to entry rise, since potential competitors have little data themselves to entice advertisers compared with the incumbents, who have both the concentrated processing power and the supply of user data to dominate particular sectors. With little competition, companies end up with little incentive to either protect user privacy or share the economic value of that user data with the consumers generating those profits.

The report argues for a threefold approach to making big data work for everyone in the economy, not just for the big data platforms' shareholders:

  • First, regulators need to strengthen user control of their own data by both requiring explicit consent for all uses of the data and better informing users of how it's being used and how companies profit from that data.
  • Second, regulators need to factor control of data into merger review, and to initiate antitrust actions against companies like Google where monopoly control of a sector like search advertising has been established.
  • Third, policymakers should restrict practices that harm consumers, including banning price discrimination where consumers are not informed of all discount options available and bringing the participation of big data platforms in marketing financial services under the regulation of the Consumer Financial Protection Bureau.

Data Justice itself has been founded as an organization "to promote public education and new alliances to challenge the danger of big data to workers, consumers and the public." It will work to educate the public, policymakers and organizational allies on how big data is contributing to economic inequality in the economy. Its new website at datajustice.org is intended to bring together a wide range of resources highlighting the economic justice aspects of big data.

Also follow us on Twitter @datajustice1.