Encoding Privacy in a Digital World

Arguing that you don’t care about the right to privacy because you have nothing to hide, is no different than saying you don’t care about free speech because you have nothing to say.”

– Edward Snowden

The privacy debate of today is a glass-half-empty, glass-half-full scenario. As soon as technophiles rejoice that “We’ve never had it so good”, a cautionary note is sounded by the less enthusiastic: “The world and our privacy is falling apart!”. Today’s digital age is the proverbial double-edged sword, and our privacy is increasingly the hilt of that sword. Never has this been more true than in light of the revelation that users’ Facebook data was harvested and exploited for political profiling, without these users’ direct consent1. When Sting crooned to “Every breath you take”2 in the 80s, who would have thought that ‘every move you make’ in the online world today is visible to not only those you trust but also those you don’t know. Privacy can be seen as a reflex of innovation. While one approach would be to say that privacy is a norm and that with modern technologies, the norm must be reconsidered and if necessary, abandoned. The conundrum, however, is how to ensure protection while retaining the critical aspects of our democratic systems such as free speech, freedom of assembly and association, and critically, the right to privacy.

Artificial Intelligence (AI) and other digital technologies have huge opportunities in strengthening national competitiveness, but also threats that are difficult to foresee today. From an economic perspective, in the early 1990s, Michael E. Porter, a professor from Harvard University, pointed out that “a nation’s competitiveness depends on the capacity of its industry to innovate and upgrade”.3 However, all it takes is one small glitch in the image for the Artificial Intelligence to see a toaster instead of a face! The feeling of excessive surveillance and the multiplication of errors can be particularly worrying. Another cause for concern is that the racial and social profiling techniques these intelligent systems might use could lead to significant errors and abuses.

The Digital Privacy Paradox:

Consumers say they care about privacy, but at multiple points in the process end up making choices that are inconsistent with their stated preferences. The observation that small incentives, costs or misdirection can lead people to safeguard their data less, can have two interpretations. On one hand, it might lead to policy makers to question the value of stated preferences for privacy when determining privacy policy. On the other hand, it might suggest the need for more extensive privacy protections, from the standpoint that people need to be protected from their willingness to share data in exchange for relatively small monetary incentives.

Moreover, whenever privacy requires additional effort or comes at the cost of a less smooth user experience, participants are quick to abandon technology that would offer them greater protection. This suggests that privacy policy and regulation has to be careful about regulations that inadvertently lead consumers to be faced with additional effort or a less smooth experience in order to make a privacy-protective choice.

Economics of Privacy:

Economists’ interest in privacy has primarily focused on its informational dimension: the trade-offs arising from protecting or sharing of personal data. Hal Varian, now Chief Economist at Google, argued in 1996 that customers are better off sharing information about themselves with marketers because it makes life easier. Junk mail or unsolicited calls that are an annoyance to consumers become less so when the company could target them better through data analysis.

In particular, Varian (1997) noted how the consumer may rationally decide to share certain personal information with a firm because he/she expects to receive a net benefit from that transaction; however, he/she has little knowledge or control over how and by whom that data will later be used. Who, then, should hold an economic claim over personal data? The subject to whom the data refers, or the organization that invested resources in collecting the data?

In accordance with the Coase Theorem (Coase, 1960), Noam (1997) argued that whether ornot a consumer’s data will remain protected does not depend on the initial allocation of rights on personal information protection (that is, it does not depend on the presence or lack of a privacy regulatory regime). Instead, whether data will eventually be disclosed or protected ultimately depends on the relative valuations of the parties interested in the information. The potential for an individual’s personal data to be used against him/her is the defining feature of this contemporary privacy debate. Economists such as Richard Posner have based their defence of this on Utilitarian grounds. Since businesses value the data more, imposing onerous ‘opt-in’ rules is a significant transaction cost. This could jeopardize the ability of digital companies to provide services and significantly degrade user experience. The efficient solution would be to award the initial ownership of data to the business but let users ‘opt-out’ if they want to. There is a need to redefine private spaces that will not be infringed as framing of Intellectual Property Rights (IPR) is a win-win for everyone. IPR provides the necessary incentives to the producers and balances progress with the public distribution of intellectual goods.

Moreover, Laudon (1997) proposed the creation of information markets where individuals own their personal data and can transfer the rights to that data to others in exchange for some type of compensation. Similar to the view proposed by Chicago School scholars, Laudon argued that the mere legal protection of privacy is outdated, and a system based on property rights over personal information would better satisfy the interests of both consumers and firms.

Black Swans of Security:

George Orwell4 opined that the ultimate threat to privacy would be the bugging of bedrooms and offices. Today, an equally large threat to freedom is the systematic monitoring of public places through microphones, video cameras, surveillance satellites, and other remote sensing devices, combined with information processing technology. Soon it may be impossible for most people to escape the watchful outdoor eye.

In the worst cases, countries are actually listening in on their own citizens using spy technology that we see on James Bond movies, remotely hacking into their computers and turning on web cameras, or logging in and intercepting video calls. Is it possible to be secure without giving up some privacy? Theoretically yes, although it is not so easy to implement as intelligence gathering has increasingly become integral to national and international security. The debate has become quite heated black swans of security or the worst-case scenarios. Another question often raised is that ‘Is it problematic if government agencies collect our digital footprint, metadata, online habits and digital history for eternity? This data can potentially be used and abused, however, it can also keep people safe. Privacy is indeed at a crossroads. Today, it is all too easy to imagine a world in which our digital autonomy has been stripped away, a world where our actions are monitored, our secrets are known, and our choices are therefore circumscribed. The only way that we can avoid this dystopian future is by acting today and tomorrow to bring about a different future

Role of Civil Society:

The growing prominence of the Right to Privacy in the Digital Age over the past years would not have occurred without the presence of a robust and expert civil society constituency. Civil society organizations have been highly effective in influencing the evolving discourse on the right to privacy in the digital age. As we head into an era where we are intrinsically connected, to our devices and each other through the Internet of Things, privacy will become an even more disparate and complex landscape. Thus, civil society organisations should continue to have a strong voice in the privacy debate in order to make sure privacy rights are maintained and respected.

Consider the following hypothetical situation – A rabid dog bites a person, what would you do? Impose a ban on people interacting with the dog or treat the dog for rabies? The former would give you short-term relief; remember there is still a rabid dog at large. The latter would ensure that an interaction with the dog in the future will be substantially safer, so would be the answer to this problem. Similarly, when there is a deep systemic problem such as the current attacks to our privacy, the solution does not come from ad hoc deletion of problematic software or applications, but it comes from education, digital literacy, global cooperation and tirelessly advocating on best practices.

Privacy of the Future:

The strategic challenge for the future of the digital economy is to keep data open and free but, simultaneously, protected. This vision hinges on a balance of legislation and business ethics. What if you have no right to privacy to begin with? China is already undertaking the ‘Social Credit System’, a national trust score that is based on monitoring and evaluating citizens’ daily activities5.

In addition to regulations, businesses also need to codify a set of ethics and bake it into their business models. In the words of Senator Bill Nelson of Florida speaking at a congressional hearing to Mark Zuckerberg: “Let me just cut to the chase. If you and other social media companies do not get your act in order, none of us are going to have any privacy anymore.”6

Just like in the past and present, privacy must remain an enduring virtue for our digital civilization, democracy and economy survival into the future. Do state’s rights overwrite the individual’s? Does national security outweigh privacy? Does economic liberty supersede social equality? While the fundamentals of these questions have been with us since the age of enlightenment, the future now rests on how we treat and manage data.

Privacy implies serenity at home and the right to be let alone. Think before the next time you blithely sign up for a grocery store ‘bonus’ card, automatically hand out your telephone number or mumble the phrase, “What do I have to hide?” While it is the eleventh hour, it is not too late for the government to stop this vicious cycle of unlawfulness since privacy is a fundamental right that forms the backbone of democratic societies. ‘Do no harm’ in the digital age!

1 Matthew Rosenberg, Nicholas Confessore and Carole Cadwalladr, “How Trump Consultants Exploited the
Facebook Data of Millions,” The New York Times, March 17, 2018,
https://www.nytimes.com/2018/03/17/us/politics/cambridge-analytica-trump-campaign. html. 2 The Police, “Every Breath You Take,” Synchronicity, 1983,
https://www.youtube.com/watch?v=OMOGaugKpzs.
3 See: https://hbr.org/1990/03/the-competitive-advantage-of-nations
4 Orwell, George. 1984. New York: Harcourt Brace Jovanovich, 1949.
5 Simina Mistreanu, “Life Inside China’s Social Credit Laboratory,” Foreign Policy, April 3, 2018,
http://foreignpolicy.com/2018/04/03/ life-inside-chinas-social-credit-laboratory/. 6 “Transcript of Mark Zuckerberg’s Senate Hearing,” The Washington Post, April 10, 2018,
https://www.washingtonpost.com/news/the- switch/wp/2018/04/10/transcript-of-mark-zuckerbergs-senate-
hearing/?utm_term=.acf5a31b87bf.

BIBLIOGRAPHY

Coase, R. H. (1960). The problem of social cost. Journal of Law and Economics 3(1), 1–44.

Laudon, K. (1997, January). Extensions to the theory of markets and privacy: Mechanics of pricing information. Stern School of Business – New York University – Working Papers.

Noam, E. M. (1997). Privacy and self-regulation: Markets for electronic privacy. In Privacy and Self-regulation in the Information Age. US Department of Commerce.

Varian, Hal R. 1997. “Economics Aspects of Personal Privacy.” In Privacy and Self-Regulation in the Information Age. Washington, DC: US Department of Commerce, National

Telecommunications and Information Administration.

Profile of the author

Age-22, Education- B.A. Economics Honours, St. Stephen’s College, Delhi (2015-18), Masters in Public Policy (MPP), St. Xavier’s College (Autonomous), Mumbai (2018-20), Centre for Civil Society (CCS) Alumna; ‘i-Policy for Development Leaders’ (October 2016).

Simran is of the opinion that reality is what people make of it, more or less on the lines of Alexander Wendt. Her reality is about creating a shared space where people, diplomacy, economics and international realities can merge together to provide for an atmosphere of peaceful co-existence. She has been surviving on Amartya Sen, Fukoyama and Karl Marx not only for the sheer joy of critiquing, analyzing and learning their works but to see how economics and developmental policies could work in tandem. While currently interning at the Ministry of External Affairs (MEA) under the Multilateral Economic Relations (MER) Division, she is looking into the economic and political relations between G-20, BRICS and India. She is also working on her research paper on the bilateral trade relations between China, India and the United States. Her dissertation is centred around the theme of ‘Community and Healthcare’ wherein she would be analysing the positive correlation between increased community participation and the effectiveness of the Integrated Child Development Services (ICDS) scheme under the Ministry of Women and Child Development to reduce child malnutrition in Mumbai.