The White House last week released two reports on efforts to protect consumer privacy in the age of “big data.” According to one of the reports, “big data refers to the ability to gather large volumes of data, often from multiple sources, and with it produce new kinds of observations, measurements and predictions.”
“Big data technologies raise serious concerns about how we protect personal privacy and our other values,” wrote John Podesta, the White House counselor charged with leading a review of big data and privacy, in a Feb. 5 blog post. “As more data is collected, analyzed, and stored on both public and private systems, we must be vigilant in ensuring the balance of power is retained between government and citizens and between businesses and consumers.”
The first report, entitled “Big Data: Seizing Opportunities, Preserving Values,” provides an interim progress report on how the Obama Administration has worked to advance a number of the concrete privacy proposals. It contains six policy recommendations for Congress, including a broad and sweeping “privacy bill of rights” for U.S. consumers. Such legislation, outlined by the White House three years ago, would give the Federal Trade Commission new authority to require U.S. businesses to abide by so-called fair information practice principles, such as being transparent about their data-collection practices and giving consumers the right to exercise control over their personal information. Legislation to implement this proposal faced strong opposition in the last Congress from both the business community and from privacy advocates who say the proposal does not contain sufficient privacy protections against government surveillance.
The other recommendations call for passing national data breach legislation that provides for a single national data breach standard; extending privacy protections to non-U.S. persons; preventing companies from selling student data to third parties for purposes “unrelated to the educational mission” and from engaging in targeted advertising to students based on information collected in school; preventing big data analytics from having a discriminatory impact on certain classes of consumers; and providing online, digital content with the same standard of protection given to physical content.
The second report, entitled “Big Data and Differential Pricing,” was prepared by the White House Council of Economic Advisers (CEA). It raises questions about how companies use the information they harvest from big data analytics to more effectively charge different prices to different customers, a practice known as “price discrimination.” In particular, the report attempts to provide an economic perspective on the best ways to promote fairness while promoting efficiency and innovation.
“While the economic literature contends that discriminatory pricing will often, though not always, be welfare-enhancing for businesses and consumers," said Podesta, "the CEA concludes that policymakers should be vigilant against the potential for discriminatory outcomes, particularly in cases where prices are not transparent and could give rise to fraud or scams,” Podesta.