SIIA Welcomes Administration’s Privacy and Big Data Report; Says Current Regulatory Framework Can Respond to Potential Problems

SIIA today responded to the release of the Administration’s Report on Privacy and Big Data.  SIIA welcomed the report’s assessment that big data provides substantial public benefits and will provide more benefits in the future.  The organization believes the current regulations are adequate to address potential concerns.

As the report recognizes, the collection and analysis of data is leading to better consumer products and services and innovations in healthcare, education, energy, and the delivery of government benefits.  SIIA member companies are driving this innovation by leading the development of techniques for analyzing big data, while also working to safeguard personal data.  We will continue to work with the Administration to promote the responsible use of data to drive innovation, job-creation and economic growth.

The Administration’s work to examine discrimination concerns is extremely important.  It is our view that current law works.  Vigilantly enforced consumer protection and antidiscrimination laws are strong and flexible enough to prevent unfair practices.  Industry efforts are also safeguarding data privacy and preventing discriminatory practices.  Burdensome new legal requirements would only impede data-driven innovation and hurt the ability of U.S. companies to create jobs and drive economic growth.

As recently as three weeks ago the Federal Trade Commission used existing authority under the Fair Credit Reporting Act to bring cases against companies that used data in ways that violated the Act’s consumer protection provisions. Other possible unfair or discriminatory practices in the use of data may already be regulated under other statutes, including Title VII of the Civil Rights Act of 1964, the Equal Credit Opportunity Act, the Fair Housing Act and the Genetic Information Nondiscrimination Act of 2008.

In addition, SIIA is delighted that the report recognized the need to reform the Electronic Communications Privacy Act (ECPA). As users increasingly store email and other communications remotely, it is critical to reform ECPA to establish a warrant requirement for access to these communications, regardless of where they are stored.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy

Big Data Analytics: Benefits and Discrimination

As SIIA noted in a series of reports, big data analytics is a source of significant innovations in health care, education, energy and the delivery of government benefits.

Analytics has been with us for some time, but big data analytics really is something new. When data sets are very large in volume, diverse in the variety of data types they contain, and changing with dramatic velocity, standard techniques of data analysis  can be supplemented with new computational techniques that take full advantage of the wealth of new and different input data.  These techniques enable novel insights to emerge from data in the form of correlations that could not be anticipated from previous theories or empirical research.  These unexpected correlations can then form essential elements in increasingly accurate predictive models.

These predictive models have to pass all the normal tests of statistical and empirical significance in order to be successfully used for scientific research or business purposes.  This is one reason that some of the recent critiques of big data miss the mark.  Moreover, the success rate in developing increasingly accurate validated predictive models in a wide range of endeavors is well established.  With the increase in input data coming from sensors embodied in everyday things and linked to communications networks, a phenomenon that goes under the name of the Internet of things, it is highly likely that the new data analytical techniques will become increasingly accurate and will spread to new domains of activity.

The potential common good benefits of this development are so large that a major focus of the Administration’s technology policy should be the promotion and advancement of big data analytics.

It is likely that the upcoming Administration report on privacy and big data will highlight these extraordinary benefits of increasingly accurate analytical predictions.  In his earlier comments to the workshop on big data and privacy in Berkeley on April 1, White House Counselor John Podesta, who has been tasked by President Obama to lead the review effort, referred to the experience of a hospital showing how big data can literally save lives.  This experience is also described in a recent SIIA blog.  The hospital contracted with an outside firm to analyze millions of health data points about new born infants and discovered that a pattern of invariance on a range of indicators of vital signs predicted the onset of an extremely high and dangerous fever twenty four hours later.  This advance warning system enabled hospital personnel to start treatment ahead of time.

It is also likely that the report will focus some attention on big data and discrimination. This concern was highlighted several weeks ago, when a coalition of civil rights groups and privacy advocates issued civil rights principles for the era of big data. One of the principles was to ensure “fairness in automated decisionmaking.”  The group also warned that new big data analytical techniques “…can easily reach decisions that reinforce existing inequities.”  These concerns are legitimate and these groups are right to draw attention to these possibilities.

In his earlier April 1 comments, Podesta raised these same issues:

“Big data analysis of information voluntarily shared on social networks has showed how easy it can be to infer information about race, ethnicity, religion, gender, age, and sexual orientation, among other personal details. We have a strong legal framework in this country forbidding discrimination based on these criteria in a variety of contexts. But it’s easy to imagine how big data technology, if used to cross legal lines we have been careful to set, could end up reinforcing existing inequities in housing, credit, employment, health and education.”

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Ohlhausen on Big Data and Consumer Harm

At today’s conference on Privacy Principles in the Era of Massive Data, co-sponsored by the Georgetown University McCourt School of Public Policy and the Georgetown Law Center, Maureen K. Ohlhausen, Commissioner at the Federal Trade Commission, delivered a thoughtful keynote address on The Power of Data.

She emphasized the value of the new computational techniques that arise in the context of data sets that are larger in volume than traditional data sets, that are composed of a greater variety of data types, and that change at a much faster velocity. These characteristics of volume, variety and velocity enable data scientists to generate insights that were previously impossible to anticipate from traditional static data bases.

This unanticipated quality of the new computational techniques challenges traditional notions of privacy protection. For instance, it creates a tension with the traditionally understood privacy principles of notice and purpose specification.  As Commissioner Ohlhausen pointed out succinctly, “…companies cannot give notice at the time of collection for unanticipated uses.”  These novel uses also challenge the idea that data collection should be minimized and data discarded as soon as possible:

“Strictly limiting the collection of data to the particular task currently at hand and disposing of it afterwards would handicap the data scientist’s ability to find new information to address future tasks.”

So what should the FTC do?  The Commissioner approvingly referenced the FTC’s action in the Spokeo case, where the agency fined the company for failure to follow the requirements of the Fair Credit Reporting Act.  Going forward she thinks that the FTC “should use its traditional deception and unfairness authority to stop consumer harms that may arise from the misuse of big data.”

SIIA agrees.  In our recent White Paper and comments filed with the FTC in their consumer scoring workshop we urged the Commission to use its existing powers under the current regulatory regime to bring bad actors to task for failing to follow consumer protection rules.   This can only help the growth of big data analysis by making sure that edge-riders do not tarnish the new computational techniques.

Moreover, the Commissioner thinks that the FTC should continue its convening role in holding workshops to explore “the nature and extent of likely consumer and competitive benefits and risks.”  In this regard, SIIA found the FTC’s March workshop insightful and looks forward to the Commission’s workshop in September on big data and low income and underserved consumers.

As to principles that should govern the FTC’s actions on big data going forward, the Commissioner was clear that the agency “must identify substantial consumer harm before taking action.”  SIIA endorses this idea that only a significant risk of substantial consumer harm justifies new regulatory action.

Ben Wittes from the Brookings Institution, commenting as part of the discussion panel that followed the Commissioner’s talk, echoed this theme of focusing on harm, instead of abstract notions of privacy.  In his view, when data use is outside of the normal social expectations of data use typical of the context in which the data has been collected, agencies should consider regulatory action only when the data use is hostile to the data subject’s interests.  Determining which uses are harmful, then, becomes a primary task for advocates, industry and policymakers.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy

Piketty’s Historical Perspective on Economic Inequality

The debate over income inequality and job loses in the U.S. too often devolves to overly simplistic and narrow arguments. Thankfully, deeper and more thoughtful analyses are emerging, and one of those — French economist Thomas Piketty’s recently-translated book, Capital in the Twenty-First Century — is making waves, at least among the center-left of the political spectrum in the United States.  And it is a major contribution to the inequality debate.  He takes a historical view of inequality, arguing that:

“When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.”

This long-term trend, he says, accounts for the dramatic growth of economic inequality over the last thirty years. Piketty’s historical perspective reminds us that, in seeking to understand decades-long economic trends, we might be taking a view that is too narrow and too short-term.  It is worth keeping a wider perspective when it comes to thinking of possible policy responses to these trends.

This wider perspective, backed by detailed analyses of new historical data sets, promises to generate some spirited debate in the coming years.  It provides a useful counterpoint, moreover, to the continuing drum beat of articles and books, such as the very thoughtful best-selling The Second Machine Age, linking job loss and economic inequality to the more recent spread of high technology and software throughout modern economies.

The reality of inequality is far more complex.  For one thing, generalized talk of economic inequality masks several different recent developments: a fall in labor’s share of total income, an increase in the share of compensation going to top executives, and an increase in economic inequality among employees.

Moreover, short-term causal factors that might contribute to these different types of inequality are hard to disentangle.  The rise in inequality has been associated with the intensification of skills-biased technology, which increases the demand for skilled workers, and to globalization, which decreases the bargaining power of workers and decreases the pricing leverage of companies. Now, a recent study links inequality to another recent development the authors call financialization: an increase in the extent to which non-financial corporations in the United States earn income from providing financial services in addition to the core products and services that they also provide. How financialization relates to these other factors needs further study.

The role of software needs to be assessed in a fuller way as well. Too often software is linked to job loss based on nothing more than casual empiricism – like noting that if there are fewer accountants, it must be because of accounting software.  The net effect of software on job creation can’t be established simply by noticing that a job that used to take several people can now be done by one person and some software.  Unfortunately, this is how too many people approach the current debate.  The reality is that, as software spreads through the economy, it contributes to GDP, exports and employment in myriad direct and indirect ways.  SIIA will continue to examine the role of software in the economy in the coming year.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy

Big Data Improves Education Around the World

A recent article by the head of the International Finance Corporation, an affiliate of the World Bank Group, urged the responsible use of big data analytics to improve student learning around the world. IFC works in more than 100 developing countries supporting companies and financial institutions to create jobs and contribute to economic growth.  Supporting improved education is one of their strategic priority programs.

The IFC article highlighted several initiatives that they are supporting:

  • Bridge International Academies in Kenya uses adaptive learning on a large scale in its 259 nursery and primary schools, with monthly tuition averaging $6. By deploying two versions of a lesson at the same time in a large number of classrooms, Bridge can determine which lesson is most effective and then distributes that lesson throughout the rest of its network.
  • SABIS provides K-12 education in 15 countries including in Asia, the Middle East, and North Africa. It mines large data sets for more than 63,000 students, collecting more than 14 million data points on annual student academic performance that are used to shape instruction and achieve learning objectives.
  • Knewton is an adaptive learning platform that partners with companies like Pearson, Cengage, Houghton Mifflin Harcourt, and Wiley to personalize digital courses using predictive analytics.

These uses of big data analytics will improve learning in developing countries and the IFC should take pride in its leadership role in spreading these techniques around the globe.

Some are concerned that the new use of data for improved learning threatens student privacy. As a recent Wall Street article says:

“Perhaps the biggest stumbling block to using data in schools isn’t technological, though. Rather, it’s the fear that doing so will invade the privacy of students.”

The IFC recognizes the concern and urges policymakers to get out in front of the issue and to design privacy protections into big data projects from the ground up to make sure that the information is used appropriately to support learning:

“To realize those benefits – and to do so responsibly – we must ensure that data collection is neither excessive nor inappropriate, and that it supports learning. The private sector, governments, and institutions such as the World Bank Group need to formulate rules for how critical information on student performance is gathered, shared, and used. Parents and students deserve no less.”

SIIA agrees.  As part of our effort to encourage privacy by design in the educational context, we recently published our recommended best practices for providers of educational services to schools, focusing on the need for an educational purpose, transparency, proper authorization and security in the use of student information.

The Administration’s review of privacy and big data is examining this issue in general and as it applies to student privacy.  We look forward to working with them to make sure that the promise of better learning for the world’s students is fulfilled through the responsible use of big data analytics.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy

Cloud Computing and Data Analytics Are Net Job Creators

Some recent articles on technology such as this report from The Economist reawaken the old fear of technological unemployment. SIIA thinks this fear is unfounded. Studies show that technology is a net generator of jobs across the entire economy.

Some evidence of this effect comes from studies of cloud computing. One recent report found that “cloud computing is a powerful catalyst for job creation. Although some lower-skilled jobs will be lost because of the higher automation and efficiencies of the cloud, we expect cloud computing to generate hundreds of thousands of net new jobs in the United States and worldwide…”

The job growth related to cloud computing comes from several sources. Existing cloud companies themselves are hiring new workers and if their growth continues on its current trajectory that could generate almost 472,000 jobs in the United States in the next 5 years. In addition, new cloud companies are expected to enter this rapidly growing market and investments in these startup cloud companies could add another 213,000 jobs.

Cloud services also make it possible for new business to form more easily, since they can rent the computer services they need as they scale up. Moreover, existing businesses can use the savings generated by using less expensive cloud computing services to invest in new lines of business and to expand their operations, thereby generating new jobs needed to provide these additional products and services. Together these cost savings could generate hundreds of thousands of jobs beyond those generated directly by expanding cloud computing companies.

As we pointed out in an earlier blog post on this issue, the growing demand for big data analytics services has created hundreds of thousands of job openings. This demand for data scientists is another example of technological job creation.

Economists have long thought that over the long term and viewed from the point of view of the economy as a whole better technology means more and better jobs. The evidence of the effect of cloud computing and big data on job creation confirms this traditional view.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy

SIIA Applauds the Obama Administration’s Focus on Improving the Patent System; Calls for Action in Congress on Litigation Abuse

SIIA welcomes today’s announcement by the Obama Administration that it will make improvements to the patent system to strengthen the quality of the patents issued by the U.S. Patent and Trademark Office and foster innovation and to combat litigation abuse by patent trolls.  SIIA is especially pleased that the Administration has issued a renewed call for Congress to enact meaningful patent litigation abuse legislation.

Today’s announcement demonstrates that the Administration is committed to protecting American jobs and driving innovation by making necessary improvements to the patent system.  Patent litigation abuse stifles innovation and damages our economy, and it is straining the patent system. The Administration today recognized that the Patent and Trademark Office needs more and better tools to improve the quality of the patents it issues and to protect consumers, retailers and other businesses from the underhanded tactics of patent trolls.

Most significantly, SIIA supports the Administration’s renewed call for Congress to pass meaningful legislation this year. SIIA urges the Administration to encourage Chairman Leahy to work with Senators Cornyn and Grassley and other stakeholders to develop comprehensive and effective legislation that mirrors the Innovation Act passed by the House in December.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology. Follow Mark on Twitter at @Mark_MacCarthy

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