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

Data Innovation and Intellectual Property Protection Top SIIA Policy Agenda for 2014

SIIA’s Government Affairs Council met to identify the organization’s policy priorities for 2014.  Following the meeting, which took place Wednesday, SIIA announced that it will continue to take a leadership role in promoting the economic and social value of data-driven innovation, and to advocate for policies that enable innovation, rather than creating broad restrictions on the collection and use of data. SIIA also said that a top legislative priority in the year ahead will be enactment of patent litigation reform and legislative measures that assure that digital content providers can control the distribution of their products and services.

As the primary trade association representing software companies and digital content publishers, SIIA actively supports public policies – at the state, national and international level – that create a landscape that encourages innovation, strengthens the U.S. economy by supporting job-creating tech companies, advance the use of technology to improve education, assure effective intellectual property protections, and more.  While promoting the value of data and advancing intellectual property protections sit at the top of SIIA 2014 agenda, the group will focus its efforts in the following critical priorities, including:

  • Patent Reform. SIIA members use patents to protect their products and services, which improves the global competitiveness of our nation.  At the same time, SIIA members increasingly face frivolous and harassing patent infringement suits from Patent Assertion Entities (PAEs) that are diverting resources away from innovation. PAEs exploit flaws in both the patent system and litigation practices and exploit them to their advantage and the disadvantage of the innovative industries, their customers and the public.   It is essential that Congress promptly pass legislation that effectively addresses patent litigation abuse without harming the patent protections that spur innovation.  It is our hope that Congress will act quickly to take strong and effective steps to control abusive patent litigation, as we work to ensure our nation’s patent system continues to spur innovation and economic growth.
  • ECPA Reform. SIIA supports reforming the Electronic Communications Policy Act (ECPA) to create a warrant requirement for all electronic data and communications stored remotely.
  • International Data Flows. SIIA will aggressively promote policies worldwide that facilitate international data flows, ensure transatlantic data continues to flow smoothly, promote greater respect for intellectual property rights, and defend multi-stakeholder Internet Governance.
  • Student Data Protections. Through its Education Division, SIIA will promote policies and practices for safeguarding the privacy and security of personal student information.
  • Government Surveillance. SIIA supports policies that balance critical national security objectives with increased transparency and oversight of surveillance programs.
  • Copyright Reviews. SIIA will monitor the pending domestic and international reviews of copyright law and advocate strong domestic and foreign copyright laws that adequately and effectively protect software and digital content and oppose laws that would unjustly weaken these protections.

The members of the SIIA Government Affairs Council can be found here.

At the conclusion of the meeting, SIIA President Ken Wasch commented:

“SIIA is focusing on economic growth and job creation by supporting policies that promote and protect data-driven innovation.  Our work will involve a wide range of contexts, from education and data analytics to publishing and online information services.

“Recognizing that data is currently one of the biggest drivers of economic opportunity, SIIA will continue to advance the positive uses of data and data analytics.  Importantly, data-driven innovation is not only of advancing economic opportunity and jobs, but also providing tremendous consumer and societal benefits.  This effort is a key theme unifying our work on behalf of members. It is essential that public policy reflects the fact that innovation and business strategies are increasingly driven by data. We are convinced that this can be done in a balanced way that protects and preserves privacy and intellectual property rights.

“A major priority will be supporting the passage of meaningful patent legislation that effectively reduces litigation abuse without harming the patent protections that spur innovation.  We will also support trade agreements and domestic regulations that assure the flow of data across borders and will seek balanced approaches in student privacy and the reform of the U.S. domestic surveillance framework, and long overdue ECPA reform.”

SIIA also announced its specific policy priorities for 2014 in the areas of: technology policy, postal reform intellectual property, international public policy and education technology.
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Big Data Saves Lives

One of the striking examples of the social value of the new techniques of data aggregation and analysis is described in Big Data: A Revolution That Will Transform How We Live, Work, and Think by Viktor Mayer-Schonberger and Kenneth Cukier. Big data is a business buzzword, but the underlying reality it describes is real.  The three Vs of big data – variety, velocity and volume – represent the new world in which data in a variety of formats, including unstructured data like video or text, come at a researcher in enormous quantities and in a constantly changing stream.  Add to this new world of data a range of advanced analytical techniques that can detect novel correlations in data without the need for a prior causal hypothesis, and the result is truly something new under the sun – a way to discover unsuspected and unanticipated insights into the world that simply could not have been uncovered with unaided empirical observation.

The utility of these techniques is often not appreciated in policymaking circles.  But Mayer-Schonberger and Cukier provide an example of how big data analytics literally saves lives.

Dr. Carolyn McGregor and a team of researchers at the University of Ontario Institute of Technology and IBM are working with a number of hospitals on software  to analyze data generated from premature babies. Monitors track the babies’ vital signs such as heart rate, respiration rate, temperature, blood pressure, and blood oxygen level. Nurses pay close attention to the information generated by these monitors – and when they see signs that the baby is suffering from an infection or fever they rush in to begin treatment. But the data itself is often just thrown away.

The medical researchers working with IBM retained the data and subjected it to rigorous analysis and the results were startling.  Patterns were detected that could predict the onset of a fever as much as 24 hours in advance, thereby allowing medical intervention well before a crisis had developed.

Moreover, some of these advance indicators of a problem were counterintuitive.  Researchers found that the simultaneous stabilization of vital signs was an advance warning of an infection to come, a sort of calm before the storm.  No one would have predicted this in advance. Even now that the correlation has been established, the causal mechanism is a matter of speculation.  Perhaps the baby’s body senses the infection coming and tries to batten down the hatches in preparation for the rough ride ahead.

The utility of the correlation does not depend on knowing the causal mechanism.  Doctors and nurses can begin to intervene on the basis of a reliable indicator that trouble is coming.

Further research to uncover the unknown causal mechanism is obviously needed to have reliable way to know when to act on the predictive analytics.  But big data has uncovered a useful fact about the onset of fevers and infections in premature babies that can become standard practice for early intervention.

The big picture here is this.  Retaining data and using it for a purpose for which it was never intended can sometimes create enormous social benefits.  In this case, these techniques of data retention and analytical reuse save lives.


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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