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Opinion 27 February 2020

Global governance of data

Data have become one of the key assets in the new economy. In this op-ed, Ana I. Segovia and Edward Corcoran from BBVA’s Regulation team analyze the role of data and new challenges for companies in this age of digital transformation.

The World Economic Forum took place last month  in Davos — an annual event in which political and corporate leaders discuss global economic challenges. Similar to past meetings, the topic of digital challenges, and data in particular, were especially relevant this year, with Google and Microsoft offering regulatory proposals for artificial intelligence.

There is no question that data have become one of the key assets of our economy. Data are generated from every digital interaction, and advances in technology is making data storage and analysis easier and easier. International Data Corporation estimates that we will reach a global level of 175 zettabytes by 2025, compared to the 2018 level of 33 zettabytes.

In order to be able to compete in this new environment, companies need to adapt their business models based on the information the data provide. Data allow them to better understand their customers, improve their processes and create new products, while exploring lines of business in different sectors. This implies that the availability of data and application of techniques like machine learning help to improve market positioning. In addition, in some environments, the process of using data feeds itself: new customers produce more valuable data, which makes it possible to improve products and attract new users. This is very profitable for some companies, but it also entails the risk that they end up dominating the market (“winner takes all”).

In order to be able to compete in this new environment, companies need to adapt their business models based on the information the data provide

On the other hand, the effect of using data in the private sphere significantly increases personal autonomy and other individual rights. With good judgement, countries are updating their data protection, consumer protection and cybersecurity  laws.

Although the Internet allows companies to take advantage of data flows and operate across borders, the legal fragmentation among countries is a obstacle to better performance. There are hundreds of regulations in the privacy field alone and they are not all consistent. On the one hand, Europe leads the vision of data protection as a fundamental right, while the U.S. lacks federal regulation and tends to view data as an economic asset. Meanwhile, China is implementing a model that attempts to incorporate some ideas from Europe, but without adopting an actual policy to protect the fundamental rights, which gives its companies an advantage.

The global data flow also entails other challenges that need to be addressed, such as the protection of industrial and intellectual assets, illegal content on platforms and each country’s interest in overseeing companies’ profits in the digital economy. Given these challenges that are transnational nature, some countries adopt unilateral decisions that hinder the flow of data to other countries, sometimes without justification, which further complicates the work of economic actors and the search for global solutions.

China is implementing a model that attempts to incorporate some ideas from Europe

Although the Internet has promoted the adoption of international technical standards for certain issues, such as web domains and HTML language, so far, it has not been possible to reach a consensus on regulating data flows. It is a controversial topic because it is related to the difference in values among regions, competition among countries and the lack of an international organization with sufficient weight and a specific mandate for digital matters.

To overcome these challenges and foster innovation on a global scale, it is evident that progress is needed in global coordination that enables the establishment of global standards for privacy and ethical data use, fair limits on data localization policies and regulations to ensure equal access to data and the ecosystems in which they are generated.

It is no simple task, but  some groundwork exists, such as the general principles developed by the OECD, the World Trade Organization’s ecommerce initiative and the G20 digital economy task force. Now, global momentum is needed to develop more uniform and comprehensive governance of the use of data.

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