International Protection of Consumer Data

Abstract

We study the international protection of consumer data in a model where data usage benefits firms at the expense of their customers. We show that a multinational firm does not balance this trade-off efficiently if its data usage lacks (full) transparency or if consumers' privacy preference differs across countries. Unilateral data regulation by each country addresses the moral-hazard problem associated with opacity, but may nevertheless reduce global welfare due to crosscountry externalities that distort output and data usage. The regulations may also cause excessive investment in data localization, even though localization mitigates the externalities. Our findings highlight the need for international coordination-though not necessarily uniformity-on regulations about data usage and protection.

Data deprivations, data gaps and digital divides: Lessons from the COVID-19 pandemic

“…Outside of the EU with its General Data Protection Regulation 13 – probably the most advanced data rights protection legislation in the world—or California’s Consumer Privacy Act in the USA, few countries have sufficient legislative protection for data rights. Chen et al. (2020: 5) estimate that around 42% of countries ‘still do not have legislation or regulation on data usage and protection.’ This includes most countries in sub-Saharan Africa, the world’s poorest region.…”

“…Finally, the protection of data rights and data privacy is necessary to reduce market failures for data gathering, storage, use and reuse, and herein the current lack of international coordination of regulations on data usage and protection has been shown to lead to sub-optimal outcomes in terms of global welfare (Chen et al., 2020).…”

“…The COVID-19 pandemic, the most urgent global development crisis since the Second World War, has and will continue to place high expectations and growing demands on data and data scientists – not least because of the growth of big data and the many various types and modalities of data, each coming with its own risks and challenges. The global data market, already worth an estimated US$26 billion in 2019 has been given a boost by the COVID-19 pandemic (Chen et al., 2020). How this will subsequently affect decision making for global development is a relevant question, particularly so since even before the COVID-19 pandemic, and despite the recognition that more and better data can help in crafting development policies, it was clear that data deprivations, data gaps and digital divides were structurally contributing to development failures, for instance in perpetuating inequality, poverty and vulnerabilities (Hilbert, 2016; World Bank, 2020).…”

Data, global development, and COVID-19: Lessons and consequences

“…This forces the reuses to update the full dataset daily', as well as a 'lack of geolocalization contents' and little 'standardization effort' (Alamo et al 2020: 24). Finally, as will be discussed in Section 3.1 on trust, the protection of data rights and data privacy through appropriate regulations and laws is necessary to reduce market failures for data gathering, storage, use, and reuse, and herein the current lack of international coordination of regulations on data usage and protection has been shown to lead to sub-optimal outcomes in terms of global welfare (Chen et al 2020).…”

“…Production of ICT goods and services was valued in 2015 to at 6.5 per cent of world gross domestic product(Farboodi and Veldkamp 2019). The global data market was estimated to be worth US$26 billion in 2019, growing in the preceding period by more than 20 per cent per year(Chen et al 2020). The COVID-19 pandemic has given a boost to the digitalization of the global economy and hence the global ICT and data markets.…”