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With the publication of the Data Protection and Digital Information Bill, the UK government has come good on its promise to reassess the regulation of personal data post-Brexit. The headline items being pushed by the government focus heavily on stopping nuisance calls and texts, as well as the much-vaunted removal of many cookie pop-ups used to gain consent for audience tracking.
The stated motivation for the introduction of new data legislation and plans is to “unleash innovation” and “reduce burdens on businesses”, with small businesses being targeted as one of the main beneficiaries of the move to slash what is seen as unnecessary red tape and regulation. But some of what the Bill proposes could actually disadvantage innovative startups and small enterprises, rather than aid them.
On the face of it, the introduction of the concept of “Smart Data schemes” – which would be set up to allow the secure, consented sharing of customer data with third parties – sounds like an exciting move towards innovation in data infrastructure. These schemes appear to mirror the equitable market access principles, as well as the potential for the economic growth and the practical success of Open Banking, the initiative that the Open Data Institute (ODI) initiated with HM Treasury in 2015.
This was enabled by the Competition and Markets Authority mandating the UK’s nine largest banks (CMA 9) to cooperate when customers request that their financial data be shared with third parties, be they other banks or third-party apps, such as accounting software.
The new Smart Data scheme also seems to share some of Open Banking’s characteristics across other sectors, with mortgages, savings and pensions being lined up as possible next use cases. But the small print allows companies holding data to effectively install a paywall into the equation.
This means that a plucky startup wanting to use the run data from your sports watch, or a broadband company or pay TV service trying to work out the best package for you based on your previous use patterns, would have to pay the holder of your data for the privilege of that data portability.
That cost would, most likely, be passed on to the consumer, raising the costs for new businesses while advantaging established brands that hold data. This incumbent advantage effectively nullifies the innovation’s ability to break up data monopolies and give a hand-up to SMEs, startups, charities and microbusinesses.
That said, the setting up of the secure data infrastructure for Smart Data obviously has a cost. If Smart Data were to follow the secure innovation-inspiring data-sharing model of Open Banking, then it would need to be initially be funded by Whitehall (with Open Banking’s costs currently funded by the CMA 9 to the tune of around £30m a year).
Today’s economic realities are somewhat different from those of 2015, but I firmly believe that a lack of investment now could lead to a restriction of growth later on. The government has previously spoken of worries over SMEs being locked out of the data business boom, negatively impacting the economy. But to provide a platform for innovation with financial barriers would do just this.
With lack of funding comes a lack of a central coordination mechanism for Smart Data, which could also lead to the schemes not being able to live up to their promise. The interoperability of portable data depends on how that data is structured or curated, or its data standards. So, a system where the larger players set their own data standards and APIs (application programming interfaces) means you risk creating a data-sharing model that could throw up endless incompatibilities, which would once again disadvantage smaller businesses.
Innovations such as Smart Data should encourage an end to the kind of format and language battles that separate Apple and Windows, rather than risk encouraging them in the name of protectionism and financial advantages.
Smart Data could and should be a great way to strengthen competition and empower the public when it comes to both the use and the value of their personal data, but it needs to be set up to allow the rapid creation of new markets and new services without technical or financial barriers to market entry.
After all, it is the personal data of users that has created much of the value in tech companies, so it seems aberrant to impose a charge when those customers wish to use that data elsewhere. Equitable market access would allow for levelling-up across the tech sector.
It is great that the government sees data sharing as an integral part of the innovation in, and growth of, our economy, but I hope that changes might be made when the Bill is considered by Parliament in the autumn. Open data initiatives such as Smart Data have the potential to foster an environment of innovation where new products and services can be inspired by, and built on, existing data.
This could be the space where new green initiatives are discovered, where business learns to better serve diverse communities and where individuals are able to connect with services that can help with multiple issues across addiction, debt and mental health.
But ensuring data interoperability and not advantaging those with the deepest pockets and largest datasets must be a priority to ensure that creative thinking, enterprise and societal benefits are to the fore. Without such considerations, the UK data economy risks being held back, rather than being ahead of the pack.
Mahlet Zimeta is head of public policy at the Open Data Institute.