LET’S DISCUSS: WHY ONLINE DATA IS GOLD DUST FOR ONLINE COMPANIES
I recently watched The Social Dilemma on Netflix - it’s a great documentary and I highly recommend you watch this. To summarise, the documentary explains that social media is taking over reality and impacting our lives daily and those who surround us, but this isn’t news to you is it? The key point I took away from the documentary is the infinite amount of data that is collected every second from using social media and browsing the internet. It’s alarming and needs to be regulated. This idea is not new but the documentary inspired me to delve further into the topic of personal data usage online.
The government must make impactful changes in the lack of legalities surrounding the protection of personal online data. An idea was provided in this documentary to place a tax on companies that collect data and I couldn’t agree more.
The sheer collection of data and manipulative algorithms should not be a one-way benefit. Companies generate enough fiscal gain for free and it’s time to cap these profits. By placing a levy on personal data usage would also provide a more ethical way of data collection that will incite suitable online practices.
Why do companies need our data?
In today’s society, data is considered gold dust and organisations need our data to gain insights into their consumers and make informed decisions about their products and their service offerings.
How does it affect you?
Although data provides valuable insights to organisations, it can also be manipulated and distributed to third party vendors who rely on such insights to show us what companies think we like and subsequently want us to see. We already know about the insights of this impact from the Cambridge Analytica fiasco that occurred in or around 2016.
Do they need to know how long we stare at a photo on Instagram? Or how many times we visited our Deliveroo app? Personal data to companies is a financial gain that is overlooked and especially given that we are all living in a pandemic. There is a real need for a check and balance system to be in place and I believe charging tax will be a step in the right direction.
How will the tax system work?
The concept of taxation sounds like the ideal solution for the protection of personal data but, the applicability is difficult given the Internet is a cross-jurisdictional source. One suggestion to overcome this is by allowing the jurisdiction to be in the place of interaction where the media user resides. For example, where a company collects personal data from a UK citizen, the company should be liable to pay the necessary tax to the UK.
As we have to rely on the Internet more and more it will affect every sector of the economy and the world. I strongly believe for the tax system to be a success, there must be a universally alike chargeable tax rate for consistency and accountability. This will dissuade any future challenges on tax deterrence and avoidance. A compromised universal tax rate band is better than the improper manipulation of personal data that is currently on-going online and impacting our offline lives.
Consequences of tax charges on the use of data
The positive impacts of taxation would hopefully enable online browsing to be more ethical, as there will be a reduction in unnecessary data collection allowing us to form opinions that are not manipulative and our mental health will be balanced. It may also lead to there being a freeze on the offline taxes citizens pay as the government will have a new channel of funds for public services.
Conversely, the highly likely negative impact would be that online sites could charge a subscription fee for their services. This will in turn mean that personal data is collected and therefore, ironically, we will be paying for providing our data and that the online companies would retain a higher profit. Not only that but there is a chance that we could be validating and encouraging the manipulation practice for online companies which will take us back to square one.
There is a gap in the market and I have no doubt we are nearing a stage where reparations must be made. There has already been an attempt for taxation in 2017 by the European Commission looking to charge 3% on corporate revenues from “activities where users play a major role in value creation.” However, no agreement was established. The USA in 2017 also proposed a 3.3% levy on data sales but no concrete decision was made.
Chris Hughes, the co-founder of Facebook proposed a ‘data dividend’ solution that would mean that the users directly reap a proportion of the benefits online platforms earn. He explains this further in his book Fair shot if you’d like to read more into this.
Whatever the solution, it will be interesting to see how and what is decided given that we are in more need than ever to protect our data online.
SOURCES/ADDITIONAL MATERIAL:
- A new tax on personal data collection? Bird & Bird, Voisin.G (2013)
- Should Internet companies be taxed for profiting from private data? PIIE, Biancotti.C (2019)
- Taxing the Cloud: introducing a new taxation system on data collection? Internet Policy Review, De Filippi,p. (2013)
- The Social Dilemma, Netflix (2020)
- Should big tech be taxed for using our Data? Governing, Farmer.L (2019)
- The wealth of our collective date should belong to all of us The Guardian, Hughes.C (2018)