The European Union's General Data Protection Regulation (GDPR) comes into effect May, 2018. Every firm, irrespective of its physical location, interacting with EU citizens, will need to make changes to oversight, systems and processes to comply with the new rules

Tammas-Hastings, Dan

LSE Research Online

Could	the	EU’s	new	data	regulation	be	the	catalystfor	a	more	ethical	social	media?The	European	Union’s	General	Data	Protection	Regulation	(GDPR)	comes	into	effect	May,	2018.	Every	firm,irrespective	of	its	physical	location,	interacting	with	EU	citizens,	will	need	to	make	changes	to	oversight,	systemsand	processes	to	comply	with	the	new	rules.Little	known	and	even	less	discussed,	the	GDPR	is	the	most	important	change	in	how	we	are	store	and	processdata	the	world	has	ever	seen.	In	the	UK	it	replaces	the	Data	Protection	Act	(DPA)	of	1998,	which	is	nearly	twentyyears	old	and	a	relic	of	an	age	in	which	the	fax	machine	was	ubiquitous	and	data	storage	often	involved	acupboard	and	some	paper.	The	DPA	couldn’t	have	foreseen	the	rise	of	‘big	data’	or	the	ever	increasing	role	thatdata	plays	in	our	lives.In	the	last	two	decades	we	have	entered	the	information	age	–	mankind	has	created	a	vast	digital	universe.	Datacreation	and	storage	is	thought	to	be	growing	at	as	much	as	50	per	cent	a	year,	a	vast	expansion	driven	not	onlyby	increasing	populations,	but	also	the	number	of	‘smart	devices,’	items	connected	to	the	Internet	which	store	andmanipulate	data	continuously.In	this	time,	the	average	person	has	sacrificed	privacy	for	convenience.	Sharing	data	with	everyone	from	thesupermarkets	to	utility	providers,	and	of	course	the	technology	firms	which	have	sprung	up	to	monetise	thisgrowing	resource.	The	information	age	has	seen	the	birth,	rise	and	relentless	growth	of	data	giants	such	asGoogle	and	Facebook.	But	the	GDPR	has	the	potential	to	change	this	narrative,	placing	data	back	in	the	hands	ofthe	consumer	and	rewriting	the	concept	of	data	ownership.As	such,	this	legislation	is	good	for	the	individual,	potentially	onerous	for	corporates,	but	possibly	dangerous	forthe	business	models	of	many	tech	firms.	In	the	new	regime,	as	individuals	we	have	the	right	to	be	informed	ofdata	ownership,	the	right	to	correct,	delete,	or	restrict	the	use	of	data	and	also	the	right	of	data	portability.	For	thefirst	time	our	unique	data	is	ours.	(At	least	for	EU	citizens!)	For	firms	with	multi-billion	valuations	based	on	theirownership	of	our	data	this	could	be	interesting	to	say	the	least.This	has	significant	and	under-appreciated	ramifications	for	social	media.	Social	media	is	playing	a	larger	part	inall	our	lives	and	the	stock	market	valuations	for	the	tech	companies	that	obtain,	process	and	then	sell	our	dataare	higher	than	ever.	The	relentless	rise	of	Facebook	et	al	may	no	longer	be	a	‘sure	thing’	when	the	very	natureof	information	is	about	to	change.	We	see	the	role	of	GDPR	as	a	potential	catalyst	for	the	more	ethical	use	ofdata.LSE Business Review: Could the EU’s new data regulation be the catalyst for a more ethical social media? Page 1 of 2		Date originally posted: 2017-09-01Permalink: http://blogs.lse.ac.uk/businessreview/2017/09/01/could-the-eus-new-data-regulation-be-the-catalyst-for-a-more-ethical-social-media/Blog homepage: http://blogs.lse.ac.uk/businessreview/Recent	world	events	have	often	made	us	question	whether	social	media	platforms	are	a	benign	influence.	Manyof	us	live	in	‘social	media	bubbles’	in	which	are	our	views	are	reflected	and	amplified	without	receiving	the	checksand	balances	of	those	with	both	differing	viewpoints	and	differing	experiences.	This	is	compounded	by	outrightlies,	a	lack	of	fact-checking,	and	led	to	the	emergence	of	the	so-called	‘post-truth	era’.	These	issues	createdangers	not	just	to	us	individually	but	also	to	democracy.Politicians	and	traditional	media	have	sought	to	blame	Google,	Facebook	and	Twitter	for	this.	But	perhaps	theythemselves	are	the	real	culprit	that	they	have	struggled	to	adapt	to	change.	The	propagation	of	fake	news	ledmany	of	the	giants	to	appoint	chief	ethical	officers	and	adopt	policies	that	try	and	halt	the	flow	ofmisinformation	and	improve	the	quality	of	their	channels.	But	the	amount	spent	by	these	firms	developing	ethicalprocedures	is	insignificant	compared	to	their	billions	in	revenues	and	profits.This,	compounded	with	growing	evidence	that	data	giants	treat	tax	as	a	game	rather	than	a	moral	imperative(Facebook	is	thought	to	be	pay	less	than	1	per	cent	tax	on	UK	profits!,)	has	led	many	to	question	whether	a	moreethical	approach	is	needed.	With	many	consumers	critical	of	the	data	giants’	business	models,	GDPR	couldbecome	a	catalyst	for	change.Some	investment	banks	have	analysed	the	customer	value	to	Facebook	of	an	EU	citizen	as	greater	than	€1,000–	this	value	relies	on	the	data	and	the	platform	effects.	With	this	data	portable	from	2018,	the	potential	is	there	fora	large	group	of	consumers	to	seek	to	set	up	their	own	ethical	platform,	that	is	more	in	tune	with	their	values,	i.e.,shows	fewer	advertisements,	restricts	the	flow	of	malicious	information,	or	pays	more	tax.	Or	they	may	simplywish	to	capture	the	€1,000	of	value	for	themselves.	For	those	of	us	who	pay	more	than	a	1	per	cent	tax	rate,	thissounds	both	feasible	and	desirable.It	has	frequently	been	noted	that	data	is	this	century’s	oil	–	the	essential	component	to	industry.	To	extend	theanalogy	further,	the	introduction	of	the	GDPR	has	the	potential	to	be	as	momentous	as	the	1911	breakup	of	theStandard	Oil	monopoly.Also	by	Dan	Tammas-Hastings:The	exploding	popularity	of	RegTech♣♣♣Notes:The	post	gives	the	views	of	its	author,	not	the	position	of	LSE	Business	Review	or	the	London	School	ofEconomics.Featured	image	credit:	Twitter	Facebook,	by	LoboStudioHamburg,	under	a	CC0	licenceBefore	commenting,	please	read	our	Comment	Policy.Dan	Tammas-Hastings	is	Managing	Director	and	founder	at	digital	asset	management	firmRiskSave.	He	founded	the	company	in	response	to	inadequate	risk	measures	and	a	lack	oftransparency	dominating	the	financial	services	industry.	After	a	successful	career	as	a	fixedincome	trader	specialising	in	GBP	derivatives	at	Merrill	Lynch	and	as	a	hedge	fund	manager,managing	multi-billion	£	portfolios	across	credit	and	rates,	he	is	now	a	leader	in	risk	managementand	is	in	charge	of	strategy	and	investment	at	RiskSave.	Dan	has	been	awarded	both	the	CFA	andFRM	charters	and	is	a	graduate	of	the	LSE	and	the	University	of	Cambridge.	LSE Business Review: Could the EU’s new data regulation be the catalyst for a more ethical social media? Page 2 of 2		Date originally posted: 2017-09-01Permalink: http://blogs.lse.ac.uk/businessreview/2017/09/01/could-the-eus-new-data-regulation-be-the-catalyst-for-a-more-ethical-social-media/Blog homepage: http://blogs.lse.ac.uk/businessreview/

Could the EU's new data regulation be the catalyst for a more ethical social media?

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