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Business Commentary Five reasons Canada’s Digital Charter will be a bust before it even gets going

Kean Birch is an associate professor in the department of geography at York University; follow him on Twitter at @keanbirch.

At the launch of Canada’s new Digital Charter on May 20, federal Innovation Minister Navdeep Bains described “data” as akin to “new electricity” on Twitter.

People love a good metaphor when talking about new technologies, especially politicians. Take our personal data: Writers in international magazines such as The Economist and Wired have called it an untapped asset, the “new oil” of the 21st century.

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Expectations about the future value and usefulness of our personal data flow from these metaphors, although these metaphors usually reflect current fears: Canada is lagging behind the United States in the digital economy; Canada won’t be able to compete in the world.

The problem is that expectations are used to shape the future, although not necessarily with the outcomes that people want in the first place. And it looks like the expectations shaping the Digital Charter will be derailed very quickly.

Why? For at least five reasons.

First, the Digital Charter is framed by fears about losing out in the emerging “digital economy,” an economy that depends on our personal data as a resource. But our personal data is only valuable if it can be turned into a private asset, meaning that privacy or ethical concerns will always be secondary. And this matters. Even at a mundane level, free-to-play game apps (such as Angry Birds) collect an enormous amount of potentially valuable data. Companies such as Google and Facebook make most of their money from these apps nowadays, according to David Nieborg, a media studies professor at the University of Toronto. Data on our app use can be used for advertising, targeting us directly depending on our tendency to make in-app purchases. We have already passed a tipping point here, and introducing a charter seems unlikely to get our privacy back or stop the indiscriminate collection of our personal data.

Second, the economic value of our personal data depends on it being turned into a private asset, especially if this is a monopoly asset. Data companies – such as Google, Facebook, Amazon, Uber – want as much of our personal data as they can get, and they don’t want to share it with others. Whichever of these data companies can turn our personal data into a resource that provides the best means to make money will win – in whichever sector they operate, perhaps eventually across all sectors. Others will not be able to compete. Here, a Digital Charter and a government more concerned with “maintaining the confidence and trust of citizens” than with addressing an underlying drive toward monopoly are ill-equipped to do either.

Third, financial investors already expect this market concentration and monopoly to happen in the future, which is why so many are willing to bet on loss-making companies now. How else do we explain the fact that Uber’s recent IPO valued it at US$76-billion – higher than Ford’s market capitalization – despite never generating profits. Financial investors have to lock in the future returns they expect from Uber by promoting it, lobbying governments and supporting deregulation; we do too, though, since our pensions and saving funds increasingly depend on its future success. Expectations end up becoming self-fulfilling; we expect Uber to do well, bet our house on it and must ensure that it does do well. And companies with a winner-takes-all strategy – such as Uber – are already with us, largely found in the United States and China, meaning that any Digital Charter without the teeth to compel major international companies to act in the interest of Canada is pretty much worthless.

Fourth, monopolies work where there is little regulation, or little appetite for regulation – so it matters what sort of teeth we can find in the Digital Charter. Yet, in an interview for The Tyee, John Pecman – ex-commissioner of the federal Competition Bureau – argues that monopoly represents a specifically Canadian economic strategy. Unfortunately, Canada is very comfortable with monopoly and lacks the drive to pursue strong competition or data-privacy agendas – in contrast to the European Union. So, the notion that a Digital Charter will upend a decades-old pro-monopoly position seems unlikely.

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Finally, what we are left with when it comes to the Digital Charter is really just words, not much else – no regulation, no legislation, no new rights. How well-intentioned these words are is meaningless at present, and will remain so in the future if they are not backed up by a detailed and specific set of policies, regulations, standards and codes designed explicitly to shape and protect how our personal data are used and how they can be used in the future.

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