Berggruen Institute Announces Plan for Requiring Digital Platforms to Pay for User Data

"Data dividend” white paper proposes a data-dependence tax to fund public goods

Christopher Eldred

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Christopher Eldred
Berggruen Institute
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The Berggruen Institute has released a white paper outlining a new framework for data governance in which firms like Facebook and Google would be required to pay for users’ personal information. This proposal is designed for action by California’s state government, and significantly reworks and expands previous data dividend proposals, such as those from California Governor Gavin Newsom and former presidential candidate Andrew Yang.

“A small number of some of history’s wealthiest firms are dependent to an extreme degree on having free access to personal information,” said Yakov Feygin, Associate Director of the Future of Capitalism program at the Berggruen Institute and co-author of the white paper. “New technologies have often required us to change what’s considered to be ‘the commons,’ and it’s high time we did so with respect to data.”

The Berggruen proposal would require firms that store information about users to pay for public goods, including education, broadband internet, public Wi-Fi, and universal savings instruments. Funds would be collected through a per-user “data dependence” tax based on definitions in 2018’s California Consumer Privacy Act. A threshold would ensure that only the most highly data dependent firms would be required to pay the tax.

This framework is based on recent research by report co-authors Brent Hecht, Hanlin Li, and Nicholas Vincent demonstrating the collective nature of data’s financial value. Their work shows how any one person’s data is only useful for ad targeting or other decisions in relation to the data of several other people. This insight drives the white paper’s idea that data dividends should be paid collectively.

“For any data dividend to accurately reflect how data generates value, we must think in terms of ‘our data,’ not ‘my data,’ said Li. ” Valuing data individually is far less useful and would have far less of an impact.”

Additional recommendations in the proposal include the creation of a data relations board modeled on existing California state bodies to conduct research on the evolving data-driven economy. Furthermore, according to the white paper, the state should explore the creation of a data industrial policy to promote common data resources from which all Californians can benefit.

Discussions among a California-based working group of interdisciplinary scholars helped germinate this proposal. The Berggruen Institute will advocate for legislative action on this framework by the California legislature.

“The most powerful companies in the economy shouldn’t pay nothing for their most crucial input resource,” said Feygin. “California can act right now to alleviate data-driven inequality in the near future.”

The data dividend proposal articulates longstanding Berggruen Institute thinking on the economy. These principles were outlined in Institute co-founders Nicolas Berggruen and Nathan Gardels’ 2019 book, Renovating Democracy: Governing in the Age of Globalization and Digital Capitalism. The Institute’s approach to economic reform was further fleshed out in a white paper outlining a new economic framework called “mutualism,” released in 2020.

 

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About the Berggruen Institute:
The Berggruen Institute’s mission is to develop foundational ideas and shape political, economic, and social institutions for the 21st century. Providing critical analysis using an outwardly expansive and purposeful network, we bring together some of the best minds and most authoritative voices from across cultural and political boundaries to explore fundamental questions of our time. Our objective is enduring impact on the progress and direction of societies around the world. To date, projects inaugurated at the Berggruen Institute have helped develop a youth jobs plan for Europe, fostered a more open and constructive dialogue between Chinese leadership and the West, strengthened the ballot initiative process in California, and launched Noema, a new publication that brings thought leaders from around the world together to share ideas. In addition, the Berggruen Prize, a $1 million award, is conferred annually by an independent jury to a thinker whose ideas are shaping human self-understanding to advance humankind.

About the Future of Capitalism program:
Capitalism stands astride the planet; yet inequality, environmental degradation, and stagnation signal cracks in its foundation. The Future of Capitalism program seeks to question the fundamental assumptions underlying market economies and to help design new institutions and models of economic governance. In a digital and interconnected world, we must reimagine economic systems to best serve human prosperity and well-being, harnessing enterprise while recognizing the value of every person in a wealthy society.