Protect Privacy Without Destroying Innovation

Protect Privacy Without Destroying Innovation

Technological innovation has fueled America’s rise as a world power. Thanks to scientific advancements, generations of Americans have enjoyed the highest standard of living in history.

Today, we routinely experience the fruits of that innovation. We can communicate instantaneously with those we love halfway around the world. We can learn about current events almost instantly. Social media, iPhones, ridesharing, the Global Positioning System, prosthetic limbs, and Lasik surgery are all making our lives more convenient and connected than ever before

These advancements occurred largely because Americans have the freedom to pursue their dreams and develop technologies that benefit millions, sometimes billions, of people worldwide.

While the impact of these technologies has been overwhelmingly positive, they, like all technologies, pose new challenges and create new vulnerabilities.

The rise of electronic commerce companies, cloud computing and social media platforms have led to new, valid concerns about privacy and data security.

Just ask Yahoo, which suffered a data breach that affected over a billion user accounts.

Other companies that suffered massive data breaches include Equifax, which had the personal information of 145 million people compromised, and LinkedIn, which saw over 100 million users affected.

Sometimes companies are caught breaking their privacy promises to consumers. BLU Products, Inc. recently reached a settlement with the Federal Trade Commission (FTC) after it allowed a China-based third-party service provider to collect detailed information about its customers — contrary to its stated policies.

Lawmakers are developing proposals to meet these challenges — these could include increasing the FTC’s enforcement powers over technology firms.

The American people deserve to have their privacy protected; however, the measures that are taken to address these concerns must not threaten the freedom to innovate with the coercive and stifling power of legislation and regulation.

Heavy-handed measures can choke off innovation while doing little to protect consumers and unleashing unintended consequences.

This is especially apparent in new technologies. For example, Great Britain passed stringent automobile safety laws in the 19th century — such as a requirement that all automobiles be proceeded by a man waving red warning flags — which stalled their car industry while the United States pressed forward with production.

study from the University of California-Davis, which examined the effect of Federal Communications Commission policies on innovation, showed that firms with fewer regulatory burdens offered 60 to 99 percent more services than those under stricter administrative regimes.

The recently convened 116th Congress should consider several principles that can serve as a foundation for constructive legislation.

First, privacy regulation should focus on addressing practices that injure customers, rather than on restricting the collection of data. Legislation that tells companies what data they can and cannot collect would not secure the data they do collect and would prevent companies from offering a wider array of service to customers.

Second, any legislation should maintain a clear distinction between privacy and data security, and address them separately. This is because there is a greater consensus about the end goal of data security legislation (most people generally agree that the theft of consumer information is undesirable) while less consensus exists about the end goal of privacy legislation.

Third, data ownership is a complex issue that requires a nuanced assessment by policymakers. While it is reasonable for consumers to expect data security, such data is often the product of interactions and transactions with other people, who also have rights. Sometimes it is public data. Lawmakers must consider the rights and interests of all of these groups when developing workable, responsible and most importantly, constitutional solutions.

Fourth, the FTC should not be granted broad rulemaking authority. The issue of data privacy is complex — involving considerations of both security and free expression — and constantly evolving with the increasingly accelerating pace of technological progress. Providing any agency with wide rulemaking latitude could result in administrative abuses that threaten the rights of both producers and consumers, while stifling innovation.

Fifth, it is critical that the FTC’s authority to combat unfair and deceptive acts or practices be clarified. Specifically, legislation must specify the criteria for what constitutes an injury to a consumer’s privacy before the FTC is empowered to take on such cases. In addition, penalties, which must be sufficient to deter violations, must also be proportional to the harm caused or likely to be caused.

As lawmakers consider ways to protect our privacy, it is crucial that they keep in mind the importance of protecting the rights of all Americans while preserving the basic American freedom to take risks and pursue technological progress.

By considering these principles, lawmakers can achieve that delicate balance. In doing so, they will pave the way for a world in which future generations of Americans can continue to enjoy the fruits of innovation.

Billy Easley II is a senior tech policy analyst at Americans for Prosperity.

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