Fragmentation of Data Governance

Updated: Dec 23, 2021

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Professor Douglas Arner, in this 7th Looking Back, Looking Forward (LBLF) episode, retraces the fragmentation of transnational data governance from the birth of the World Wide Web in August 1991, pinning it to the "evolving differences between major economies, heightened by technological and geopolitical competition and conflicts" as well as the "irreconcilable positions of the three major economies and standard-setting jurisdictions".

Watch this episode and download the paper: The Transnational Data Governance Problem by Douglas Arner, Giuliano Castellano and Eriks Selga :: SSRN


Just over thirty years ago, in August 1991, Tim Berners-Lee posted an invitation for the world to begin using the foundational protocols of what would become the World Wide Web - the open-access information infrastructure that is the internet.

And of course, if we think of how our world has transformed over the past thirty years, it's absolutely incredible.

In the context of finance, finance has gone from a largely analogue industry to an almost entirely digitised industry.

We have seen the launch of email. We have seen the launch of large-platform companies, of Google of Alphabet, of Amazon, all growing to be tech giants.

But more recently, we've also seen another tendency, and that is different approaches to data and information.

So, if we look at that early foundation of the internet and the WWW, in many ways it's an expression of a 1980's 1990's liberal markets-based philosophy, that allows free movement of information, free movement of data as a sort of utopian view of the world.

But in some ways, combined with that has been a model where ownership of data can freely pass from person-to-person. And the end result, in many cases, has been amalgamation of vast amounts of data by giant big-tech platform companies.

And in some ways, the end result of that libertarian data dream has been an increasingly dominated concentrated version that raises concerns.

And as a reaction to that, we're beginning to see opposing systems develop.

In the EU, beginning in 1995, with the first personal data protection directive, the EU began to develop a framework whereby data today in the EU is a right, it is personal information that is under the control of an individual, and that much of that data cannot be permanently transferred to private companies.

Now, that is both a reaction to the growth of giant data firms, but it is also a fundamentally different vision about how data and even the internet works.

Likewise, in the context of China, we have seen a system whereby foreign companies have largely been excluded, where we have seen the building of an internet and data infrastructure that is used to control information flows, and increasingly, even though we've seen the evolution of Chinese internet giants, there is now a move, in many cases, to turn those vast data pools that those Chinese internet giants have accumulated over time, into national assets which can then be used for a variety of public purposes.

But once again, that's a fundamentally different view of the internet.

And what my co-authors, Giuliano Castellano, Eriks Selga and I argue in a new paper, is essentially we are seeing a fragmentation of transnational data governance.

And that fragmentation is being reflected not only in different approaches for political and cultural reasons to data amongst major jurisdictions, but also in the evolution of different and competing systems as other countries have to join in one model or the other in order to access those markets.

And we suggest that this fragmentation of transnational data governance in fact is posing a very real risk of fracturing of the internet.

And so, we ask what could we do? Could we build a global treaty-based framework for these sorts of interactions?

One, global treaties are very difficult to do. Second, we have fundamentally different positions amongst the major economies which makes it very difficult for agreement amongst the EU, US and China, but also for the rest of the world.

How about we stay where are? Where we end up in a situation where we have three large data zones that are interacting with the rest of the world but increasingly incompatible with one another.

That's something that is less than ideal from the standpoint of thinking about global flows of data and maximising the benefits of data amalgamation.

How about something where we look at building standards, where we take something like the experience of finance and apply it to data?

Perhaps the creation of something like a digital stability board. An organisation which could set standards not necessarily for how data should be dealt with in different jurisdictions,

but rather mechanisms for communication and coordination across those jurisdictions.

And so, what I want to close on is to say that thirty years after the advent of the WWW, and of course in 2021, we've seen Tim Berners-Lee sell that initial post in the context of a non-fungible token, an NFT, a blockchain-based token, there are real questions about the future of this utopian model of free flows of data going forward.

And it is something that we need to think very carefully about how we can build bridges between increasingly competing and increasingly conflicting major jurisdictions, in order to try to prevent the building of a new iron curtain, a new data Cold War.

Thank you.

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